ITO 3(3)(3), MUMBAI v. RAMGOPAL POLYTEX LTD, MUMBAI

ITA 1356/MUM/2009 | 2000-2001
Pronouncement Date: 19-03-2010 | Result: Allowed

Appeal Details

RSA Number 135619914 RSA 2009
Assessee PAN AAACR5754K
Bench Mumbai
Appeal Number ITA 1356/MUM/2009
Duration Of Justice 1 year(s) 22 day(s)
Appellant ITO 3(3)(3), MUMBAI
Respondent RAMGOPAL POLYTEX LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-03-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 19-03-2010
Date Of Final Hearing 09-03-2010
Next Hearing Date 09-03-2010
Assessment Year 2000-2001
Appeal Filed On 27-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH MUMBAI BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NOS. 1356 & 1357/MUM/2009 (ASSESSMENT YEARS: 2000-01 & 2001-02) INCOME TAX OFFICER 3(3)(3) M/S. RAMGOPAL POLYTEX LT D. ROOM NO. 602 6TH FLOOR 401 ARCADIA 195 NCPA MARG AAYAKAR BHAVAN M.K. ROAD VS. NARIMAN POINT MUMBAI 400021 MUMBAI 400020 PAN - AAACR 5754 K APPELLANT RESPONDENT APPELLANT BY: SHRI T.T. JACOB RESPONDENT BY: SHRI J.P. BAIRAGRA O R D E R PER B. RAMAKOTAIAH A.M. THESE APPEALS ARE BY THE REVENUE AGAINST THE ORDERS OF THE CIT(A) XXXII MUMBAI DATED 02.09.2008 FOR ASSESSMENT YEARS 2000-01 & 2001-2. IN BOTH THE YEARS THERE IS ONE COMMON ISSUE AS GROU ND NO. 1 FOR A.Y. 2000- 01 AND AS GROUND NO. 2 FOR A.Y. 2001-02 WITH REFER ENCE TO ALLOWING OF DEPRECIATION ON FACTORY BUILDING AND PLANT & MACHIN ERY THOUGH THE SAME WERE NOT PUT TO USE DURING THE RELEVANT PREVIOUS YE AR. THE AMOUNT INVOLVED IN A.Y. 2000-01 IS RS.85 60 957/- AND FOR A.Y. 2001 -02 IS RS.48 64 867/- THE GROUND NO.1 IN AY 2001-02 IS WITH REFERENCE TO RE-OPENING OF ASSESSMENT CANCELLED BY CIT(A). 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD DIS CONTINUED MANUFACTURING ACTIVITIES SINCE DECEMBER 1998 DUE TO ADVERSE MARKET CONDITIONS AND CONTINUOUS LOSS BEING INCURRED. HOWE VER THE ASSESSEE CONTINUED WITH TRADING ACTIVITY. IN ASSESSMENT YEAR 1999-2000 EVEN THOUGH THE ASSESSEE HAS STOPPED MANUFACTURING ACTIVITY IN DECEMBER 1998 DEPRECIATION ON PLANT & MACHINERY WAS ALLOWED. THE ASSESSEE CLAIMED DEPRECIATION IN A.Y. 2000-01 AND 2001-02 AS WELL. F OR THE YEAR 2001-02 THE A.O. HAS ORIGINALLY COMPLETED THE ASSESSMENT UNDER SECTION 143(3) ON 15.03.2004. SUBSEQUENTLY THE CASE WAS REOPENED UNDE R SECTION 147 AFTER OBTAINING THE PERMISSION FROM THE CIT MUMBAI VIDE NOTICE ISSUED UNDER ITA NO. 1356 & 1357/MUM/2009 M/S. RAMGOPAL POLYTEX LTD. 2 SECTION 148 DATED 27.03.2007. IT WAS ASSESSEES CON TENTION THAT REOPENING OF ASSESSMENT FOR A.Y. 2001-02 AFTER 4 YEARS WHEN THE ASSESSMENT