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2022 (6) TMI 733 - ITAT AHMEDABADDepreciation on plant and machinery forming part of block of assets - Disallowance on the ground that assets were not put to use in the present year - HELD THAT:- The Notes forming part of Balance Sheet mentions specifically states "The company is in transition period and has not finished restructuring of power plant at Panoli and hence could not made sales during the year by generation and supply of power". So this is not a case, where the unit had not been in operation for several years or has not been generating any revenue at all for many years altogether. Though, subsequently the unit closed down eventually (in 2016), but so far as the present assessment year is concerned, there is no observation either in the assessment order or CIT(A) order that relocation was purpose of closing down the unit altogether. Though, the unit could not generate revenue during the year on account of relocation of plant to Panoli, but the fact that the assessee did not earn revenue or did not put the assets to use on account of fact that it was in process of shifting of plant to Panoli, would not, in our view, disentitle the assessee to claim depreciation on plant and machinery forming part of block of assets. Thus, in absence of any finding to the effect that the purpose of shifting was to close down the unit altogether, in our view, it respectfully following the decision of Gujarat High Court in the case of Nirma Credit & Capital Ltd. [2017 (2) TMI 278 - GUJARAT HIGH COURT] and PCIT v. Babul Products (P.) Ltd [2018 (7) TMI 2095 - GUJARAT HIGH COURT]. in our view, Ld. CIT(A) erred in disallowing the claim of the assessee in respect of depreciation on plant and machinery forming part of block of assets on the ground that assets were not put to use in the present year. Assessee appeal allowed. Set-off of unabsorbed brought forward depreciation and business loss in absence of business activity during the year - HELD THAT:- As in the case before us there is no specific finding either in the assessment order or CIT(A) order that the assessee had abandoned/closed his business during the year. Though during the year, admittedly the assessee could not generate revenue on account of relocation of plant to Panoli, but that fact by itself, would not, in our view, ipso facto lead to the conclusion that the business of the assessee has ceased altogether. As relying on the case of Dwarka Cements [2003 (8) TMI 166 - ITAT BOMBAY-J] which has held that merely because there was no manufacturing activity in relevant previous year, that could not be reason enough to come to conclusion that unabsorbed appreciation of assessee in earlier years was not entitled to be set off against its business income in current year, we are of the considered view that assessee should be allowed set-off of unabsorbed brought forward depreciation and business loss during the year. Appeal of assessee allowed.
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