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TMI Blog2012 (4) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... of assets and the block continues to exist, provisions of S.50 do not come into play and depreciation has to be allowed on that portion of the WDV of the assets which have been scrapped, after reducing the scrap value from the block of assets - 'block assets' depreciation on ponds and plant & machinery which are forming part of the block of assets has to be allowed as deduction – in favour of assessee. - IT Appeal Nos. 287 to 289 (Hyd.) of 2007 and 1512 (Hyd.) of 2008 - - - Dated:- 30-3-2012 - Chandra Poojari And Asha Vijayaraghavan , JJ. ORDER Asha Vijayaraghavan, Judicial Member These appeals preferred by the Revenue are directed against the different orders passed by the CIT(A)-II, Hyderabad dated 20.11.2006 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above mentioned assessment years. While disallowing the depreciation, the Assessing Officer had observed that for claiming depreciation, the assessee should not only own the assets, but also the assets should be put to use in the relevant assessment year. 4. Similarly, for the assessment year 2003-04 and 2004-05, on the grounds the business of prawn and shrimp farming had been apparently discontinued, the Assessing Officer held that the assets were not put to use and the assessee was not entitled to depreciation on ponds and plant machinery. 5. Aggrieved, the assessee preferred appeal before the CIT(A). 6. In the ground of appeal, the assessee has stated that it had claimed depreciation on ponds and plant m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are identical and hence allowed the assessee's appeal for all the four years following the decision of Tribunal, Hyderabad in the case of Natco Exports v. DCIT and the CIT(A) directed the Assessing Officer to allow depreciation on ponds and plant and machinery forming part of block of assets and as per the provisions of Income Tax Act and Rules. For the assessment year 2000-02 and 2002-03 the CIT(A) has not given any finding with respect to reopening u/s 147 and has decided the issue on merits. The Assessee has not come on appeal against the reopening. With respect to assessment year 2003-04 2004-05 the assessment has been completed only under section 143(3) of the IT Act. 10. Aggrieved, the Revenue is in appeal before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) (Bom.) South Eastern Coalfields Ltd. v. JCIT (85 ITD 608) Inductothem India Ltd. v. Dy. CIT (73 ITD 329 (Ahd.) Natco Exports v. Dy. CIT (86 ITD 445) (Hyd.) Asst. CIT v. SRF Ltd. (21 SOT 122) Goetze (India) Dy. CIT 25 SOT 171 (Delhi) Swati Synthetics Ltd. v. ITO (2010-TIOL-78-ITAT-MUM) 13. The learned DR on the other hand relied upon the order CIT(A) and submitted that words 'intensity of use' etc. mentioned in the Circular No.469 means there must be some use and that does not mean that assets not in use at all are eligible for depreciation., The DR further submitted that section 43(6) provides methodology of calculation of depreciation whereas the basic requirement of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation - section 32 of IT Act - depreciation. 15. We heard both the parties and perused the materials available on record. The Tribunal Special Bench, Chandigarh in the case of Gulati Saree v. ACIT 71 ITD 73 held that. Even after introduction of the concept of block of assets, the provisions of section 38(2) would continue to apply and the AO is empowered to restrict depreciation to a fair proportionate part thereof, having regard to the use of the building, machinery, plant or furniture for the purposes of business or profession. In that case of the assessee, WDV of vehicles was separately worked out and details of vehicles were also given. Thus, it was held that the provisions of section 38(2) had been rightl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with section 43(6) of the Act by the increasing opening WDV by the actual cost of any asset falling within that block, acquired during the previous year. Once an asset is included in the block of assets it remains in block for its entire life. There are following three situations provided in the statutes when an individual asset of the block goes out of block: 1. An asset is sold or discarded or demolished or destroyed during that previous years as provided in section 43(6)(c)(i)(b) and 32(1)(iii) of the Act. 2. An asset not exclusively used for the purposes of the business r profession but used other than business purposes as provided in section 38(2) of the Act. 3. Where any block of assets does not cease to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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