WAS COMPLETED ORIGINALLY UNDER SECTION 143(3) WAS BAD I N LAW. THE CIT(A) HAS EXAMINED THE FACTS AND FOLLOWING THE DECISION IN TH E CASE OF ICICI BANK LTD. VS. K.J. RAO & ANR 268 ITR 203 (BOM) DECIDED THE IS SUE IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY HELD THAT REOPENING IS BAD IN LAW. HE HOWEVER ALSO DECIDED THE ISSUE ON MERITS IN BOTH THE YEARS AGAINST THE REVENUE AND ACCORDINGLY THE REVENUE IS IN APPEAL AGGRIEVED ON : (A) CANCELLATION OF REOPENING FOR A.Y. 2001-02 AND (B) ALLOWANCE OF DE PRECIATION WHEN ASSETS ARE NOT PUT TO USE DURING THE PREVIOUS YEAR. REOPENING OF ASSESSMENT UNDER SECTION 147 FOR A.Y. 2001-02 3. THIS ISSUE IS CONTESTED AS GROUND NO. 1 IN ITA NO. 1357/MUM/2009. AS BRIEFLY STATED ABOVE THE ASSESSMENT UNDER SECTIO N 143(3) WAS ORIGINALLY COMPLETED ON 15 TH MARCH 2004 AND AS SEEN FROM THE ORDER THE A.O. HAS ENQUIRED ABOUT THE DEPRECIATION CLAIM AND DISALLOWE D PART OF DEPRECIATION ON SOME ASSETS. SINCE NO NEW INFORMATION HAS COME O N RECORD THE REOPENING OF ASSESSMENT UNDER SECTION 147 BY ISSUING NOTICE U NDER SECTION 148 ON 27.03.2007 AFTER 4 YEARS FROM THE END OF THE RELEV ANT ASSESSMENT YEAR CANNOT BE UPHELD AS THE PROVISO TO SECTION 147 IS A PPLICABLE. THE CIT(A) HAS CONSIDERED ISSUE VIDE PARA 2.2 TO 2.4 WHICH IS AS UNDER: - 2.2 BEFORE ME IT WAS SUBMITTED THAT THE ASSESSMEN T IN THIS CASE HAS BEEN REOPENED AFTER EXPIRY OF FOUR YEARS FROM THE E ND OF THE RELEVANT ASSESSMENT YEAR AND AS PER THE PROVISO TO SECTION 1 47 IF THE ASSESSMENT IS COMPLETED U/S. 143(3) THE SAME CANNO T BE REOPENED AFTER 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEA R UNLESS INCOME ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS. TH E APPELLANT HAS DISCLOSED ALL THE MATERIAL FACTS DURING THE COURSE OF THE ASSESSMENT. FOR THE SAME THE APPELLANT HAS RELIED ON THE DECISION IN THE CASE OF ICICI BANK LTD. V. K.J. RAO & ANR. 268 ITR 203 (BOM) THAT THE ISSUE WAS SIMILAR TO THE FACTS OF THE ASSESSEE AS IN THAT CAS E THE ASSESSEE HAD CLAIMED 10% DEPRECIATION ON PLANT AND MACHINERY WHI CH WAS ALLOWED WHILE PASSING THE ORDER U/S. 143(3). SUBSEQUENTLY THE AO RE-OPENED THE ASSESSMENT ON THE GROUND THAT THE ASSESSEE IS ENTIT LED TO DEPRECIATION @20%. THE HON. JURISDICTIONAL HIGH COURT HAD CANCEL LED THE RE-OPENING OF THE ASSESSMENT IN VIEW OF THE PROVISO TO SECTION 147 OF THE I.T. ACT. FURTHER THE APPELLANT HAS RELIED ON THE DECISION O F THE SUPREME COURT IN THE CASE OF ACIT V. RAJESH JHAVERI STOCK BROKER PVT. LTD. 291 ITR 500 WHEREIN THE SUPREME COURT HELD THAT AF TER THE AMENDMENT IN SEC. 147 W.E.F. 1-4-1989 TWO CONDITIONS MUST BE SATISFIED IF THE CASE ITA NO. 1356 & 1357/MUM/2009 M/S. RAMGOPAL POLYTEX LTD. 3 FALLS WITHIN THE AMBIT OF THE PROVISO TO SECTION 14 7 IF EARLIER ASSESSMENT WAS U/S. 143(3) (I) INCOME HAS ESCAPED ASSESSMENT; AND (II) INCOME HAS ESCAPED ASSESSMENT BY REASON OF EITHER OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. 