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TMI Blog2015 (12) TMI 1890X X X X Extracts X X X X X X X X Extracts X X X X ..... he block of assets in the earlier years and accordingly, assessee has claimed depreciation on the reduced written down value. Since the assessee could not receive the insurance claim, the amount of insurance claim was added back and accordingly, depreciation was claimed on this amount. CIT(A) has enhanced the disallowance of depreciation on the ground that the said asset has not been put to use for the business purpose. Such a reasoning given by the CIT(A) for the enhancement cannot be sustained, because now it is quite a settled proposition that if the assets have already entered into the block of assets and is forming part of the gross block of assets, then deprecation has to be allowed even if the said assets has not been used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has added an amount of Rs. 23,55,968/- to the block of assets which was stated to be adjustment on account of lower amount of insurance claim received. It was stated by the assessee that it had made a claim of Rs. 23.55 lakhs on account of assets destroyed / lost by theft during the earlier years and by same amount it was reduced from the WDV of the assets in the preceding years. During the previous year, since no claim was settled, therefore, consequential difference has been added in this year. The AO held that the said adjustment should have been made in the preceding year itself and on that depreciation should have been claimed. Since the assessee has made the relevant adjustment in this year, therefore, there is an enhanced claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets and AO has wrongly restricted the disallowance of depreciation to Rs. 53,395/-. The reason for such a enhancement by the Ld. CIT(A) was that if the assets were destroyed or lost in the earlier years then such an asset were not put to use for the business purpose, hence, the entire claim of depreciation of such used plant and machinery has to be disallowed. Accordingly, he disallowed the entire claim of depreciation of Rs. 3,00,385/- on the WDV of Rs. 20,02,573/-. 4. Before us, the Ld. Counsel, Shri Nitesh Joshi, submitted that in the concept of block of assets , the first appellate authority cannot say that such an asset has not been put to use. In fact, when insurance claim was not settled and the assessee has reinstated the WDV, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orming part of the gross block of assets, then deprecation has to be allowed even if the said assets has not been used in the relevant year. This proposition now stands settled by the catena of decisions including that of a jurisdictional High Court in the case of CIT vs G.R. Shipping Ltd., which is based on the decision of earlier Bombay High Court decisions. Otherwise also, if the assessee s claim for insurance has not been settled and amount has been added back, then the depreciation has to be allowed on such an amount. Accordingly, we direct the AO to grant deprecation on Rs. 23.56 lakhs in the previous year relevant to AY 2006-07, that is, when it was added back to the block of assets and secondly, rework the deprecation for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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