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2014 (10) TMI 288 - ITAT PUNEDepreciation on second hand machinery Failure to produce WDV Invocation of explanation 3 of section 43 Held that:- As decided in assessees own case for the earlier assessment year, it has been held that the AO disallowed depreciation to the extent of ₹ 1,59,54,775/- by allowing depreciation whereby depreciation was allowed on WDV of assets in the hands of the Ceat Ltd. and not on the basis of actual cost paid by the assessee CIT(A) was rightly of the view that the assessee was eligible for depreciation on actual cost paid for the assets taken over from Ceat Ltd. Decided against revenue. Depreciation on machinery used for production of two-three wheeler tyres used for part of year Held that:- The AO has not appropriately appreciated the concept of allowance of depreciation in section 32 with the introduction of block of assets w.e.f. 01.04.1988. The depreciation in terms of the block of assets concept is to be allowed on the 'actual cost' or WDV of the particular 'block of assets', even if it is found that a particular asset comprised in the block of asset has not been put to use - The proposition is founded on the concept that depreciation is allowable with respect to the block of assets and not the individual assets relying upon COMMISSIONER OF INCOME TAX Versus BHARAT ALUMINIUM COMPANY LTD. [2010 (8) TMI 26 - DELHI HIGH COURT] - certain Plant & Machinery was not put to use in the relevant year and therefore depreciation thereupon was not allowed - whether an individual asset is put to use in a particular year or not is of no consequence inasmuch as the requirement of law is to establish the use of concerned block of assets and not use of particular assets individually. It has been explained before us that the production of two-three wheeler tyres was abandoned by the assessee and hence the nonuse of such machinery - the assets are forming part of block of assets and there is no requirement of law, each of the item of assets comprised in the 'block of asset' is put to use in order to claim depreciation - CIT(A) made no mistake in allowing assessee's claim for depreciation in relation to part of the machinery relating to the manufacture of two-three wheeler tyres - the assets were already in use and were forming part of the block of assets at the beginning of the year under consideration and on such 'block of assets', depreciation was being claimed and allowed in the past - the fact that assets were not in use hereinafter cannot be a reason to deny depreciation on such assets which form part of the block of assets, i.e. Plant & Machinery the order of the CIT(A) is confirmed Decided against revenue.
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