Case Law Details
ACIT Vs M/s Krystal Colloids Pvt. Ltd. (ITAT Mumbai)
Conclusion: Once an asset was part of the block of assets and depreciation was granted on that block, it could not be denied in its subsequent year on the ground that one of the assets was not used by assessee in some of years.
Held: Assessee-company was claiming depreciation on intangible assets acquired on conversion from proprietary concern to corporate entity on 31.03.2005. AO held that assessee was not entitled to depreciation claim on intangible asset in view of provisions of Explanation-3 to section 43(1), which had been created as a safeguard to protect the interest of revenue against corporatization schemes, which were devoid of economic or ocommercial justification and could be regarded as pure tax planning scheme. It was held once an asset was part of the block of assets and depreciation was granted on that block, it could not be denied in its subsequent year on the ground that one of the assets was not used by assessee in some of years. The concept “user” of assets had to apply upon block as a whole instead of an individual asset. The above issue could be raised in the AY 2005-06 when the assets entered into the block not to be agitated in the AYs 2006-07 and 2007-08.
FULL TEXT OF THE ITAT JUDGMENT
The captioned appeals filed by the Revenue are directed against the order of the Commissioner of Income Tax (Appeals)-12, Mumbai [in short ‘CIT(A)’] and arise out of the assessment completed u/s 143(3) r.w.s.147 of the Income Tax Act 1961 (the ‘Act’). As common issues are involved, we are proceeding to dispose them off through a consolidated order for the sake of convenience. Facts being identical, we begin with the assessment year (AY) 2006-07.
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