2.3 THE APPELLANT ARGUED THT THE DECISION RELIED BY THE AO IN THE CASE OF AMEENS PATHOLOGICAL LABORATORIES V. JCIT 252 ITR 673 IS DISTINGUISHABLE AS IN THAT CASE THE ASSESSEE WAS F OLLOWING MERCANTILE SYSTEM OF ACCOUNTING FOR ALL THE ITEMS OF EXPENDITU RE AND INCOME EXCEPT COLLECTIONS WHICH WERE DONE ON CASH BASIS. THE ASSE SSEE HAD CLAIMED EXPENSES IN RESPECT OF THE PURCHASES. HOWEVER AN I TEM OF RS.6 70 758/- REPRESENTED UNPAID PURCHASES AND THEREBY THE COURT HELD THAT THE ASSESSEE HAS NOT DISCLOSED FULLY AND TRULY ALL THE MATERIAL FACTS AT THE TIME OF ASSESSMENT. 2.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE BY THE APPELLANT. IN THE PRESENT CASE THE AO HAS RE-OPENED THE ASSES SMENT AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR ON ACCOUNT OF THE REASON THAT DEPRECIATION IS NOT ALLOWABLE ON PL ANT AND MACHINERY. THEREFORE THE FACTS ARE SIMILAR TO THE BOMBAY HIGH COURT DECISION IN THE CASE OF ICICI BANK LTD. (SUPRA) WHERE ALSO DEPRECIA TION WAS ALLOWED AT HIGHER FIGURE THOUGH IN THE AOS OPINION THE DEPREC IATION WAS ALLOWABLE AT A LOWER FIGURE. IT IS NOT THAT ANY NEW FACTS WER E DISCOVERED BY THE AO REGARDING ESCAPEMENT OF INCOME WHICH WERE NOT AVAIL ABLE AT THE TIME OF ORIGINAL ASSESSMENT. I AM THEREFORE OF THE OPINION THAT REOPENING OF CASE UNDER SECTION 147 OF INCOME TAX ACT 1961 IS NOT CO RRECT. THE REOPENING IS THEREFORE QUASHED AND THE ASSESSMENT IS ANNULLED . 4. AFTER CONSIDERING THE FACTS WE ARE OF THE OPINION THAT THE CIT(A)S ORDER IS CORRECT ON FACTS AS WELL AS LAW. THE A.O. HAS NOT MADE OUT ANY CASE FOR REOPENING THE ASSESSMENT AFTER 4 YEARS AS NO FR ESH INFORMATION HAS COME ON RECORD AND THE SATISFACTION NOTE DO INDICATE THA T ON THE SAME SET OF FACTS AVAILABLE ON RECORD THE ASSESSMENT WAS REOPENED. KE EPING IN VIEW THE PRINCIPLES ESTABLISHED BY THE HON'BLE BOMBAY COURT IN THE ABOVE REFERRED DECISION WE ARE OF THE VIEW THAT REOPENING UNDER S ECTION 147 IS NOT CORRECT AND THE ORDER OF THE CIT(A) IS THEREFORE UPHELD. REVENUES GROUND IS REJECTED. ISSUE ON ALLOWANCE OF DEPRECIATION 5. THIS ISSUE ARISES IN BOTH THE ASSESSMENT YEARS. IN VIEW OF THE REJECTION OF GROUND NO. 1 IN A.Y. 2001-02 THERE IS NO NEED TO CONSIDER GROUND NO. 2 ON MERITS. ACCORDINGLY