Allowability of depreciation on Assets forming part of Block of Assets if the same was not used during the year

Allowability of depreciation on Assets forming part of Block of Assets if the same was not used during the year

CIT Vs Oswal Agro Mills Ltd (Delhi High Court)- ITA No. 161 of 2006 and others dated 24 December, 2010)

Facts :-

• The Assessee had a unit at Bhopal which was not functioning since the assessment year 1997-98. For the assessment year 1998-99, the assessee claimed depreciation in respect of closed unit at Bhopal on the ground that depreciation would be allowable since the assets of Bhopal unit formed a part of block of assets and were ready for passive use, which was as good as real use.

• The AO, however rejected the assessee’s contention and disallowed depreciation on Bhopal unit on the ground that unit at Bhopal was closed throughout the year and had not been put to use.

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