Bombay High court Judgement on Depreciation
Court :
Bombay High Court
Brief :
Depreciation allowable even if asset not used at all for entire year
Citation :
CIT vs. G. R. Shipping (Bombay High Court)
Depreciation allowable even if asset not used at all for entire year
CIT vs. G. R. Shipping (Bombay High Court)
Income Tax Appeal No.598 of 2009 The assessee, engaged in shipping business, owned a barge which was included in the block of assets. The barge met with an accident and sank. As efforts to retrieve the
barge were uneconomical, the barge was sold on as-is-where-is basis in May 2001 (AY 2002-03). As the barge was non-operational and not used for business at all in AY 2001-02, the AO denied depreciation. The CIT (A) confirmed the order of the AO. On appeal by the assessee to the Tribunal, the Tribunal took the view that after the insertion of the concept of
“block of assets” by the T. L. (A) Act, 1988 w.e.f 1-4-1988, individual assets had lost their identity once it entered into the block of assets, and only the “block of assets” had to be considered. It was held that the test of “user” had to be applied upon the block of assets as a whole and not on individual assets. Aggrieved by the order of the Tribunal, the Department preferred an appeal to the High Court, the High Court while dismissing the appeal held that the issue was squarely covered in favour of the assessee by its earlier judgements in Whittle Anderson 79 ITR 613 and G. N. Agrawal
217 ITR 250.
CMA Ramesh Krishnan
Published in Income Tax
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