TMI Blog2021 (10) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... ne for one time settlement, it shows that the business was temporarily shut down due to heavy losses The use of individual asset for the purpose of business may be examined only in the first year when the asset was purchased and put to use but not in the subsequent years, when use of block of assets is to be examined, existence of individual asset in block of assets itself amounts to use for the purpose of business. Once an asset is included in the block of assets, it remains in block for its entire line. See INTEGRATED TECHNOLOGIES LTD. [ 2011 (12) TMI 48 - DELHI HIGH COURT] wherein held that 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. Maintaining the office and establishment, complying with the statutory formalities, not disposing of the plant and machinery, incurring expenses on the repair of plant and machin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation for the whole year. In the present case, the Assessing Officer observed that the assessee company became sick and suspended its business activities for several years and has also made a reference to BIFR. During the year under consideration, no business activity was carried out by the assessee company. Since none of the assets were used at any time during the previous year for the purposes of business of the assessee company, the depreciation of ₹ 6,13,14,399/- claimed by the assessee company was disallowed. 4. When the assessee preferred an appeal before the CIT(A), the CIT(A) confirmed the order of AO. 5. Aggrieved by the order of CIT(A), the assessee is in appeal before the ITAT. 6. Before us, the ld. AR of the assessee reiterated the submissions made before the lower authorities and submitted that the AO is not correct in not granting the depreciation in the impugned AY as the AO allowed the same in AY 2013-14 and to this effect the ld. AR of the assessee filed a copy of the assessment order passed in AY 2013-14. He, therefore, contended that denying the claim of depreciation in the impugned AY is not correct as facts in in the impugned AY are simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but not in the subsequent years, when use of block of assets is to be examined, existence of individual asset in block of assets itself amounts to use for the purpose of business. Once an asset is included in the block of assets, it remains in block for its entire line. In this connection, we refer to the judgment of the Hon'ble Delhi High Court in the case of 4. CIT Vs. Integrated Technologies Ltd. (supra), on which reliance placed by the assessee, wherein the Hon'ble High Court has observed as under: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plant and machinery or other assets were used for the purpose of the assessee's business. In support of his view the CIT(Appeals) referred to several judgments of the Calcutta, Madhya Pradesh, Rajasthan and Bombay High Courts. Thus, the disallowance of depreciation was upheld. 6. In respect of the other expenses disallowed by the Assessing Officer, the CIT(Appeals) dealt with them in some detail and ultimately directed the Assessing Officer 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 preferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame useless and unfit for any manufacturing activity and write off of such stocks did not mean that the assessee had no intention to revive the business. 8. In the aforesaid view of the matter, the Tribunal held that the plant and machinery and other assets on which depreciation was claimed was kept ready for use and accordingly the depreciation was allowable under Section 32. The revenue challenges the order of the Tribunal and seeks to raise the following questions as substantial questions 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 intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d machinery or other asset is kept ready for use in the 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. Maintaining the office and establishment, complying with the statutory formalities, not disposing of the plant and machinery, incurring expenses on the repair of plant and machinery etc., are some of the indications of nurturing the hopes of reviving the business. The above are only illustrative instances and are by no means exhaustive and the question as to whether the assets were kept ready for use in the business is largely to be decided on the facts and circumstances of each case. In our opinion, the Tribunal has not committed any error in applying the ratio laid down in the judgments of this Court to the facts of the present case in order to up ..... X X X X Extracts X X X X X X X X Extracts X X X X
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