EMCO DYESTUFF PVT. LTD., MUMBAI V. DCIT - 12(2)(1), MUMBAI

ITA 2957/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4413 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 08-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Assessee Lawyers: K GOPAL A R MS NEHA PARANJAPE
• Keywords: Business income; Depreciation; Principle of natural justice; Retrospective amendment; Set aside; CHAPTER IV
• Section: 13; 153; 22; 32; 131; 27; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.2957/M/2018 ASSESSMENT YEAR: 2014-15 M/S. EMCO DYESTUFF PVT. LTD., UNIT NO.304, WESTERN EDGE, WE HIGHWAY, DATTAPADA ROAD, BORIVALI EAST, MUMBAI 400 066 PAN: AAACE11670D VS. DCIT 12(2)(1), 5 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI - 400021 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI K. GOPAL, A.R. MS. NEHA PARANJAPE, A.R. REVENUE BY :SHRI AMIT PRATAP SINGH, D.R. DATE OF HEARING : 13.01.2020 DATE OF PRONOUNCEMENT : 18.02.2020 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 27.02.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX A(20) [HEREINAFTER REFERRED TO AS DCIT] GROSSLY ERRED IN DISALLOWING THE APPELLANTS C LAIM U/S 35, AMOUNTING TO RS.1,05,00,000/-. 2. THE LEARNED CIT(A) ERRED IN COMPLETELY IGNORING THE SUBMISSIONS MADE BY THE APPELLANTS IN THIS REGARD. ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 2 3. ON FACTS & CIRCUMSTANCES OF THE CASE THE LEARN ED DY. COMMISSIONER OF INCOME TAX A (20) (HEREINAFTER REFERRED TO AS DCIT] WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 8,81, 137/- BEING DEPRECIATION ON LET OUT PROPERTY. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALT ER, AMEND, MODIFY, SUBSTITUTE, DELETE & FOR RESCIND ALL OR ANY OF THE GROUND OF AP PEAL ON OR BEFORE THE FINAL HEARING IF NECESSITY SO ARISES. 3. THE ISSUE RAISED IN GROUND NO.1 & 2 IS AGAINST T HE ORDER OF LD. CIT(A) CONFIRMING THE ORDER OF AO IN DISALLOWIN G THE ASSESSEES CLAIM UNDER SECTION 35 OF THE ACT OF RS. 1,05,00,000/-. 4. THE FACTS IN BRIEF ARE THAT THE AO DURING THE CO URSE OF ASSESSMENT PROCEEDINGS RECEIVED INFORMATION OF BOGU S DONATION FROM ACIT-12(3)(1), MUMBAI VIDE LETTER NO.ACIT CIR- 12(3)(1)/SURVEY 2016-17 DATED 20.09.2016 WHEREIN IT WAS INTIMATED THAT ASSESSEE COMPANY HAD GIVEN DONATION TO MATRAVAINI INSTITUTE OF EXPERIMENTAL RESEARCH EDUCA TION, KOLKATA. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE AO ON THE PERUSAL OF PROFIT & LOSS ACCOUNT AND COMPUTA TION OF INCOME OBSERVED THAT ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 35 OF THE ACT AMOUNTING TO RS.60 LAKH ON AC COUNT OF DONATION GIVEN TO MATRAVAINI INSTITUTE OF EXPERIMEN TAL RESEARCH EDUCATION. THE AO ALSO NOTED THAT THE CBDT VIDE IT S LETTER F.NO.203/11/2015/ITA.II DATED 24.08.2016 HAS ORDERE D FOR WITHDRAWAL OF NOTIFICATION ISSUED UNDER SECTION 35 (1)(II), 1961 GRANTED TO MATRAVAINI INSTITUTE OF EXPERIMENTAL RES EARCH EDUCATION W.E.F. 21.08.2007 AND ACCORDINGLY THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE DED UCTION CLAIMED OUT OF DONATION TO THE SAID INSTITUTE, KOLK ATA SHOULD NOT BE DISALLOWED AS THE SAME WERE BOGUS DONATION WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 28.09.201 6. THE LD. ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 3 A.R. SUBMITTED BEFORE THE AO THAT DONATION PAID OF RS.60 LAKHS TO THE SAID INSTITUTE IS A GENUINE AS THE SAME IS P AID BY CHEQUE VIDE CHEQUE NO.000378 DATED 06.03.2014 AND THE ASSE SSEE HAS CHECKED THE REGISTRATION AND APPROVAL GIVEN TO THE SAID TRUST UNDER SECTION 35(1)(II) OF THE ACT AND ON THE DATE OF GIVING DONATION THE SAID INSTITUTION WAS HAVING AND HOLDIN G THE EXEMPTION TO RECEIVE THE DONATION AND IT WAS ONLY A FTER BY A SUBSEQUENT ORDER DATED 24.08.2016 THE SAID REGISTRA TION HAS BEEN WITHDRAWN W.E.F. 21.08.2007. THE AO ON THE BA SIS OF STATEMENT RECORDED UNDER SECTION 131 OF TWO DIRECTO RS NAMELY SHRI BIPIN K SHAH AND SHRI RAVINATH K. SHAH WHO GAV E THE STATEMENT THAT THEY NEVER HEARD OF THIS TRUST NAMEL Y MATRAVAINI INSTITUTE OF EXPERIMENTAL RESEARCH EDUCATION AND ON THE BASIS OF CBDT WITHDRAWING THE NOTIFICATION ISSUED UNDER S ECTION 35(1)(II), 1961 W.E.F. 21.08.2007 HELD THE SAID DON ATION AS NON GENUINE AND CONSEQUENTLY DISALLOWED THE CLAIM OF RS.1,05,00,000/-. 5. THE LD. CIT(A) ALSO AFFIRMED THE SAID ORDER OF T HE AO BY HOLDING AND OBSERVING AS UNDER: 4.1 I HAVE CONSIDERED THE RIVAL CONTENTIONS. I HAV E TAKEN NOTE OF THE ADVERSE FINDINGS BY THE INVESTIGATION WING OF KOLKATA AND A LSO THE STATEMENT GIVEN BY SHRI ARVIND K. SHAH, THE DIRECTOR OF THE COMPANY. AS PER THE REPORT OF THE INVESTIGATION WING, KOLKATA, THE PURPORTED RECIPIENT OF THE DONAT ION ADMITTED THAT THE SUMS PAID WERE RETURNED TO THE RESPECTIVE DONORS. THE STATEME NT OF SHRI ARVIND K. SHAH, DIRECTOR OF THE APPELLANT COMPANY, ALSO MAKES IT CL EAR THAT THE DONATION WAS NOT GENUINE. IN HIS STATEMENT, SHRI ARVIND K. SHAH, STA TED THAT HE WAS NOT AWARE OF ANY DONATION PAID TO MATRIVANI INSTITUTE OF EXPERIMENTA L RESEARCH & EDUCATION. IN HIS STATEMENT, SHRI ARVIND K. SHAH STATED THAT HE WAS N OT EVEN AWARE OF THE EXISTENCE OF THE MATRIVANI INSTITUTE OF EXPERIMENTAL RESEARCH & EDUCATION. CONSIDERING THE QUANTUM OF DONATION (RS. 60 LAKHS) CLAIMED TO HAVE BEEN MADE, IT IS INCONCEIVABLE THAT A DIRECTOR OF THE COMPANY WOULD NOT BE AWARE O F SUCH HUGE DONATION AND THE EXISTENCE OF THE DONEE, IF THE TRANSACTION WAS GENU INE. CONSIDERING ALL THE FACTS BROUGHT ON RECORD BY THE AO, IT CAN BE SAFELY INFER RED THAT THE DONATION WAS BOGUS. ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 4 4.4.2 IN HER SUBMISSIONS WHICH IS REPRODUCED ABOVE, THE AR OF THE APPELLANT SUBMITTED THAT THE APPELLANT WAS NOT AWARE OF ANY W RONGDOING ON THE PART OF THE DONEE. THE AR OF THE APPELLANT CONTENDED THAT THE D ONATION IS EVIDENCED BY A VALID RECEIPT. ON GOING THROUGH THE RECEIPT (COPY ENCLOSE D AS ANNEXURE - 1), I FIND THAT THE RECEIPT HAS BEEN DOCTORED. I FIND THAT THE DIGI T '2' HAS BEEN INSERTED IN THE SERIAL NUMBER OF THE RECEIPT AND THE SERIAL NUMBER HAS BEE N CHANGED. THEREFORE, THE RECEIPT IS NOT VALID. IN ABSENCE OF A VALID RECEIPT AND IN VIEW OF THE FACTS MENTIONED HEREIN ABOVE, I UPHOLD THE DISALLOWANCE MADE BY THE AO. IN THE RESULT, GROUNDS OF APPEAL NO. 1 & 1.1 ARE DISMISSED. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE ASSESSEE H AS GIVEN DONATION OF RS.60 LAKHS DURING THE YEAR TO KOLKATA BASED RESEARCH INSTITUTE NAMED MATRAVAINI INSTITUTE OF EX PERIMENTAL RESEARCH EDUCATION. THE SAID INSTITUTE WAS REGISTE RED AS ELIGIBLE INSTITUTE TO RECEIVE DONATION TO CARRY OUT THE RESEARCH WORK BUT WHEN THE SAME WAS FOUND TO BE ENGAGED IN A CCEPTING THE BOGUS DONATIONS, THE CBDT VIDE LETTER NO.203/11/2015/ITA.II DATED 24.08.2016 ORDERED THE WITHDRAWAL OF NOTIFICATION UNDER SECTION 35(1)(II) OF THE ACT GRANTED TO THE SAID INSTITUTE W.E.F. 21.08.2007. N OW THE ISSUE BEFORE US IS WHETHER THE DONATION GIVEN BY THE ASSE SSEE OF RS.60 LAKHS IS TO BE ALLOWED TO THE ASSESSEE UNDER SECTIO N 35 OR NOT. IN THIS CASE, ADMITTEDLY THE TWO DIRECTORS OF THE C OMPANY HAVE DENIED TO HAVE ANY KNOWLEDGE OF THE SAID RESEARCH I NSTITUTE TO WHOM THE DONATION WAS GIVEN WHEREAS THE ASSESSEES CONTENTION IS THAT ONLY THE WORKING DIRECTOR WAS HAVING THIS K NOWLEDGE AND HE HAS NOT DENIED THE SAID FACT. WE HAVE CAREFULLY EXAMINED THE FACTS OF THE CASE IN THE LIGHT OF THE VARIOUS DECIS IONS RELIED UPON BY THE ASSESSEE AND OBSERVED THAT THE ASSESSEE IS E NTITLED TO DEDUCTION OF SECTION 35(1)(II) OF THE ACT AS THE SA ID RESEARCH INSTITUTE WAS ELIGIBLE TO ACCEPT DONATION AND ON TH E DATE OF GIVING DONATION BY THE ASSESSEE AND THAT NOTIFICATION WAS VALID AND IT IS ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 5 ONLY BY WAY OF SUBSEQUENT LETTER IT WAS CANCELLED F ROM BACK DATE. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY A SERIES OF DECISIONS AS REFERRED TO AND RELIED BY THE LD. A.R. IN THE CASE OF BORSAD TOBACCO COMPANY PVT. LTD. VS. DCIT IN ITA NO.2040/M/2018 A.Y. 2014-15 ORDER DATED 17.06.2019, THE CO- ORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT DONOR IS NOT AFFECTED DUE TO SUBSEQUENT WITHDRAWAL OF RECOGNITIO N WITH RETROSPECTIVE EFFECT. THE OPERATIVE PART IS REPROD UCED AS UNDER: 6. AFTER HAVING GONE THROUGH THE FACTS OF THE PRES ENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AND ORDERS OF THE COORDINATE BENCHES OF ITAT AS MENTIONED ABOVE, WE FIND THAT AS PER THE FA CTS OF THE PRESENT CASE, ADMITTEDLY, THE ASSESSEE HAD GIVEN DONATION TO SHGP H, WHICH WAS AFTER THE DATE OF