High Court Of Gujarat
CIT vs. Sonal Gum Industries
Section 32(1)(ii)
Asst. Year 1988-89
D.A. Mehta & S.R. Brahmbhatt, JJ.
IT Ref. No. 19 of 2000
11th February, 2009
Counsel Appeared :
Mrs. Mauna M. Bhatt, for the Applicant : None, for the Respondent
JUDGMENT
D.A. MEHTA, J. :
The Income-tax Appellate Tribunal, Ahmedabad Bench ‘A’ (the Tribunal) has referred the following question under s. 256(2) of the IT Act, 1961 (the Act) at the instance of the applicant-Revenue for asst. yr. 1988-89 :
“Whether the Tribunal is right in law and on facts in confirming the order passed by the Dy. CIT(A) directing the AO to grant depreciation in view of the fact that concept of block of assets had been inserted in the Act, when the assets were not used in the year ?”
Heard the learned advocate for the applicant-Revenue. She has reiterated the stand taken by the AO in the assessment order to assail the impugned order dt. 16th May, 1997 made by the Tribunal. Though served none appears for the respondent-assessee.
As can be seen from the concurrent findings recorded, both by CIT(A) and the Tribunal, the assessee is an old assessee who has been carrying on the same business with the same assets on which depreciation had been allowed in past. The record reveals that the reason advanced by the AO for rejecting the depreciation is that entire factory building and all the items included in the block of plant and machinery were not actually put to use during the year under consideration. Dy. CIT(A) has found that since asst. yr. 1988-89 depreciation is allowable on all assets falling within a block of assets as mentioned in Appendix I of the IT Rules, 1962. It has further been held that in light of the amended provisions with effect from asst. yr. 1988-89 individual items included in the block are not to be considered separately for the purposes of granting depreciation. This view has been confirmed by the Tribunal.
It is not possible to find any legal infirmity in the aforesaid view adopted by the first appellate authority and confirmed by the Tribunal. In fact the assessment order itself reveals that it is not the case of the AO that the assets were not put to use at all. Once the factory building is put to use it is not possible to restrict the depreciation on the said building by stating that only a portion thereof has been put to use. Similarly in relation to the block of assets, it is not possible to segregate items falling within the block for the purposes of granting depreciation or restricting the claim thereof. Once it is found that the assets are used for business, it is not necessary that all the items falling within plant and machinery have to be simultaneously used for being entitled to depreciation.
In the result, in absence of any error committed by the Tribunal, the question, referred for the opinion of this Court, is answered in the affirmative i.e., in favour of the assessee and against the Revenue. The reference stands disposed of accordingly with no order as to costs.
[Citation : 322 ITR 542]
