TMI Blog2016 (1) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... n the earlier financial year its entire machinery remained in “ready to use” mode because the assessee company has come up with logical explanation that due to not having received any order for technical consultancy nor it carried out any training activity, the income from its business comes to ‘nil’; that when the A.O. has accepted the contention of the assessee that it has made sales representing trading items incidental to its main business activity and has earned profit from such activity, he cannot disallow the depreciation claimed by the assessee; that even Ld. CIT(A) has erred in doubting the trading activities stated to have been carried out by the assessee company during the Assessment Year 2008-09 without any investigation though in the past, such activity has been accepted by the Revenue specifically; that no doubt, the assessee has not produced the vouchers to prove the claim of sale and purchase but when the Revenue has accepted the audited profit and loss statement, they cannot be allowed to sail in two boats; that when the assessee company has not sold, discarded, demolished or destroyed the assets during the previous year, the assessee has certainly become entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elated books as Income from Other Sources instead of assessing the same as income from Business : The sale of insurance related books being allied to the main activity of technical consultancy and insurance training, is a part of the regular business of the appellant. 3. The CIT (A) has erred in not allowing expenditure incurred by the appellant under the heads Insurance Expenses - ₹ 5003/-, Miscellaneous Expenses ₹ 16,840/- and Travelling Conveyance - ₹ 5,355/ - without specifying any reason for not allowing the same. B. I.T.A.No. 5930/Del/2013: On the facts and circumstances of the case and in law, the learned CIT (Appeals) has erred in upholding the disallowance of depreciation of ₹ 8,88,239/ - made by the Assessing Officer on the ground that no business has been carried on by the appellant. The CI'I' (A) ought to have. allowed the depreciation' claimed because' the appellant had used the assets in the course of normal administrative activities to keep the company running and that the assets have suffered normal wear tear during the year. 3. Briefly stated, the facts of this case are: during the processin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business order, trading business could not be carried out. 8. On the other hand, Ld. D.R. relied upon the order passed by Ld. CIT(A) and contended that since no trading business has been shown by the assessee, A.O. has rightly treated the income shown by the assessee as 'income from other sources' . 9. Ld. CIT(A) has upheld the assessment order in disallowing the depreciation on the ground that the assessee is claiming set off depreciation on fixed assets against different activities in the past and activities of trading has been accepted as business income but in Assessment Year 2008-09 the activity itself is doubtful as appellant could not produce any vouchers of the alleged sale and purchase. The appellant has provided only computerized ledger account and original sales / purchase voucher have not been produced even during the appellate proceedings. The authorities below noticed that most of the sales are shown to the sister concern M/s. Ritu Insurance Services Ltd. related to insurance books etc. and there is no evidence of purchasing of material for M/s. Chawla Printers. So, in the absence of vouchers, the claim of sale and purchase of assessee is declined. Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that it has admittedly not carried out any technical consultancy and provided technical training during the year under assessment. 13. Identical issue has come up for determination before the Hon'ble Jurisdictional High Court in case entitled CIT Vs Yamaha Motor India (P) Ltd, 328 ITR 297. For ready reference, the operative part at para 6, 7 8 of the judgement in Yamaha Motor India (P) Ltd. (supra) is reproduced as under: 6. The relevant and related provisions, in this regard, for decision of the issue are Section 32(1) which requires that the assets are used for the purposes of the business, Section 32(1 )(iii) lays down the details and requirements with respect to claim of depreciation inter alia of discarded machinery, Section 43(6)(c)(B) defines written down value with respect to block of assets, Section 50(2) under the head of profits chargeable to tax on the aspect of discarded machinery. 7. On the aspect of passive user, there are two decisions of two Division Benches of this Court in the cases reported as CIT vs. Refrigeration and Allied Industries Ltd., 247 ITR 12 and Capital Bus Services vs. CIT, 123 ITR 404. In this view of the matter, we need no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down by the Hon'ble Jurisdictional High Court in the case cited above, we are of the considered view that the assessee company is entitled for depreciation on computer and software during the year under assessment (Assessment Year 2008-09 and 2010- 11) though not actually used for the purpose of business on the grounds inter alia that when during the previous Assessment Year i.e. Assessment Year 2007-08, the assessee disclosed receipt from technical consultancy and training fee at ₹ 4,35,90,000/- , income from trading activities at ₹ 9,75,607/- and other income at ₹ 3,50,381/- but shown the income from technical consultancy and training fee at nil in Assessment Years 2008-09 and 2010-11, it is entitled for depreciation u/s 32 of the Act as the same has not been discarded by the assessee company; that when the machinery in question was in fact used in the earlier year and depreciation was allowed on block of assets, the assessee company is entitled for depreciation; that though the usage of machinery in the business was not in the relevant assessment year but in the earlier financial year its entire machinery remained in ready to use mode because the ..... 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