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Issues involved: Appeal against disallowance of depreciation on a barge named Jay - II for assessment year 2001-02.
Summary: Issue 1: Disallowance of depreciation on the barge Jay - II - The Assessing Officer disallowed depreciation on the barge as it was not used for business purposes after an accident and subsequent sale. - Assessee argued that depreciation should be allowed on the entire block of assets as per section 43(6) of the Act. - Assessee cited various judgments supporting the allowance of depreciation on assets forming part of a block. - CIT(A) held that user of the asset was a condition precedent for depreciation allowance. - Tribunal noted the change in depreciation system post the Taxation Law (Amendment) Act, 1986, focusing on block of assets for depreciation calculation. - Tribunal referred to the definition of "block of assets" in section 2(11) and the calculation of written down value under section 43(6). - Tribunal emphasized that post the amendment, depreciation is allowed on the entire block of assets, not individual assets, based on the principle of user of the block as a whole. - Tribunal distinguished a previous High Court decision where the asset was not put to use, unlike in the present case. - Relying on previous tribunal decisions, the Tribunal allowed the appeal, directing the Assessing Officer to allow depreciation on the barge. This judgment deals with the disallowance of depreciation on a barge named Jay - II for the assessment year 2001-02. The Assessing Officer had disallowed the depreciation on the barge due to it not being used for business purposes after an accident and subsequent sale. The Assessee contended that depreciation should be allowed on the entire block of assets as per section 43(6) of the Act and cited various judgments supporting this position. The CIT(A) held that user of the asset was a prerequisite for depreciation allowance. However, the Tribunal, considering the post-amendment depreciation system focusing on block of assets, allowed the appeal by emphasizing the principle of user of the block as a whole. The Tribunal distinguished a previous High Court decision and directed the Assessing Officer to allow depreciation on the barge.
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