GROUND NO. 2 PERTAINING TO C LAIM OF DEPRECIATION IN ITA NO. 1356 & 1357/MUM/2009 M/S. RAMGOPAL POLYTEX LTD. 4 A.Y. 2001-02 ALSO STANDS REJECTED. THE ISSUE IS TO BE CONSIDERED ONLY IN A.Y. 2000-01. THE FACTS ARE THAT THE ASSESSEE HAD DISCON TINUED ITS MANUFACTURING ACTIVITY SINCE DECEMBER 1998 AS PER N OTE 4 TO THE ACCOUNT IN SCHEDULE 18 OF THE COMPANYS STATEMENT OF ACCOUNTS. THE CONTENTION OF THE ASSESSEE WAS THAT THE ACCOUNTS HAVE BEEN PREPARED A S ON-GOING CONCERN BASIS AS THE COMPANY CONTINUED TO CARRY ON ITS TRAD ING ACTIVITY AND EXPECTED IMPROVED PERFORMANCE IN THE YEARS TO COME. IT IS AL SO ON RECORD THAT THE COMPANY HAS DISPOSED OFF PART OF LAND AND BUILDING IN THE BLOCK OF PLANT AND MACHINERY. THE A.O. WAS OF THE VIEW THAT SINCE THE ASSETS WERE NOT PUT TO USE DURING THE YEAR ASSESSEE WAS NOT ENTITLED FOR D EPRECIATION WHEREAS IT WAS ASSESSEES CONTENTION THAT IT WAS TEMPORARILY S TOPPED MANUFACTURING ACTIVITY AND ACCORDINGLY ENTITLED FOR DEPRECIATION. THE CIT(A) HOWEVER HAS ACCEPTED ASSESSEES CONTENTION AND HELD THAT THE EX PRESSION USED IN SECTION 32 HAS WIDER CONNOTATION AND INCLUDES NOT ONLY ACTU AL USER BUT ALSO A PASSIVE USER. HE RELIED ON THE FOLLOWING CASES: - I) INDIA TEA & RUBBER TRADING CO. 221 ITR 857 (GUWAHAT I) II) REFRIGERATION AND ALLIED INDUSTRIES 247 ITR 12 (DE LHI) III) GEO TECH CONSTRUCTION 244 ITR 452 (KERALA) IV) PEPSU ROAD TRANSPORT CORPORATION 253 ITR 303(P & H) V) PREMIER INDUSTRIES (INDIA) LTD. 170 TAXMAN 407 (M.P .) VI) UDAIPUR MINERAL DEVELOPMENT SYNDICATE (P) LTD. 269 ITR 263 (RAJ.) AND CAME TO THE CONCLUSION THAT THERE IS PREPONDERA NT LEGAL OPINION OF DIFFERENT HIGH COURTS THAT USER OF AN ASSET INCLUDE S PASSIVE USER ALSO FOR THE PURPOSE OF ALLOWANCE OF DEPRECIATION. ACCORDINGLY H E DIRECTED THE A.O. TO ALLOW THE DEPRECIATION. 6. THE LEARNED D.R. SUBMITTED THAT THERE IS AN ADMISSI ON BY THE ASSESSEE THAT THE ENTIRE MANUFACTURING ACTIVITY WAS DISCONTI NUED AND PART OF THE MACHINERY WAS SOLD. ACCORDINGLY SINCE THERE IS NO USAGE OF MACHINERY EITHER PASSIVE OR ACTIVE THE ASSESSEE IS NOT ENTIT LED FOR DEPRECIATION. HE RELIED ON THE DECISION HON'BLE BOMBAY HIGH COURT IN THE CASE OF DINESH KUMAR GULABCHANG AGARWAL VS. CIT 267 ITR 768 FOR TH E ABOVE PROPOSITION. 