Asset once becomes part of block of assets is eligible for dep. even if it wasn’t used in subsequent years: ITAT

Case Details: Pawan Hans Helicopters Ltd. v. DCIT - [2021] 132 taxmann.com 271 (Delhi - Trib.)

Judiciary and Counsel Details

• • Amit Shukla, Judicial Member and Dr. B.R.R Kumar, Accountant Member
  • Ved Jain, Adv. for the Appellant. 
  • Ms. Pramita M. Biswas, CIT DR for the Respondent.

Facts of the Case

Assessee-Pawan Hans Limited had claimed the depreciation on Westland Helicopters which were the part of block of assets. These assets had been acquired in 1986-87, however, the same were not used during the current assessment year.

Assessing Officer (AO) held that the depreciation claimed by the assessee was not allowable since the asset was not used in the current year. On appeal, the CIT(A) also confirmed the disallowance. Aggrieved-assessee filed the instant appeal before the Delhi Tribunal.

ITAT Held

The Delhi Tribunal held that the helicopters were acquired in 1986-87 and the assessee was claiming the depreciation since then. The AO had allowed the depreciation on helicopters in the earlier assessment years. This fact was also not disputed by the AO as well as CIT(A). Further, the assessee was following the concept of block of assets which were also not in qualm by the revenue.

Once an asset is part of the block of assets and depreciation is granted on that block, it cannot be denied in its subsequent year on the ground that one of the assets is not used by the assessee in some of the years. The concept “user” of assets has to apply upon block as a whole instead of an individual asset. Thus, assessee cannot be denied the benefit of depreciation claimed under section 32 with regard to the Westland Helicopters.

Case Review

• • Sony India (P.) Ltd. v. CIT [2017] 88 taxmann.com 580 (Delhi)
  • CIT v. Oswal Agro Mills Ltd. [2011] 9 taxmann.com 58/197 Taxman 25/341 ITR 467 (Delhi) (para 23) followed.

List of Cases Referred to

• • Sony India (P.) Ltd. v. CIT [2017] 88 taxmann.com 580 (Delhi)
  • CIT v. Oswal Agro Mills Ltd. [2011] 9 taxmann.com 58/197 Taxman 25/341 ITR 467 (Delhi) (para 23) followed.