RECOGNITION OF SHGPH U/S 35(1)(II) OF THE ACT, BUT BEFORE THE DATE OF WITHDRAWAL OF SAID APPROVAL BY CBDT IN THE CASE OF SHGPH. NOW, TH E SHORT POINT FOR CONSIDERATION BEFORE US IS AS TO WHETHER THE ASSESSEE /DONAR COUL D BE DENIED WEIGHTED DEDUCTION U/S 35(1)(II) OF THE ACT DUE TO THE SUBSEQUENT WITH DRAWAL OF RECOGNITION BY CBDT WITH RETROSPECTIVE EFFECT. WE FIND THAT THE ISSUE U NDER CONSIDERATION HAS ALREADY BEEN ADDRESSED /CONSIDERED BY THE COORDINATE BENCH OF KOLKATA TRIBUNAL IN THE CASE OF DCIT VRS. MACO CORPORATION (I) PVT. LTD. IN ITA NO. 16/KOL/2017 DATED 14.03.18 FOR AY 2013-14. 7. APART FROM THIS, LD. AR HAD ALSO PLACED ON THE D ECISIONS OF HONBLE SUPREME COURT IN THE CASE OF CIT VS CHOTATINGRAI TEA REPORT ED IN (2003) 126 TAXMAN 399 (SC) DATED 29.10.2002 AND STATE OF MAHARASHTRA VS SURESH TRADING COMPANY REPORTED IN (1998) 1998 TAXMANN.COM 1747 (SC) DATED 7.2.1996 WH ICH ARE SQUARELY APPLICABLE TO THE FACTS OF THE INSTANT CASE BEFORE US. THE RAT IO DECIDENDI OF THE SAID JUDGEMENTS ARE NOT BEING REPRODUCED HEREIN FOR THE SAKE OF BREVITY. IN ANY CASE, WE FIND THAT THE PROVISIONS OF SECTION 35(1)(II) OF TH E ACT VIDE ITS EXPLANATION REPRODUCED HEREINABOVE CLEARLY PROVES THAT THE DONO R (I.E ASSESSEE HEREIN) CANNOT BE AFFECTED DUE TO SUBSEQUENT WITHDRAWAL OF RECOGNI TION WITH RETROSPECTIVE EFFECT. THEREFORE, RESPECTFULLY FOLLOWING THE PROVISIONS OF THE ACT AND THE DECISIONS OF THE COORDINATE BENCHES OF ITAT AS MENTIONED ABOVE AND I N ORDER TO MAINTAIN JUDICIAL CONSISTENCY AND JUDICIAL DISCIPLINE, WE APPLY THE S AME FINDINGS WHICH ARE APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE. THEREFORE, WE DIRECT THE AO TO GRANT DEDUCTION U/S 35(1)(II) OF THE ACT TO THE ASSESSEE AS CLAIMED BY HIM FOR THE YEAR UNDER CONSIDERATION. 7. SIMILARLY, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RAM DAS MANIKLAL GANDHI VS. UOI (2000) 108 TAXMAN 590 (BOM) HAS HELD THAT THE DONATION TO AN INSTITUTION WHOSE APPROVAL WAS WITHDRAWN BY THE PRESCRIBED AUTHORITY WITH ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 6 RETROSPECTIVE EFFECT WOULD NOT AFFECT THE ASSESSEE WHO GAVE THE DONATION. THE ASSESSEE IS ENTITLED TO RELY UPON THE CERTIFICATE GRANTED TO AN INSTITUTION UNDER SECTION 35CCA OF TH E ACT FOR CLAIMING DEDUCTION UNDER SECTION 35CCA OF THE ACT F OR CLAIMING DEDUCTION UNDER THAT SECTION WHICH WAS VALID AND SU BSISTING WHEN DONATION WAS MADE TO IT. WE, THEREFORE, RESPE CTFULLY FOLLOWING THE RATIO LAID DOWN IN THE ABOVE DECISION S, SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO ALLOW THE DEDUCTION AS CLAIMED UNDER SECTION 35 OF THE ACT BY THE ASSESSEE . 