TMI Blog2014 (1) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... sed u/s 143(1) in a summary manner and the case was not taken up for scrutiny assessment - the assessee is not entitled to depreciation as per law, the principle of consistency in the given circumstances cannot be followed as obviously there can be no estoppel against the provisions of the Act – Decided against Assessee. Addition made on account of difference in valuation of closing stock – Held that:- The invoices showing the sale of defective goods at a lower price in succeeding year were not placed before the AO - when the assessee is following 'Cost or market price whichever is less' as method for valuation, then the assessee cannot be compelled to value such stock at the cost price, if the market value of such stock is less - it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inery was installed at the business premises of DKIPL, which was located at a different place. The assessee claimed that it was a pure business decision and hence the allowance could not be denied. Not convinced with the assessee's submissions, the Assessing Officer rejected the assessee's claim by holding that the machinery was not used by the assessee for its business purpose but was utilized by DKIPL, for which the assessee did not get either rent or any sort of benefit. The learned CIT(A) echoed the action of the Assessing Officer on this score. 4. We have heard the rival submissions and perused the relevant material on record. There is no dispute on the fact that the assessee purchased this machinery in the preceding year and recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be restricted to a fair proportionate part thereof having regard to the user of the asset by the assessee for its business purpose. 6. It is a trite law that once an asset falling in a particular block is purchased by the assessee and put to use for its business purpose, then depreciation has to be allowed. In the scheme of block of assets, depreciation is allowed irrespective of the fact whether or not a particular asset forming part of a block is distinctly used. The rationale of allowing depreciation in a case of non-user of a particular asset is that the otherwise user of such asset forming part of the block, is not jeopardized in any manner to the assessee. Where an asset is 'actually used' by the assessee for its business purpose, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how an assessee can claim depreciation by reason of mere acquisition of an asset. The second condition of section 32, being the 'user' of asset - whether 'actual' on one hand or 'deemed' on the other, in such a case would be wanting. That being the position, there can be no question of granting any depreciation in such a case. 7. Adverting to the facts of the instant case, it is seen that the assessee purchased the asset but installed it at the premises of its sister-concern, which was utilized by the sister concern for their own business purpose. There is no benefit which the assessee derived from its sister-concern as a quid pro quo for allowing the user of such asset. The mere facts that the assessee utilized its funds or obtained a lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and the case was not taken up for scrutiny assessment. Since in view of the detailed discussion supra, it is manifest that the assessee is not entitled to depreciation as per law, we are disinclined to accept the argument of the ld. AR to follow the principle of consistency in the given circumstances as obviously there can be no estoppel against the provisions of the Act. The impugned order is upheld on this issue. This ground is not allowed. 9. The second ground is against the confirmation of addition of Rs. 9,60,000 on account of difference in valuation of closing stock of defective and rejected goods. The facts apropos this ground are that the assessee valued 1,44,000 pieces of undergarments at Rs. 8.33 per piece making total valuat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequently sold at a price close to such declared value. 11. Coming back to the facts of the extant case, it is seen that the assessee had total stock worth Rs. 2.36 crore, of which only Rs. 9.60 lakh was claimed as defective stock valued at below the cost price. The valuation of the good stock has been accepted by the AO. The learned AR placed on record certain sale bills issued in the succeeding year to show that the defective stock of the current year fetched a price much less than Rs. 8.33 per piece. On a pertinent query, it was conceded that such invoices showing the sale of defective goods at a lower price in succeeding year were not placed before the AO. In principle, we hold that when the assessee is following 'Cost or market pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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