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TMI Blog2015 (10) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-08, 2008-09 and 2009-10 respectively as stated above. Therefore, addition made by the AO is deleted and the ground of appeal of appellant company is allowed on this issue Depreciation on the closed units for last 8 years - Held that:- If some of the units of the assessee are closed, other units are certainly working and the depreciation is to be allowed on the entire block of assets of the plant & machinery and not only individual plant and machinery of each unit of the assessee - In the present case although the production has not been carried out in the years under consideration but the assets are kept as a stand by for the whole year. Moreover, although the production is suspended but the other activities of the units are being carried out. In such circumstances, find that the AO was not justified in disallowing the depreciation on the assets of these units. The additions made by him are, therefore, directed to be deleted - Decided in favour of assessee. - I.T.A .Nos.-5708 & 5709/Del/2013 - - - Dated:- 12-8-2015 - SMT DIVA SINGH, JUDICIAL MEMBER AND SH.INTURI RAMA RAO, ACCOUNTANT MEMBER For The Appellant : Smt. Parwinder Kaur, Sr. DR For The Respondent : None ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 is against the disallowance of depreciation on plant and machinery in all the three years as under:- Assessment Year Amount 2007-08 Rs.53,57,552/- 2008-09 Rs.45,86,536/- 2009-10 Rs.39,29,428/- 4. We have heard the submissions of both the sides and perused relevant material placed before us. We find that learned CIT(A) allowed the relief to the assessee following the order of his predecessor for AY 2003-04 to 2006-07 wherein the CIT(A) has held as under:- In the present case also, although the production has not been carried out in the years under consideration but the assets are kept as a stand by for the whole year. Moreover, although the production is suspended but the other activities of the units are being carried out. In such circumstances, I find that the AO was not justified in disallowing the depreciation on the assets of these units. The additions made by him are, therefore, directed to be deleted. 5. It was brought to our knowledge that in AY 2003-04 to 2006-07, the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above factual background where the record shows that the AO in the first round by his order u/s 143(3) originally allowed the claim of the assessee, however in his order u/s 143(3)/147 dated 29.12.2011 following the view taken in 2007-08 assessment year the assessment was re-opened. The reasoning on identical facts in the above-quoted order of the Co-ordinate Bench which includes 2007-08 assessment year shows has not been upheld. In the afore-mentioned facts as they stand we find no infirmity with the following finding of the CIT(A):- 5.3. So far as the 3rd ground of appeal is concerned, an amount of ₹ 1,86,08,800/- incurred by the appellant on account quarry development expenses was disallowed by the AO treating the same as capital expenditure. However, the appellant has submitted that quarry development expenditure is incurred on removal of overburden' at the site of limestone deposit which are found by the survey of the site and at different places by the expert Geologists and once sites are located, soil, stone etc are removed and excavation is done, in order to reach the deposit of cement grade limestone. The expenditure pertaining to removal of overburden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasoning taken in ITA No.- 5708/Del/2013 Ground No.-2 is dismissed. 10. The following issue has been agitated by the Revenue in Ground no.-1:- 1. Whether the Ld.CIT(A) has erred in law and on facts in allowing depreciation of ₹ 35,53,318/- on the closed units for last 8 years, ignoring that the condition of Section 32(1) are not fulfilled. 11. The relevant facts of the same are found discussed in para 3 of the assessment order at pages 1 to 4 of the same wherein the AO disallowed the assessee s claim of depreciation to the extent of ₹ 35,53,318/- in view of the fact that out of the 10 plants, only 3 plants were found to be in operation for the last 8 years as per para 14 page 51of the Annual Report filed by the assessee company which brought out that production in the following units remained suspended:- 1. Mandhar (Chattisgarh) 2. Charkhi Dadri (Haryana) 3. Akaltara (Chattisgarh) 4. Nayagaon Nayagaon Expn. (Madhya Pradesh) 5. Kurkunta (Karnataka) 6. Adilabad (Andhra Pradesh) 7. Delhi Cement Grinding Unit 8. Bhatinda Grinding Unit (Not commissioned) 12. The record shows that the assessee canvassed bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt quarry development expenses was disallowed by the AO treating the same as capital expenditure. However, the appellant has submitted that quarry development expenditure is incurred on removal of overburden' at the site of limestone deposit which are found by the survey of the site and at different places by the expert Geologists and once sites are located, soil, stone etc are removed and excavation is done, in order to reach the deposit of cement grade limestone. The expenditure pertaining to removal of overburden etc at the mines is held to be type of revenue expenditure by my predecessors CIT(A) for the AYs 2007-08 and 08-09 respectively as well as by my own decision in Appeal No 91/11-12 for A Y 2009-10 dated 29.07.2013 and in the instant case, details of expenditure clearly shows that the expenses have not resulted in creation of any assets nor have they resulted in any enduring benefit to the appellant. The AO has not brought any facts on record to show as to which expenses debited under the head of 'quarry development' were capital in nature. These expenses are in the nature of salaries, wages, fuel, power, rent, and other expenses for removal of overburden et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment i.e., COD directed the CBDT to accept the above order. When the above order of learned CIT(A) is accepted by the Government for AY 2003-04 to 2006-07, there would be no justification to interfere with the order of learned CIT(A) for AY 2007-08 to 2009-10 wherein he has only followed the order of his predecessor for AY 2003-04 to 2006-07. It was also pointed out by the learned counsel that now the issue is squarely covered by the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Bharat Alumunium Co.Ltd. 187 Taxmann 111, wherein their Lordships held as under:- though as per section 32(1), in order to be entitled to claim depreciation, asset is to be owned by assessees and it is also to be used for purpose of business or profession, but expression used for the purpose of business , when applied to block of assets, would mean use of block of assets and not any specific building, machinery, plant or furniture in said block of assets as individual assets lose their identity after becoming inseparable part of block of assets. 6. It was pointed out by the learned counsel that even if some of the units of the assessee are closed, other units are ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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