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2010 (2) TMI 145 - HC - Income TaxDepreciation- Business Expenditure- The respondent- assessee is engaged in the manufacture and sale of Indian made foreign liquor. The assessee filed a return of income declaring a loss of Rs. 4, 65,540. The assessee had claimed the depreciation on the assets amounting to Rs. 2, 09,536 on plant and machinery. The Assessing Officer had not granted the depreciation on the ground that the assessee had not carried on the business activity. Accordingly, the order passed by the Assessing Officer on January 31, 1997. On an appeal, the Commissioner of Income-tax (Appeals), came to the conclusion that the assessee forcibly closed his business activities on account of local problems. Consequently, he allowed the appeal Being aggrieved by the same, the Revenue filed an appeal before the Income-tax Appellate Tribunal, which appeal came to be rejected by the Tribunal confirming the order passed by the Commissioner of Income-tax (Appeals). Held that- The Assessing Officer has failed to take note of the fact that the assessee did not close its business activities on its own. But it was on account of unforeseen circumstance. Such closure will not disentitle the assessee to claim the depreciation. Thus, we hold the substantial questions of law arising in this appeal against the Revenue and in favour of the assessee. Accordingly, the appeal is dismissed.
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