8. THE ISSUE IN 2 ND GROUND OF APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.8,81,137/- BY LD. CI T(A) AS MADE BY THE AO TOWARDS DEPRECIATION ON THE LET OUT PROPE RTY. 9. THE FACTS IN BRIEF ARE THAT THE AO DURING THE CO URSE OF ASSESSMENT PROCEEDINGS NOTED THAT ASSESSEE HAS CLAI MED DEPRECIATION ON THE PREMISES WHICH WERE LET OUT DUR ING THE YEAR AND ACCORDINGLY CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE DEPRECIATION ON THE SAID LET OUT PREMISES SHOULD NO T BE DISALLOWED WHICH WAS REPLIED BY THE ASSESSEE VIDE L ETTER DATED 14.12.2016 BY SUBMITTING THAT THE SAID ASSET WAS PA RT OF THE BLOCK OF ASSETS AND DUE TO SALE OF ONE OF THE ASSET S IN THE BLOCK THE WDV WAS REDUCED AND THE ASSESSEE HAS ONLY CLAIME D DEPRECIATION ON THE NEW ADDITION MADE TO THE BUILDI NG WHICH WAS SELF OCCUPIED FOR THE PURPOSE OF BUSINESS OF TH E ASSESSEE. THE AO ,NOT FINDING THE REPLY OF THE ASSESSEE AS TE NABLE, CAME TO THE CONCLUSION THAT THE ASSESSEE IS CLAIMING BOT H THE BENEFITS AT THE SAME TIME UNDER DIFFERENT HEADS OF INCOME I. E. DEDUCTION OF DEPRECIATION FROM INCOME AND STANDARD DEDUCTION ON HOUSE PROPERTY INCOME AND ACCORDINGLY REWORKED THE INCOME OF THE ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 7 ASSESSEE BY TREATING THE RENTAL INCOME UNDER THE HE AD BUSINESS INCOME AND ALLOWING THE DEPRECIATION UNDER THE INC OME TAX ACT AS CLAIMED. 10. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DI SMISSED THE APPEAL OF THE ASSESSEE. HOWEVER, WHILE DISMISSING THE APPEAL DIRECTED THE AO TO TREAT THE RENTAL INCOME UNDER TH E HEAD HOUSE PROPERTY AND DIRECTED TO ALLOW 30% AS STANDARD DEDU CTION FROM THE RENT RECEIVED AND SIMULTANEOUSLY DIRECTED THE A O TO REDUCE THE CLAIM OF DEPRECIATION BY RS.8,81,157/- UNDER SE CTION 38(2) OF THE ACT. 11. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THE ASSESSEES OWN CASE THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.703/M/2018 A.Y. 2013-14 WHEREIN THE ISSUE WAS RESTORED TO THE FILE OF THE AO. THE OPERATIVE PART IS REPRODUCED AS UNDER: 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSE D THE MATERIAL ON RECORD INCLUDING CITED CASE LAWS. WE HAVE OBSERVED THAT AS SESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN CHEMICALS & DYES, INTERMEDIA TE & COMMISSION AGENTS. WE HAVE OBSERVED THAT ASSESSEE, INTER-ALIA, HAS ASSETS BEING IMMOVABLE PROPERTIES IN ITS BLOCK OF ASSETS VIZ. BUILDING, AS DEFINED U/S . 2(11) OF THE 1961 ACT WHICH CONSISTED AT THE BEGINNING OF THE PREVIOUS YEAR, SI X IMMOVABLE PROPERTIES OWNED BY ASSESSEE. THE ASSESSEE DURING THE PREVIOUS YEAR UND ER CONSIDERATION PURCHASED TWO NEW IMMOVABLE PROPERTIES WHILE ONE IMMOVABLE PR OPERTY WAS SOLD DURING THE PREVIOUS YEAR UNDER CONSIDERATION. THUS, UNDISPUTED LY, ASSESSEE OWNS IN ALL SEVEN IMMOVABLE PROPERTIES AS AT THE END OF THE PREVIOUS YEAR UNDER CONSIDERATION BEFORE US, OUT OF WHICH FOUR PROPERTIES WERE LET OU T BY ASSESSEE INCOME FROM WHICH WAS OFFERED TO TAXATION BY ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY, WHILE REST OF THE THREE PROPERTIES