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TMI Blog2014 (1) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions” – Decided against Revenue. Deletion of Disallowance on account of depreciation on plant and machinery of non-functional units – Held that:- Following Commissioner of Income Tax Versus Oswal Agro Mills Ltd. & Oswal Chemicals and Fertilizers Ltd. [2010 (12) TMI 947 - Delhi High Court] - As per amended s. 32, deduction is to be allowed in the case of any block of assets, such percentage on the WDV thereof as may be prescribed as per Circular No. 469, dt. 23rd Sept., 1986 - the depreciation was allowable on the basis of concept of block of assets - The Revenue is 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 - Whenever such an asset is sold, it would result in short term capital gain which would be exigible to tax and for this reason, we say that there is no loss to Revenue either – Decided against Revenue. - ITA Nos.3540 & 3541/Del/2012 - - - Dated:- 26-4-2013 - A D Jain and Sham ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the judgement of the Hon ble Apex Court in Lakshmi Machine Works (Supra) is squarely applicable for computation of total turnover u/s. 10B(4). In view of the facts, I hold that the appellant has rightly calculated the amount of deduction u/s. 10B without considering the Excise Duty on indigenous sales as part of the total turnover for the purpose of computing eligible profits. For this reason, there was no mistake apparent from record in assessment order u/s. 143(3) dated 27.1.2008 and, therefore, the action of the Assessing Officer to withdraw deduction u/s. 10B u/s. 154 is set aside and the disallowance / addition of Rs. 41,08,977/- is hereby deleted. 6. Against the above Order the Revenue is in appeal before us. 7. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that it is the submission of the assessee that both section 80HHC 10B deal with computation of deduction of total income on account of export profits. The manner of computation of export profit for the purpose of section 10B is given in section 10B(4) for the exports of 100% export oriented units while it is given in section 80HHC(3)(a) for export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the assessee situated at Gulaothi were not functional and the same were not run in preceding year as well as in succeeding year. The Assessing Officer disallowed the depreciation of assets of the said two units amounting to Rs. 1,98,31,337/- holing that as the plant and machinery was not actually used for the purpose of business during the year, the depreciation thereon cannot be allowed. He further held that keeping the machinery ready for use is not sufficient to allow depreciation on plant and machinery. 10. Before the Ld. Commissioner of Income Tax (A) assessee submitted firstly that keeping the plant and machinery in ready to use condition is equivalent to use and for that reason the depreciation is allowable. Secondly, that the plant and machinery being part of block of assets, the depreciation is allowable with reference to the block without segregating a particular asset individually. Ld. Commissioner of Income Tax (A) held as under:- I have considered the facts of the case, findings of the Assessing Officer, submissions of the appellant and the cases relied upon by the Assessing Officer as well as appellant. The facts of Oswal Agro Mills Ltd s case are more o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets cannot be accepted. Therefore, the claim of depreciation was allowable on the basis of the concept of block of assets . In the appellant s case, even if the closure of the two units is accepted as a permanent closure rejecting appellant s submission to the effect of temporary non-user, in that case too the depreciation cannot be disallowed as the block of assets was in use during the year and the finding of the Assessing Officer that the plant and machinery is separate block of assets not put to use cannot be sustained. The plant and machinery installed at the said two units also form part of block of assets consisting of all the units of the appellant. In view of the above, I respectfully following the judgements of Hon ble Delhi High court in the case of Oswal Agro Mills Ltd. and M/s Bharat Aluminum Co. Ltd. reported as respectively delete the disallowance of depreciation of Rs. 1,98,31,337/-. 11. Against the above order the Revenue is in appeal before us. 12. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that the first case of the assessee in this case is that plant and machinery of these two units ..... X X X X Extracts X X X X X X X X Extracts X X X X
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