Once an asset is part of block, depreciation can not be denied non-use. The concept of “use” of assets has to apply upon block as a whole instead of an individual asset.
In the instant case, the assessee had challenged the order passed by the CIT(A) in inter alia upholding the disallowance of depreciation made by the Assessing Officer (AO) for non use.
ABCAUS Case Law Citation
ABCAUS 3529 (2021) (07) ITAT
Important case law relied referred:
Sony India (P.) Ltd vs CIT [2017] 88 taxmann.com 580
CIT vs Oswal Agro Mills Ltd. 341 ITR 467 (Del.)
The Tribunal noted that the assessee had been claiming the depreciation since the acquisition of the assets and the AO had allowed the depreciation in the earlier assessment years.
Further, the assessee was following the concept of block of assets as defined by section 2(11) of the Income Tax Act, 1961 (the Act) which was also not disputed by the revenue.
The Tribunal opined that, once an asset is part of the block of assets and depreciation is granted on that block, it cannot be denied in its subsequent year on the ground that one of the assets is not used by the assessee in some of the years. The concept “user” of assets has to apply upon block as a whole instead of an individual asset.
The Tribunal rejected the submission of the Revenue that for allowing the depreciation, use of each and every asset is essential even when a particular asset forms part of ‘block of assets’.
The Tribunal also opined that as noted by the Hon’ble High Court Revenue was not put to any loss by adopting such method and allowing depreciation on a particular asset, forming part of the ‘block of assets’ even when that particular asset is not used in the relevant assessment year.
Accordingly, keeping in view the judgments on allowability of depreciation on the “Block of Assets”, the Tribunal held that the assessee cannot be denied the benefit of depreciation claimed u/s 32 of the Act.
In the result, appeal was allowed in his favour of the assessee.
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