TMI Blog1996 (8) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act with regard to allowance of depreciation has undergone a radical transformation. It was submitted that now the depreciation has to be allowed not in respect of each and every asset but in respect of block of assets. It was submitted that once an asset enters the block of assets, it loses its identity and merges into the block of assets. It was, therefore, submitted that under the new dispensation, there cannot be any separate asset which may be said to have been used partly for business purposes and partly for non-business purposes. It was submitted that section 41(2) of the Income-tax Act had since been deleted, section 43(6) defining "written down value" had been amended and a new section 50 of the Act had been brought on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Budget Speech for 1986-87 and certain amendments made by the Finance Minister in the Lok Sabha on 5th May, 1986. This is clear from the Explanatory Notes to the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986 as contained in Circular No. 469 dated 23-9-1986. In his budget speech for the year 1986-87, the Finance Minister had announced to introduce a system of allowing depreciation in respect of block of assets instead of the present system of depreciation on individual assets. As mentioned by the Economic Administration Reforms Commission, the existing system in this regard requires the calculation of depreciation in respect of each capital asset separately and not in respect of block of assets, which requires elaborat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the identity of the assets entering the block of assets has been lost altogether or all assets have been merged in the block of assets. For instance, if machinery and plant consisting of four different items, as mentioned in the depreciation table, then the block of assets has to be kept in respect of each such item which is still an improvement on the existing system of allowing depreciation in respect of each and every asset. Section 32(1) has a proviso according to which any asset falling within a block of assets acquired by the assessee during the previous year and put to use for the purposes of business or profession for a period of less than 180 days in that previous year qualifies for 50% of the depreciation allowance. This sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion, in spite of the fact that depreciation is allowable in respect of block of assets, it is very much possible to compute the disallowance in suitable cases of a fair proportion of depreciation as visualised by section 38(2) of the Act. The exercise may be time consuming or difficult but it cannot be said that in the changed scheme of things, disallowance under section 38(2) of the Act is not capable of computation. Difficulties apart, the disallowance under section 38(2) is certainly capable of computation. 11. It is not denied that the cars in both the cases under consideration were used for personal purposes of the partners as well. The ld. counsel for the assessee has also not addressed any arguments with regard to the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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