JAI KAMAKHYA ALLOYS PRIVATE LIMITED,YRNIHAT vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-SHILLONG, SHILLONG

आदेश /O R D E R The present appeal has been preferred by the assessee against the order dated 15-05-2019 of the Commissioner of Income-tax (Appeals), Shillong [hereinafter referred to as ‘CIT(A)’].

2. That the appellant craves leave to submit any other ground/s on or before the hearing of the appeal.

4. The sole issue raised by the assessee in this appeal is relating to the disallowance for depreciation claim of Rs. 12,25,087/-. The said claim has been disallowed by the A.Y 2016-17 Jai Kamakhya Alloys P.Ltd Page 2 lower authorities on the ground that the assessee had not shown any proof that the factory of the assessee was closed down. Therefore, the machinery in question was not used for business purposes. Therefore, the claim of depreciation on plant & machinery was disallowed by the Learned Assessing Officer ( in short, the Ld. AO). The said disallowance was further confirmed by the Ld. CIT(A). The assessee, thus, has come up in appeal before this Tribunal.

5. Before this Tribunal, Learned Counsel for the assessee has submitted that due to certain reasons, though, the manufacturing activity of the assessee was discontinued. however, the plant & machinery was a part of block of assets. The assessee company had been making efforts to re-start the manufacturing activity. There was no intension of the assessee to stop the business. He, therefore, has submitted that the claim of depreciation on plant & machinery has been wrongly disallowed by the lower authorities.

6. On the other hand, the Learned Departmental Representative ( in short, the Ld. DR) has relied on the findings of the lower authorities and submitted that since the asset was not put to use, therefore, the disallowance has rightly been made by the Ld. AO.

7. I have heard the rival contentions and gone through the records. The purpose of depreciation is to give set off of the loss of investments made by the assessee on capital assets used for business purposes. The assessee, in this case had installed plant & machinery solely for the purpose of business. There was no case of the revenue that the said plant & machinery was used for other purpose. Even the asset was not put to use in the particular year because of discontinuance of manufacturing activity, but the asset was forming part of block of assets and it continued to depreciate, which admittedly was purchased and installed by the assessee solely for the business purposes. The case of the assessee is that he was making efforts to resume its manufacturing activities. In view of this,, the disallowance of depreciation made by the lower authorities, in my view is not justified. Accordingly, the said disallowance is ordered to be deleted. A.Y 2016-17 Jai Kamakhya Alloys P.Ltd Page 3 In view of the above, the appeal of the assessee stands allowed.

Order pronounced on 30th April, 2021