WERE USED FOR TH E PURPOSES OF BUSINESS OF THE ASSESSEE. ALL THESE SEVEN IMMOVABLE PROPERTIES OWNE D BY ASSESSEE COMPANY ARE SEPARATE AND DISTINCT PROPERTIES IDENTIFIABLE INDIV IDUALLY. OUT OF THESE FOUR IMMOVABLE PROPERTIES WHICH WERE LET OUT BY ASSESSEE DURING THE PREVIOUS YEAR UNDER CONSIDERATION, TWO IMMOVABLE PROPERTIES LET O UT WERE NEW IMMOVABLE PROPERTIES ACQUIRED DURING THE YEAR UNDER CONSIDERA TION WHILE TWO IMMOVABLE PROPERTIES WERE ACQUIRED IN EARLIER YEARS. IT IS AL SO OBSERVED THAT THREE REMAINING ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 8 IMMOVABLE PROPERTIES WHICH WERE NOT LET OUT BY ASSE SSEE BUT WERE FORMING PART OF BLOCK OF ASSET VIZ. BUILDING WERE USED BY ASSESSEE FOR ITS BUSINESS PURPOSES. THE DISPUTE HAS ARISEN BETWEEN RIVAL PARTIES AS TO CLAI M OF DEDUCTION OF DEPRECIATION ON FOUR IMMOVABLE PROPERTIES WHICH WERE LET OUT BY ASS ESSEE ON RENT AND INCOME THEREOF WAS OFFERED FOR TAXATION BY ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE ON ITS PART HAD CLAIMED DEP RECIATION ON ALL SEVEN IMMOVABLE PROPERTIES HELD BY IT , VIZ. THREE IMMOVA BLE PROPERTIES WHICH WERE USED FOR BUSINESS PURPOSES AS WELL FOR FOUR PROPERTIES W HICH WERE LET OUT ON RENT BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, ON TH E GROUND THAT ALL THESE SEVEN IMMOVABLE PROPERTIES ENTERED BLOCK OF ASSET VIZ. BUILDING AND ONCE AN ITEM OF ASSET ENTERED INTO BLOCK OF ASSET AS DEFINED U/S 2(11) READ WITH CLAUSE (II) TO SECTION 32(1) , THEN IT LOSES ITS INDIVIDUAL IDENTITY AND HENCE D EPRECIATION IS TO BE ALLOWED ON ENTIRE BLOCK OF ASSET IRRESPECTIVE OF THE FACT THAT SOME OF THESE SEPARATELY IDENTIFIABLE PROPERTIES FALLING WITHIN B LOCK OF ASSETS ARE NOT PUT TO USE FOR BUSINESS PURPOSES DURING THE YEAR UNDER CONSIDE RATION . THERE IS DISPUTE BETWEEN RIVAL PARTIES WITH RESPECT TO THREE IMMOVAB LE PROPERTIES FALLING WITHIN BLOCK OF ASSETS WHICH WERE UNDISPUTEDLY BEEN USED B Y ASSESSEE FOR BUSINESS PURPOSES ON WHICH DEPRECIATION WAS CLAIMED BY THE A SSESSEE. THUS, WE WILL BE CONFINING OUR DISCUSSIONS TO ONLY FOUR IMMOVABLE PR OPERTIES WHICH WERE LET OUT ON RENT DURING THE YEAR UNDER CONSIDERATION INCOME THE REOF WHICH WAS OFFERED BY ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY , ON WHICH THE ASSESSEE HAS SET UP CLAIM FOR ALLOWABILITY OF DEPRECIATION U /S 32 CITING JUSTIFICATION THAT SINCE THEY FORM PART OF BLOCK OF ASSETS VIZ. BUILDING AS DEFINED U/S 2(11) AND HENCE DEPRECIATION U/S 32 OUGHT TO BE ALLOWED IRRESPECTIV E OF FACT THAT THESE PROPERTIES WERE NEVER USED FOR PURPOSES OF BUSINESS OF THE ASS ESSEE FOR THE ENTIRE YEAR UNDER CONSIDERAION . WITH RESPECT TO TWO IMMOVABLE PROPER TIES ACQUIRED DURING THE YEAR UNDER CONSIDERATION AND WHICH WERE LET OUT ON RENT, A FRESH PLEA IS NOW RAISED BEFORE THE BENCH FOR THE FIRST TIME BY LEARNED COUN SEL FOR THE