7. THE LEARNED COUNSEL IN REPLY SUBMITTED THAT THERE W AS ONLY A TEMPORARY STOPPAGE OF WORK AND THE ASSESSEE DURING THE YEAR HAS CONTINUED ITA NO. 1356 & 1357/MUM/2009 M/S. RAMGOPAL POLYTEX LTD. 5 TO SELL THE CLOSING STOCK OF MANUFACTURED PRODUCT A ND ITS TURNOVER INCLUDED SALES FROM ERSTWHILE MANUFACTURING ACTIVITY. HE FUR THER RELIED ON THE DECISION OF THE HON'BLE ITAT IN THE CASE OF G.R. SH IPPING LTD. IN ITA NO. 822/MUM/2005 DATED 17.07.2008 (WHEREIN IN ONE OF US (A.M.) IS ALSO A MEMBER) WHICH WAS UPHELD BY THE HON'BLE BOMBAY HIG H COURT IN ITA NO. 598 OF 2009. IT WAS HIS CONTENTION THAT THE CASE LA W RELIED UPON BY THE A.O. WAS NOT CORRECT AS THE ASSETS HAVE BECOME PART OF B LOCK ASSETS AND THE ASSESSEE WAS ENTITLED TO DEPRECIATION AS THE ASSETS WERE USED EARLIER FOR THE PURPOSE OF BUSINESS AND THE CIT(A) WAS RIGHT IN CON SIDERING THE ISSUE AND ALLOWING DEPRECIATION. 8. WE HAVE EXAMINED THE FACTS AND ALSO THE VARIOUS CAS E LAWS RELIED UPON BY THE A.O. AND THE ASSESSEE. WITH REFERENCE T O THE FACTS IT IS ON RECORD THAT THE ASSESSEE HAS DISCONTINUED MANUFACTURING IN VIEW OF THE ADVERSE MARKET CONDITIONS AND SWITCHED OVER TO TRADING ACTI VITIES. IT IS ALSO ON RECORD THAT PART OF THE MACHINERY WAS SOLD. HOWEVER THE A .O. HAS NOT EXAMINED WHETHER THE ASSESSEE HAS CONTINUED THAT BUSINESS AC TIVITY DURING THE YEAR AS THERE WAS CONSUMPTION OF SOME RAW MATERIAL AND A LSO EXPENDITURE INCURRED UNDER THE HEAD MANUFACTURING AND SELLING EXPENSES. IT IS ALSO NOT KNOWN WHETHER THE ASSESSEE HAS SOLD THE ASSETS IN T HE BLOCK DURING THE YEAR OR IN EARLIER/ LATER YEARS. IF THE ENTIRE PLANT AND MACHINERY AND LAND WAS SOLD SUBSEQUENTLY WITHOUT REVIVING THE BUSINESS IT CAN BE CONSIDERED THAT THE ASSESSEE HAS NO INTENTION TO CONTINUE THE BUSIN ESS TO CONSIDER THE PASSIVE USER CONCEPT FOR THE PURPOSE OF BUSINESS. I T IS THE CONTENTION OF THE LEARNED COUNSEL THAT PART OF THE STOCK WAS SOLD DUR ING THE YEAR WHICH ASPECT ALSO WAS NOT EXAMINED BY THE A.O. IT IS ALSO ONE OF THE CONTENTIONS THAT THE A.O. HAS ALLOWED PART OF DEPRECIATION CLAIMED REFER RING TO THE QUANTUM ALLOWED AS DEPRECIATION AND THE CLAIM MADE BY THE A SSESSEE IN THE COMPUTATION OF INCOME. THERE IS NO INDICATION WHETH ER THE REDUCTION IN CLAIM BY THE A.O. IS DUE TO VARIATION IN WDV OR ALL OWANCE OF DEPRECIATION ON SOME OF THE ASSETS OR ADJUSTMENTS MADE IN THE BLOCK OF ASSETS DUE TO SALE OF CERTAIN ASSETS. THE LEARNED COUNSEL ALSO COULD NOT CLARIFY WHETHER ANY PART OF THE ASSETS OF CLOSED UNIT WAS ALLOWED FOR DEPREC IATION DURING THE YEAR. THESE ASPECTS REQUIRE RE-EXAMINATION FROM THE END O F THE A.O. WITHOUT EXAMINING WHETHER ASSESSEE IS ACTIVE OR PASSIVE USE R OF THE MACHINERY IT IS ITA NO. 1356 & 1357/MUM/2009 M/S. RAMGOPAL POLYTEX LTD. 6 VERY DIFFICULT TO RELY ON VARIOUS CASE LAWS IN CONS IDERING THE CLAIM OF DEPRECIATION. 