TMI Blog2023 (4) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has not carried out any business activity during the year relevant - AR submitted that assets were put to use in the earlier years and the depreciation was also allowed in those years - HELD THAT:- In the instant case, though the tax authorities have stated that the assessee has not started business activities in the subsequent years also, it was not shown that the assessee has completely abandoned the business of generation of electricity. The case of the assessee that the assets are kept ready for use and it was expecting only favourable market situation. It is also submitted that the assessee has maintained its business establishment and was generating other types of income, besides servicing loan taken for business purposes. We are of the view that there is no reason to disallow the depreciation claimed by the assessee. Decided in favour of assessee. - ITA Nos. 257 & 258/Jodh/2019 - - - Dated:- 2-11-2022 - SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER For the Assessee : Sh. Amit Kothari (CA) For the Revenue : Smt. Alka Rajvanshi Jain, CIT-DR ORDER PER: B.R. BASKARAN, AM Both the appeals filed by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed loan from M/s Adarsh Credit Co-operative Society Ltd. In the balance-sheet also, the assessee has not shown the loan taken from above said society, but only claimed also do not show that loan has been availed from the said society. Though the assessee has claimed that the above said loan is included under the head Loan from banks , the break-up details of the same was not given at any stage. 7. In the rejoinder, the ld. AR submitted that the the break up details of Loan from banks is not readily available with him. He submitted that the assessee would be in a position to furnish the break up details of loan taken from banks , if an opportunity is given. The assessee shall prove from the books of account that it has availed loan from M/s Adarsh Credit Co-operative Society Ltd. 8. We heard the rival contentions and perused the record. It is the submission of the assessee but it has availed loan from M/s Adarsh Credit Co-operative Society Ltd. We notice that the tax authorities have taken a different view and we notice that they have not examined the books of accounts. The AO could have examined the books in order to find out as to whether the loan has been accounted in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation of Rs. 52.48 lakhs claimed by the assessee. The Ld. CIT(A) also confirmed the said amount. 10. The ld. AR submitted that assets were put to use in the earlier years and the depreciation was also allowed in those years. The assessee has stopped the business activity of generation of power, since the Revenue generated was less than the cost of production of electricity. He submitted that the assessee has stopped the production of electricity on genuine commercial considerations in order to avoid losses. He submitted that the assets were ready to put to use and the assessee was only waiting for proper business opportunity. Hence the AO was not justified in disallowing depreciation claim. In support of his contentions, the ld. AR placed reliance on the following case laws. CIT vs. GEO TECH CONSTRUCTION CORPORATION (2000) 244 ITR 452 (Ker) : (2000) 162 CTR (Ker) 528 NATIONAL THERMAL POWER CORPN. LTD vs. CIT Source (2013) 357 ITR 253 (Del): (2012) 211 Taxman 505 (Del) CIT vs. SWARUP VEGETABLE PRODUCTS INDIA LTD. (2005) 277 ITR 60 (All): (2005) 198 CTR (All) 595 CIT vs. REFERIGERATION ALLIED INDUSTRIES LTD (2001) 247 ITR 12 (Del) : (2000) 163 CTR (Del) 498 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly, it was submitted that there was no reason to disallow depreciation claimed by the assessee. The assessee has also placed its reliance on various case laws. 14. The Hon ble Allahabad High Court has held as under in the case of CIT vs. Swarup Vegetable Products India Ltd (277 ITR 60):- 3. Heard learned counsel for the Department and Shri Vikram Gulati for the assessee-respondent. It was submitted by learned standing counsel that the Tribunal was not justified in allowing the normal depreciation at Rs. 1,91,917 on the plant and machinery which was not actually used during the year. Elaborating the argument it was submitted that for claiming depreciation the asset must be used during the whole or at least some part of the accounting year. The machinery and plant was not used at all in the previous year relevant to the assessment year in question and as such no depreciation under Section 32 of the Act could be allowed. We find no merit in the aforesaid submissions. The findings recorded by the Tribunal are that the vanaspati unit though was not actually in use but it was kept ready for use. There was no intention on the part of the assessee in the relevant assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can be taken as connoting or requiring the active requirement or actual working of the machinery, plant or building in the business. On the other hand, the wider meaning will include not only cases where the machinery and plant, etc., are actively implied but also the cases where there is what may be described as passive user of the same in the business and the same can be said to be in use when it is kept ready for use. The Delhi High Court in CIT v. Refrigeration and Allied Industries Ltd. [2001] 247 ITR 12, has held that the assessee was entitled to depreciation allowance on the cold storage plant though the machinery had not actually worked during the accounting period. 6. The Punjab and Haryana High Court in CIT v. Pepsu Road Transport Corporation [2002] 253 ITR 303 has held that the assessee who was the transporter had to keep spare engines in the store, was entitled for depreciation on spare engines in the store, as the engines were meant to be used in the case of need. There is a normal depreciation of value even when machines or equipment is merely kept in the store. Looking to the nature of business of that assessee, who was a transporter it was held that keepin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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