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Where the assessee has written off the value of assets in the books of assessee as obsolete, can it still be include the value of said machinery in the block of assets and claim depreciation thereon. In the decision of the Hon’ble Delhi High Court in the case of M/s Bharat Aluminium Co., Ltd., the Court held that in order to be entitled to claim depreciation asset has to be owned by the assessee and it has to be used for the purpose of business or profession, but the expression used for the purpose of business, would apply for block of assets and not any specific building, machinery, plant or furniture in the said block of assets, as the individual assets loose identity after becoming inseparable part of block of assets.
Section 32 of the Act indeed entitles an assessee, who is the owner of a property, to depreciation. As we have already held, the arrangement between the lessor and the assessee was, in effect, an agreement of sale of the property by the lessor to the assessee. The assessee is, therefore, the owner of the property having acquired the same on 29th March, 1982, itself and, in any event, by 30th March, 1982.
According to Explanation 10 and proviso to sub-section (1) of section 43, the subsidy amount shall be deducted in the actual cost of the asset of the assessee. Thus, the contention of the assessee that the subsidy received towards the power generation plant would not be reduced from the actual cost of the assets was not correct.
Supreme Court in the case of CIT v. Mir Mohammed Ali [1964] 53 ITR 165 had considered the meaning of the word ‘machinery’ and pointed out that the word is not a technical term and in the absence of any definition under the Act, ordinary meaning would prevail. Indeed rule 8 of the Income-tax Rules treats aero-engines separately from aircraft, but this cannot be used to interpret the clauses in the Act that what was purchased and installed was machinery and after installation, a wider meaning has to be given to the said term.
The only other issue in this appeal is against the deletion of addition of foreign travel expenses. The facts of this ground are that the assessee incurred foreign travelling expenses to the tune of Rs. 23.50 lakh. The A.O. disallowed a sum of Rs. 3 lakh for the reason that the journeys undertaken were not in connection with the business. The learned CIT(A) deleted the addition by observing that all the places visited by the assessee were in connection with the business. No material has been brought on record to controvert this finding of the learned CIT(A). We, therefore, uphold the impugned order to this extent. This ground is not allowed.
The assessee has not claimed depreciation on goodwill it acquired commercial rights to sell products under the trade name and paid consideration in dispute for acquiring marketing and territorial rights to sell through dealers and distributors i.e. the network created by the seller for sale in India. Under the agreement. It become entitled to use of infrastructure developed by the seller. Rights were acquired since 1.4.1998 and these rights have all along been treated as an asset entitled to depreciation and depreciation was actually allowed in the past.
It is not disputed before us that basement and ground floor were fully owned by the assessee and used for the purpose of business by the assessee. This was accepted by the department in the AY 1998-99 as per details available on record. Once, the assessee is the owner of the asset and put the assessee for the purpose of business during the relevant FY, then the depreciation has to be allowed as per the details.
In the present case also, the assessee has made a claim for depreciation on WDV method but the rate chosen was not a correct one. The assessee asked for adopting the correct rate which is in fact, was only a prayer to rectify a mistake apparent on record. The assessee was not claiming any fresh claim before the assessing authority.
In order to encourage new investment by the assessees engaged in the business of generation or generation and distribution of power, it is proposed to amend this section to provide that an assessee engaged in the business of generation or generation and distribution of power shall also be allowed initial depreciation at the rate of 20% of actual cost of new machinery or plant (other than ships and aircraft) acquired and installed in a previous year.
The assessee was in the business of offset printing and typesetting. It admittedly had converted this land and factory building into stock-in-trade. The Minutes of the assessee-company did the conversion of the land and factory building into stock-in-trade and the business assets of the assessee no more survived as the business asset eligible for depreciation. Once this happens, the business of the assessee would be deemed to have been discontinued.