9. WITH REFERENCE TO LAW THE LEARNED CIT(A) HAS RELIE D ON VARIOUS CASE LAWS WHERE EVEN PASSIVE USE IS CONSIDERED AS USED FOR THE PURPOSE OF BUSINESS. WHILE NOT OBJECTING TO THE LEGAL PRINCIPL ES INVOLVED THEREIN THE FACTUAL ASPECT ALSO REQUIRES VERIFICATION WHETHER T HE ASSESSEE HAS ANY INTENTION TO REVIVE THE BUSINESS OR SIMPLY CLOSED M ANUFACTURING ACTIVITIES ONCE FOR ALL. WITHOUT EXAMINING THE FACTS IT IS VER Y DIFFICULT TO APPLY VARIOUS PRINCIPLES OF LAW GIVEN IN DIFFERENT CONTEXTS. THE LEARNED COUNSEL DURING HIS ARGUMENT RELIED ON THE DECISION OF THE G.R. SHIPPI NG LTD. IN ITA NO. 822/MUM/2005 DATED 17.07.2008 WHICH IS UPHELD BY T HE HON'BLE HIGH COURT OF JUDICATURE AT BOMBAY IN ITA NO. 598 OF 200 9. IN THAT THE FACTS ARE THAT THE SAID ASSESSEE IS ENGAGED IN THE SHIPPING B USINESS AND WAS OWNING ONE BARGE JAY-II WHICH IS INCLUDED IN THE BLOCK OF ASSETS AND HAS SUFFERED AN ACCIDENT ON 06.03.2000 AND SUNK. THE AFORESAID BARG E COULD NOT BE RETRIEVED AND SO SOLD IN THE MONTH OF MAY/JUNE 2001. ACCORDIN G TO THE A.O. THE BARGE WAS NOT USED FOR THE PURPOSE OF BUSINESS DURING THE WHOLE YEAR AS IT MET WITH ACCIDENT AND WAS NON-OPERATIONAL NOR WAS SENT FOR A NY REPAIRS. ACCORDINGLY HE DISALLOWED DEPRECIATION. ON EXAMINATION OF THE P ROVISIONS OF SECTION 43(6) AND ALSO DEFINITION AS PROVIDED IN SECTION 2(11) IT WAS HELD AS UNDER: - 10. THE LEGISLATURE FELT THAT KEEPING THE DETAILS WITH REGARD TO EACH AND EVERY DEPRECIABLE ASSETS WAS TIME CONSUMING BOT H FOR THE ASSESSEE AND THE ASSESSING OFFICER. THEREFORE THEY AMENDED THE LAW TO PROVIDE FOR ALLOWING OF THE DEPRECIATION ON THE ENTIRE BLOC K OF ASSETS INSTEAD OF EACH INDIVIDUAL ASSETS. THE BLOCK OF ASSETS HA ALSO BEEN DEFINED TO INCLUDE THE GROUP OF ASSETS FAILING WITH THE SAME C LASS OF ASSETS. HENCE AFTER THE AMENDMENT WITH EFFECT FROM 01.04.1988 TH E INDIVIDUAL ASSETS HAVE LOST ITS IDENTIFY AND FOR THE PURPOSE OF ALLOW ING OF DEPRECIATION ONLY THE BLOCK OF ASSETS HAS TO BE CONSIDERED. IF A BLOC K OF ASSETS IS OWNED BY THE ASSESSEE AND USED FOR THE PURPOSE OF BUSINESS DEPRECIATION WILL BE ALLOWED. THEREFORE THE TEST OF USER HAS TO BE APPL IED UPON THE BLOCK AS A WHOLE INSTEAD OF UPON AN INDIVIDUAL ASSET. 11. THE ABOVE PRINCIPLE HAS BEEN LAID DOWN IN THE F OLLOWING DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE NAM ELY; (A) NOTCO EXPORTS. VS. DCIT 86 ITD 445 (HYD.) (B) ACIT VS. SRF LTD. VOL. 21SOT 122 (DEL.) & (C) UNITEX PRODUCTS LTD. VS. ITO VOL. 22 SOT 429 (MUM.) ITA NO. 1356 & 1357/MUM/2009 M/S. RAMGOPAL POLYTEX LTD. 7 12. THE LD. DR HOWEVER SUBMITTED THE USER WAS A CON DITION FOR ALLOWING DEPRECIATION AND IN THIS REGARD RELIED TO THE DECIS