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TMI Blog2015 (2) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal or, for that matter before the first appellate authority, in the matter. Further, no pleading in its respect was also made during the course of the hearing. The decision in the case of Maxopp Investment Ltd. (2011 (11) TMI 267 - Delhi High Court ) was neither cited before us nor is a copy thereof on record. In any case, even as observed at the time of hearing, the matter has been set aside back to the file of the first appellate authority to adjudicate the assessee’s case afresh, i.e., qua the said disallowance, allowing the assessee opportunity to present its case on both the factual and legal aspects. We are, thus, unable to see as to how any prejudice stands caused by the said decision by the tribunal. - Decided against assessee. Disallowance of depreciation - asset under reference is not a building, but repair and renovation expenditure in respect of a leased building, which stands capitalized under the block of assets ‘Furniture, fixture and electrical fittings’ - Held that:- Statement of the depreciation allowable under the Act was made by the AR during hearing, specifically adverting to the opening WDV of the block of assets ‘Furniture, fixture and electrical fitti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A No. 414/Mum/2014 (at the instance of the Tribunal) 2. A rectification was moved at the instance of the Tribunal itself vide order sheet entry dated 01.10.2014, the copy of which, stating the reason/s for the same, was communicated to the parties along with the notice u/s. 254(2). The background facts are that the assessee had claimed deprecation on a leased building, lease in respect of which had expired, so that the said premises stood vacated by it. The disallowance of the said claim (Rs.1.92 lacs) for the current year was confirmed by the tribunal with reference to the decision by the hon ble jurisdictional high court in Dineshkumar Gulabchand Agarwal vs. CIT [2004] 267 ITR 768 (Bom) and by the tribunal in Asst. CIT vs. Rishiroop Polymers (P.) Ltd. [2006] 102 ITD 129 (Mum). The assessee s alternate claim for allowance of terminal deprecation on the entire amount of written down value (WDV) of the relevant asset, written off in accounts, u/s.32(1)(iii); the said asset having been discarded, was also considered inadmissible by the tribunal on the ground that the asset had not been brought to use in any earlier year. However, it subsequently came to its notice that the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim being not admissible there-under in the facts of the case. The said provision however is applicable only in respect of assets of an undertaking engaged in the generation and distribution of power, depreciation on which is exigible u/s.32(1)(i). The order by the tribunal thus suffers from a mistake apparent from record; the assessee being admittedly a company in the manufacturing of garments and bicycles and not engaged in the production and distribution of power. The discovery of the said mistake, noticed suo motu, would necessitate amending the order with a view to rectifying the said mistake apparent from the record. However, we only consider it proper to, before giving effect thereto, put the parties to notice of the proposed amendment, allowing an opportunity for being heard in the matter, i.e., as to the non-application of the provision of section 32(1)(iii) in the instant case. Accordingly, the date of hearing for the purpose is fixed for 14.11.2014. Inform parties. Issue notice u/s. 254(2), enclosing along with a copy of this order sheet entry. 3.2 The reason for the proposed rectification is apparent from a reading of the order sheet as well as the facts as narra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to present its case on both the factual and legal aspects. We are, thus, unable to see as to how any prejudice stands caused by the said decision by the tribunal. The relevant grounds are, accordingly, dismissed. 7. Vide its grounds 11 to 20, the assessee seeks to bring to the notice of the tribunal that the asset under reference is not a building, but repair and renovation expenditure in respect of a leased building, which stands capitalized under the block of assets Furniture, fixture and electrical fittings . Accordingly, the basis on which the disallowance has been confirmed by the tribunal, i.e., the vacation of the premises, and, accordingly, its nonuser, would not hold. Reference in this matter stands made to the statement of depreciation at PB pg. 37, attention to which, it is claimed, was drawn by the assessee during the hearing of the assessee s appeal. 8. We have heard the parties, and perused the material on record. We find that the statement of the depreciation allowable under the Act (Annexure VIII to Form 3CD, at PB pg. 37) was made by the ld. Authorized Representative (AR) during hearing, specifically adverting to the opening WDV of the block of assets Furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier year, we find the assessee s claim as valid. Section 43(6)(c), defining WDV of a block of assets, clearly stipulates a reduction from the opening WDV for the moneys payable in respect of any asset falling within a block of assets, which is sold or destroyed or demolished or discarded during the relevant previous year. Furniture and fittings, to the extent it is the part of the leasehold building, could not be removed by the assessee on its vacation. In any case, the decision to continue to use the same or discard an asset would only be within the exclusive domain of the assessee as its owner or user. Further, to the extent no sum has been realized on the discard of the asset, moneys payable u/s. 43(6)(c)(i)(B) would be nil. Further on, even where the amount under reference (or a part thereof), as presumed by the tribunal while passing its earlier order dated 30/9/2014, is a part of the block of assets building , or liable to be so considered, deprecation on that part of the WDV of the relevant block of assets can, in our view; the qualifying conditions of the relevant provision (section 43(6)(c)) being satisfied, be claimed. True, the deeming of ownership under Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy, meaning to suggest or advocate that the condition of user is no longer a primary condition for the grant of depreciation, as clarified by the tribunal in Rishiroop Polymers (P.) Ltd. (supra) with reference to the decision in the case of CIT vs. Oriental Coal Co. Ltd. [1994] 206 ITR 682 (Cal), rendered following the decision in the case of Liquidators of Pursa Limited vs. CIT [1954] 25 ITR 265 (SC). Or, that the user does not imply an active user, but could also include a ready to use state, as clarified to be not so by the hon ble jurisdictional high court in Dineshkumar Gulabchand Agarwal (supra). So however, the assets which are subject to any of the conditions provided in section 43(6)(c)(i)(B) are no longer in the assessee s domain, while the value realized in their respect stands to be adjusted, so that the question or issue boils down to one of value adjustment. It also needs to be noted that the changed method of allowance of depreciation, i.e., after introduction of the concept of block of assets , does away with the allowance of terminal depreciation, which is since applicable only to the assets falling u/s. 32(1)(i), i.e., where depreciation is charged on individu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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