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2017 (11) TMI 902 - AT - Income TaxDisallowance of depreciation - beneficial owner of the asset - Held that:- A perusal of section 32 would indicate that for grant of deprecation this section contemplates two conditions. The assessee should be owner of the asset, and the asset has been used for the purpose of business. According to the AO the expression “used” employed in this section would construed as actual user and in case in any year the asset is not used then the assessee will not be entitled for the depreciation. However, in a large number of authoritative pronouncements it has been observed that expression “used” employed in section would embrace deemed user of the asset. The assessee has not closed its business, rather on account of stay operation from the Court manufacturing activities were stopped. The assets were ready for use for the purpose of the business and there was constructive user of the asset. Therefore, depreciation ought to be granted to the assessee - Decided in favour of assessee Addition u/s 41(1) - Held that:- AO has not brought any evidence on the record to show that liability has ceased. The assessee has not written off the liability in the accounts. Therefore, there would not be any addition under section 41(1) of the Act. Hon’ble High Court in the case of Bhogilal Ramjibbhai Atara (2014 (2) TMI 794 - GUJARAT HIGH COURT) considered this aspect and observed that even if debt itself is found to be non-genuine from the very inception that also in terms of section 41(1) of the Act, there is no solution for that. In other words, addition cannot be made unless liability in the accounts has been written off. Therefore, following the decision of the Hon’ble Gujarat High Court in the case of Bhoghilal Ramjibhai Atara (supra), we allow this ground of appeal and delete disallowance.- Decided in favour of assessee
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