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2023 (7) TMI 986 - AT - Income TaxDisallowance of depreciation u/s 32 - Plants not in operation - HELD THAT:- Units are non-operating since 1996 and prior to 2003-04 all the assessment were done without any additions on account of disallowance then the principles of consistency required Revenue to have allowed the depreciation on the assets for being part to the block of assets. The BIFR directions do not override the provisions of Act. As long as the ownership of the assets continue to be with the assessee company, as for the purpose of Section 32 the claim of assessee company fulfils the following essentials. 1st the assets are capital in nature. 2nd assets are still owned by the assessee company. 3rd the depreciation was claimed on the assets forming part of the non-operating plants in the block of assets. 4th WDV at the beginning of the year was available and the assets were used for the purpose of business or profession since they were three other working units and the company as a whole were still working. It is a settled provision of law that use for a purpose of business when applied to block of assets would mean use of block of asset and not any specific building or machinery. Assets of closed units could not be segregated for purpose of allowing depreciation and depreciation has to be allowed on entire block of assets. See Bharat Aluminium company Ltd. [2009 (10) TMI 505 - DELHI HIGH COURT] The Mumbai Bench in the case of Swati Synthetics Ltd. [2009 (12) TMI 667 - ITAT MUMBAI] has held that as the year under consideration is not the first year of the assets. The assets of closed units still remained exist / part of the block of the assets and accordingly allowed depreciation. Thus appeals of assessee are allowed and AO is directed to allow the depreciation as claimed by the assessee on the block of assets for the relevant assessment years.
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