TMI Blog1999 (6) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed assets discarded. Since the assets discarded were of capital nature and such expenses are not allowable under the I.T. Act. Therefore, the amount of Rs. 1,28,885 will be added to the income of the assessee. The depreciation on such discarded assets will not be allowed amounting to Rs. 42,962." 2.1 The grievance of the assessee is with regard to refusal of the depreciation on the assets discarded by it. The CIT(A) upheld the finding holding that although it was a part of block of assets but it is treated as discarded and not brought into use throughout the year. 2.2 Shri S.N. Soparkar, learned counsel on behalf of the assessee has submitted that the authorities below failed to take into consideration the provision or the depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 2.4 We have heard both the sides and perused the materials on record. It is not in dispute that with effect from 1-4-1988 there has been a change of system for the purpose of allowing depreciation which is to be allowed on block assets and not on individual assets. In this connection, the provision of section 32(1)(ii) as substituted with effect from 1-4-1988 is as follows: "32(1) In respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, the following deductions shall, subject to the provisions of section 34, be allowed. (ii) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed" The d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the depreciation actually allowed in respect of that block of assets in relation to the said preceding previous year and as further adjusted by the increase or the reduction referred to in item (i)". In this connection, C.B.D.T. Circular No. 469 dated 23rd September, 1986 may be considered which is available at pg. 1043 of Chaturvedi Pithisaria's I.T. Law, Fourth Edition, Volume-1 where the relevant position of Budget Speech of Finance Minister has been mentioned which is as follows: "As promised in the long-term Fiscal Policy Statement, I propose to introduce a system of allowing depreciation in respect of blocks of assets instead of the present system of depreciation on individual assets." Further the report of the Economic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red after the new provision of block assets came into force. If a particular machinery were owned forming part of block asset is not used during the year, still depreciation is to be allowed even if assets are not used during the present year. After reading provision of block asset, we have to consider whether the block of assets were used or not during the present assessment year for the purpose of allowing depreciation. If one single asset out of the entire block has been discarded or not put to use by the assessee for its business consideration for that ground alone partial depreciation cannot be disallowed. Similar view has been taken in the case of Packwell Printers v. ACIT [1996] 59 ITD 340 (Jab.). The decision of Patna Bench of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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