Asset once becomes part of block of assets is eligible for depreciation even if it isn’t used in subsequent years: ITAT
The Delhi Tribunal has allowed depreciation to Pawan Hans Ltd. on the Helicopters which were not used during the whole year. The Tribunal has ruled that once an asset becomes part of block of assets and depreciation is granted on that block, the depreciation cannot be denied in subsequent year on ground that an asset of such block is not used in that year.
Facts:
Pawan Hans Limited (‘Assessee’) claimed depreciation on Westland Helicopters which were the part of block of assets. The Helicopters were acquired in 1986-87, however, the same were not used during the current financial year.
Assessing Officer (AO) held that the depreciation claimed by the assessee was not allowable since the Helicopters were 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.
Ruling
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 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 becomes part of the block of assets and depreciation is granted on that block, the depreciation cannot be denied in subsequent year in respect of any asset forming part of that block on the ground that such asset is not used by assessee in that year. 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.