ION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF DINESHKUMAR GULABCHAND AG ARWAL VS. CIT 267 ITR 768 (BOM). WE HAVE PERUSED THE AFORESAID DECISI ON AND ARE OF THE VIEW THAT THE SAME IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE PRESENT CASE THE ASSESSEE HAS ALREADY USED THE ASS ET FOR THE PURPOSE OF BUSINESS. THE ASSET HAS ALREADY ENTERED THE BLOCK O F ASSETS. IN THE CASE BEFORE THE HON'BLE BOMBAY HIGH COURT THE ASSET IN QUESTION WAS NOT AT ALL PUT TO USE. WE THEREFORE FIND THE DECISION RELIED UPON THE LD. DR IS OF NO ASSISTANCE TO THE PLEA OF THE DR. RESPECTFULLY FOLL OWING THE DECISIONS OF THE TRIBUNAL REFERRED TO ABOVE WE HOLD THAT THE ASSESS EE WAS ENTITLED TO CLAIM DEPRECIATION AND THE ASSESSING OFFICER DIRECTED TO ALLOW THE SAME. 10. AS CAN BE SEEN FROM THE ABOVE THESE FINDINGS ARE G IVEN IN THE CONTEXT THAT THE TEST OF USER HAS TO BE APPLIED UPON THE BLOCK A S A WHOLE INSTEAD OF UPON AN INDIVIDUAL ASSET. SINCE THE SAID BARGE WAS PART OF THE BIGGER BLOCK WHERE OTHER BLOCK ASSETS WERE USED THE JUDGEMENT OF THE HON'BL E BOMBAY HIGH COURT IN THE CASE OF DINESHKUMAR GULABCHAND AGARWAL VS. CIT 267 ITR 768 (BOM) WAS DISTINGUISHED AND THE DEPRECIATION WAS DIRECTED TO BE ALLOWED BY THE ITAT WHICH WAS UPHELD BY THE HON'BLE BOMBAY HIGH COURT. HOWEVE R IN THE PRESENT CONTEXT IT WAS THE CONTENTION OF THE ASSESSEE THAT THERE WAS O NLY TEMPORARY STOPPAGE OF WORK AND ASSESSEE DURING THE YEAR HAS CONTINUED TO SALE CLOSING STOCK OF THE MANUFACTURED PRODUCT AND ITS TURNOVER INCLUDED SALE S FROM THE ERSTWHILE MANUFACTURING ACTIVITIES. THIS ASPECT HAS NOT BEEN EXAMINED BY ANY OF THE AUTHORITIES. SINCE IT HAS BEARING ON DECIDING THE I SSUE THAT THE ASSETS ARE USED IN THE COURSE OF BUSINESS WITHOUT DECIDING THE ISSUE ONLY ON LEGAL PRINCIPLES THE MATTER IS RESTORED TO THE FILE OF THE A.O. TO EXAMI NE THE FACTS AND DECIDE WHETHER THERE IS ANY USE OF MACHINERY FOR THE PURPOSE OF SECTION 32 AND DECIDE THE ISSUE BOTH ON FACTS AS WELL AS ON LAW. THE ASSESSEE SHOUL D BE GIVEN ADEQUATE OPPORTUNITY TO JUSTIFY THE CLAIM. WITH THIS DIRECTI ON THE GROUND IS ALLOWED. 11. IN THE RESULT ITA NO. 1356/MUM/2009 IS CONSIDERED ALLOWED WHEREAS ITA NO. 1357/MUM/2007 IS TREATED AS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH 2010. SD/- SD/- (R.K. GUPTA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 19 TH MARCH 2010 ITA NO. 1356 & 1357/MUM/2009 M/S. RAMGOPAL POLYTEX LTD. 8 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXXII MUMBAI 4. THE CIT III MUMBAI CITY 5. THE DR D BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.