Case Law Details
ITO Vs Ventura Textiles Ltd. (ITAT Mumbai)
Conclusion: Depreciation could not be disallowed due to assets were not in use as assessee had not close down the business but it was not going on because of illegal strike by the workers and therefore manufacturing had been stopped temporarily.
Held: AO noticed during the course of assessment proceedings that assessee had claimed depreciation under section 32 in its computation of income. AO noted that since there was no activity carried out during the year on account of lock out by workers, the assets of the assessee company were not actually put to use and hence he disallowed the claim of assessee. It was held that the assessee had not close down the business but it was not going on because of illegal strike by the workers and therefore manufacturing had been stopped temporarily. It was not the case that the assets were not in use or the intention of the assessee was not to use the same. Another factor was that once, assets was forming part of block of assets and in earlier years depreciation was allowed and due to certain risks in this year, assessee was unable to carry out the manufacturing activities, depreciation could not be disallowed.
FULL TEXT OF THE ITAT JUDGEMENT
These three appeals by the Revenue are arising out of the different orders of Commissioner of Income Tax (Appeals)-18, Mumbai in Appeal No. CIT(A)-18/IT-54/ITO-11(3)(3)/16-17, CIT(A)-18/IT-7/Addl.cit-8(3)/15-16, CIT(A)-18/IT-118/ACIT-11(3)(2)/15-16 dated 29.05.2017, 04.01.2017, 16.12.2016. The Assessments were framed by the Income Tax Officer, Ward 11(3)(3), Addl. CIT-8(3), Mumbai (in short ACIT/ITO/ AO) for AYs 2013-14, 2011-12, 2012-13 vide dated 28.03.2016, 27.02.2014, 27.02.2015 under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
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