TMI Blog2011 (12) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee’s business, the assessee would be entitled to depreciation. The only condition is that the business should not have been closed down once for all and that the assessee should demonstrate that the hopes of the business being revived are alive and real. It is however not a matter that can turn entirely on the assessee’s hopes alone. - There should be evidence or material to show that the assessee took efforts to keep the business alive in the hope of reviving the same. Thus no substansial question of law arises. - Decided against the revenue. - ITA NO.530/2011 - - - Dated:- 16-12-2011 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V. EASWAR, JJ. For Appellant : Mr. Kamal Sawhney, sr. standing counsel with Mr. Amit Shrivastava, Advocate. For Respondent: R.V. EASWAR, J.: This is an appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 ( Act , for short) against the order dated 30th April, 2010 passed by the Income Tax Appellate Tribunal ( Tribunal , for short), Delhi Bench C in ITA No.1559/Del./2008 in respect of the assessment year 2004-05. 2. The assessee is a company. It filed a return of income on 18.10.2004 declaring a loss of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 95,15,161.40 Raw material stock write off Rs. 1,36,26,779.01 Decrease in stock Rs. 23,69,606.74 Total Rs. 4,82,93,277.88 It was contended by the assessee that even though there was no sale or purchase or any manufacturing activity carried on in the relevant previous year, the business was still a going concern and in order to keep it alive and fulfill several legal and statutory formalities, some expenditure has to be incurred. It was also submitted by the assessee that it had approached the BIFR under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, that the application was being processed and soon the manufacturing and sale activities will start and therefore in these circumstances it cannot be said that the business of the assessee had ceased to exist. It was pointed out that there was only a temporary lull and the business would revive shortly. With particular reference to the claim of depreciation of Rs.2,16,41,897/-, it was contended that the plant and machinery were kept ready for use once the business revived and such passive use also amounted to use of the asset within the meaning of Section 32 of the Act. It was therefore contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer to allow the administrative expenses, personnel expenses and financial expenses as deductions. Surprisingly, while dealing with these expenses, he took the view that there is no material on record to show that the assessee had completely abandoned its business and that on the basis of the facts given in the assessee s application dated 29.11.2002 to the BIFR and the minutes of the joint meeting with BIFR held on 2.2.2007 it cannot be said that the assessee had completely abandoned or closed its business forever. It was in this view of the matter that the administrative expenses, personnel expenses and the financial expenses were directed to be allowed. Revenue accepted the said findings and no appeal/cross objections were preferred. 7. The assessee filed a further appeal before the Tribunal and questioned the decision of the CIT(Appeals) regarding allowance of depreciation. The Tribunal, relying upon three judgments of this Court held that the assessee was entitled to the allowance of depreciation on plant and machinery on the footing that they were kept ready for use in the business once it got revived and that amounted to passive use of the assets, which would meet the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stions of law : A) Whether the Income Tax Appellate Tribunal was correct in holding that the assessee could get benefit of depreciation under Section 32 of the Act on the basis of passive use of the assets? B) Whether the Income Tax Appellate Tribunal ought to have appreciated that in the facts and circumstances of the present case there was no question of passive use of the assets? C) Whether the Income Tax Appellate Tribunal erred in ignoring the clear language of Section 32? In our opinion, no substantial question of law arises from the decision of the Tribunal. It has been found as a fact by the Tribunal that the assessee had not closed its business and had every intention to revive the same. The basis for this finding is the fact that the assessee had kept its establishment alive by paying salary and other allowances to the staff and had also acquired plant and machinery in the relevant previous year and had further incurred repair expenditure on its existing plant and machinery. These findings have not been challenged by the revenue as perverse. In fact, the allowance of the salary payments, staff welfare and repairs and maintenance expenditure by the CIT (A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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