TMI Blog2023 (6) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... admittedly no manufacturing activity. In such a situation, depreciation could not be allowed on such non-use in view of the clear verdict given in Oriental Coal Co. Ltd. [ 1994 (1) TMI 82 - CALCUTTA HIGH COURT ] and which is directly on the present issue involved as held that as there was strike, lockout in the factory for two years and the plant and machinery has not been actually used, then assessee would not be entitled for depreciation - Decided against assessee. - I.T.A. Nos. 45 to 47/Kol/2022 - - - Dated:- 23-2-2023 - Dr. Manish Borad, Accountant Member And Shri Sonjoy Sarma, Judicial Member For the Assessee Shri S.K. Bandopadhyay, CA Shri Swaraj Kumar, FCA For the Revenue Shri Vivek Verma, CIT, DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed on 19.03.2014 at an assessed loss of Rs. 321,87,94,739/-. The ld. AO noticed during the assessment proceeding, the business activity of the assessee company was closed and in earlier years, it was engaged in the business of manufacturing selling of telecommunications cables and laying of cables. Subsequently, it was come to notice from the computation of depreciation on plant machinery amounting to Rs. 1,65,63,389/- has claimed by assessee. However, the ld. AO notices that production and business activity of the assessee company was stopped since the year 2003 and the revenue earned by the assessee company in the previous year mainly comprised of revenue from operation of Rs. 19.47 lacs and other income of Rs. 2,19,34,578/- whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery amounting to Rs. 1,65,63,389/- was disallowed and added to the total income of the assessee for assessment year under consideration under the provisions of section 32 of the Act. 3. Dissatisfied with the above order passed by the ld. AO, assessee preferred an appeal before the ld. CIT(A), where the appeal of the assessee was dismissed. 4. Aggrieved by the order of ld. CIT(A), assessee preferred an appeal before the Tribunal. 5. At the time of hearing before us, ld. AR submitted that the assessing officer erred in making addition on account of depreciation amounting to Rs. 1,65,63,389/- in its order passed u/s 147(1)/143(3) dated 05.11.2018 as well as ld. CIT(A) erred in issuing order that action taken to disallow the depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Individual assets lose their identity and become an inseparable part of the block asset in so far as calculation of deprecation is concerned, therefore even a single assets of the block is used during the year it shall be deemed that entire block is used and the block itself becomes eligible to claim depreciation, further it may also be noted that specific use of assets is not required to claim the deprecation. iii. Further during the previous year under the consideration the revival plan also initiated by the concerned Ministry, and the company was not yet closed, also various assets being Building, Residential Building, Furniture Fixtures, Plant Machinery etc. including computer was also used for say, resident of employee, com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and, secondly, the plant and machinery must be used for the purpose of business of the assessee. If the aforesaid two conditions are satisfied, then the assessee is entitled to claim depreciation at the rates specified in the Appendix, to the Income-tax Rules. 1962. In the instant case, it was not in dispute that the plant and machinery in question were owned by the assessee. One of the conditions specified in sub-section (1) of section 32 for grant of depreciation is the actual user of plant and machinery for the purposes of business. In certain cases like a pooling arrangement or where plant and/or machinery are kept as stand-by to provide against breakdown, even a passive user may entitle the assessee to claim depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om which revenue could be earned and machinery was not put to use as there was admittedly no manufacturing activity. In such a situation, depreciation could not be allowed on such non-use in view of the clear verdict given by the Hon ble Calcutta High Court referred above and which is directly on the present issue involved. Besides that by merely including an item in the block will not make it eligible for the depreciation if other conditions for allowability of claim are not satisfied. We, therefore, respectfully follow the judgement rendered by the Hon ble Jurisdictional Calcutta High Court on this issue. Hence, we sustained the order passed by the ld. CIT(A) on this issue and dismiss the ground taken by the assessee. 9. Since we dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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