TMI Blog2017 (11) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... eri And Inderjeet Singh, JJ. For the Appellant : Mr. Sanjay Jhanwar with Ms. Archana For the Respondent : Mr. R. B. Mathur with Mr. K. D. Mathur ORDER 1. By way of this appeal, the appellant has assailed the judgment and order of the Tribunal whereby the Tribunal has partly allowed the appeal of the department. 2. This Court while admitting the matter framed the following substantial question of law:- Once an asset forms part of the Block of Asset, which is eligible for depreciation u/s 32 of the Act, whether the depreciation deserves to be computed and allowed with reference to the Written Down Value of such Block of Asset as defined u/s 43(6) of the Act, notwithstanding the actual use of individual asset forming part of block of asset.? 3. Counsel for the appellant Mr. Jhanwar has taken us to the order of the CIT(A) which reads as under:- 2. Whether assessing officer was justified in disallowing depreciation claim in respect of thread division. 2.1. On perusal of para 2 of the assessment order it is seen that considering closure of thread division an opportunity was given proposing disallowance of depreciation claim in respect of thread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions on the block value concept as a whole for the appellant there was no question of partial disallowance of depreciation claim. In any case, this unit did not function w.e.f. 15.10.2001 but the assessing officer in A.Y. 2002-03 has also not disallowed the depreciation claim on thread division in the assessment order passed u/s 143(3) of I.T. Act dated 24.2.2005. With this discussion, in my considered view the appellant was entitled for the depreciation claim on thread division and A.O. is directed to allow the same. 4. He contended that the Tribunal while considering the matter has seriously committed an error in relying the judgment of this Court in case of Udaipur Mineral Development Syndicate Pvt. Ltd. 269 ITR 263 wherein while considering the issue, the court held it prior to the amendment where block value is there. However, he has relied upon the decision of this Court in the case of Commissioner of Income Tax vs. Udaipur Distillery Co. Ltd. reported in [2004] 268 ITR 446 (Raj.) wherein while considering the question after the amendment, this court has observed as under:- 12. The AO has disallowed the claim amounting to ₹ 28,617 by holding that the fast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid question raises a substantial question as to the interpretation of Section 32 as amended by the Act of 1986 and was in force during the relevant assessment year. 16. However, we are of the opinion that in view of the findings of fact recorded by the learned Tribunal in this regard, this question really does not arise for consideration to affect the final decision. Apparently, as per facts not in dispute, the R D division, of which the assets were formed part, was not closed albeit it was confined in its activities to the other business of the assessee than fast food. Once this is found the assets relating to R D cannot be excluded because part of the assessee's business is closed to which also the R D division might be rendering its services. It may not have been used for the business relating to the fast food division. It is not the requirement of Section 32 that the depreciation claim in respect of any asset has to be allowed if it continues to be used for all the purpose which was being used earlier. In view of the findings of fact recorded in favour of the assessee that the R D division was alive and all business of the assessee were not closed, depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his written note amply illustrate the mechanism of allowance of depreciation u/s 32 after the block concept of asset. Therefore, the notional disallowance of depreciation in respect of plant machinery of Duracell batteries which formed part of the block of assets of the assessee is not permitted in law. 53. The Delhi High court of CIT V/s. Bharat Aluminium Company Ltd. 187 Taxman 111, 124 (Del.) held that though as per section 32(1), in order to get entitled to claim depreciation, asset is to be owned by the assessee and it is also be used for the purpose of business and profession but this expression when applied to block of assets and not any specific building, machinery, plant or furniture in said block of assets as individual assets loose their identity after becoming inseparable part of block of assets. 54. The Gujarat High Court in case of CIT V/s. Sonal Gum Industries 322 ITR 542 held that in relation to block of assets it is not possible to segregate items falling with in the block for the purpose of granting depreciation or restricting the claim thereof. Once it was found that the assets were used for the prupose of business, it was not necessary that all the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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