ASSESSEE BY MAKING STATEMENT BEFORE THE BENCH THAT THESE TWO NEW IMMOV ABLE PROPERTIES ACQUIRED DURING THE PREVIOUS YEAR UNDER CONSIDERATION WERE I N-FACT USED FOR BUSINESS PURPOSES INITIALLY BY THE ASSESSEE AS GODOWNS FOR I TS BUSINESS PURPOSES BEFORE BEING LET OUT BY ASSESSEE ON RENT IN PREVIOUS YEAR UNDER CONSIDERATION ITSELF. THESE TWO NEWLY ACQUIRED IMMOVABLE PROPERTIES ARE NOW CLAIMED BY ASSESSEE OF BEING PUT TO USE AS BUSINESS ASSETS FOR GODWON OF THE ASSESSEE F OR THE PURPOSES OF BUSINESS OF THE ASSESSEE BEFORE IT WAS LET OUT ON RENT AND NOW PRAYERS ARE MADE TO SET ASIDE AND RESTORE THIS MATTER TO THE FILE OF THE AO FOR V ERIFICATION OF THIS FRESH PLEA AND ACCORDINGLY THEN THE AO CAN RE- ADJUDICATE/DECIDE T HE ISSUE ON MERITS IN ACCORDANCE WITH LAW. IT IS PERTINENT TO MENTION THA T IF PROPERTIES WERE ACQUIRED WITH AN OBJECTIVE OF LETTING ON RENT AND WERE NEVER USED FOR PURPOSES OF BUSINESS OF THE ASSESSEE , OF WHICH RENTAL INCOME THEREOF IS OF FERED FOR TAXATION UNDER THE HEAD INCOME FROM HOUSE PROPERTY, THE SAID PROPERTY WILL NEVER ENTER INTO BLOCK OF ASSET AND NO DEPRECIATION CAN BE ALLOWED. REFERENCE IS DR AWN TO CO-ORDINATE BENCH DECISION IN THE CASE OF SONU NIGAM V. ACIT REPORTED IN (2019) 105 TAXMANN.COM 331(MUM-TRIB.), WHEREIN CO-ORDINATE BENCH OF MUMBAI -TRIBUNAL HELD AS UNDER:- '11. IN THE PRESENT CASE WE FIND THAT THE FLATS WHI CH NEVER ENTERED INTO THE BLOCK OF DEPRECIABLE ASSETS AS INCOME FROM THE SAME WERE BEING OFFERED UNDER THE HEAD INCOME FROM HOUSE PROPERTY CAN BY NO STRETCH OF IMAGINATION BE SAID TO BE ENTITLED FOR AUTOMATIC EN TRY INTO THE BLOCK OF ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 9 DEPRECIABLE ASSET. IN THIS VIEW OF THE MATTER, THE REFERENCE TO SECTION 2(11), 43(6) & 50 BY LEARNED CIT(A) IS GERMANE AND SUPPORT THE CASE OF THE REVENUE. SECTION 2(11) DEFINES BLOCK OF ASSET AS A GROUP OF ASSET FALLING WITHIN THE CLASS OF ASSET........ IN RESPECT OF WHI CH THE SAME PERCENTAGE OF DEPRECIATION IS PERMISSIBLE. THE INCOME FROM 'NAMAH ' BUILDING AND THE PREMISES IN 'LAKHANI CENTRIUM' WAS FALLING UNDER TH E HEAD 'INCOME FROM HOUSE PROPERTY' AND HENCE THESE PREMISES CANNOT BE SAID TO BE FALLING UNDER ANY ASSET GROUP ON WHICH ANY RATE OF DEPRECIA TION IS PRESCRIBED AS ON SUCH ASSET NO DEPRECIATION IS PERMISSIBLE.' IT IS PERTINENT TO MENTION HERE THAT COUNSELS WHO R EPRESENTS ASSESSEES BEFORE HONBLE COURTS/TRIBUNAL ARE OFFICERS OF THE COURT/T RIBUNAL AND IT IS EXPECTED OF THEM THAT THEY WILL MAKE RESPONSIBLE, TRUE AND CORR ECT STATEMENTS BEFORE THE HONBLE COURTS/TRIBUNAL TO PROVIDE PROPER ASSISTANC E TO THE HONBLE COURTS/TRIBUNAL AS THERE STATEMENTS ARE NORMALLY TA KEN COGNIZANCE TO ARRIVE AT DECISIONS AND ANY UNTRUE , FALSE, IRRESPONSIBLE AND /OR RECKLESS STATEMENTS MADE BEFORE HONBLE COURTS/TRIBUNAL BY THESE COUNSELS HA VE ITS OWN REPERCUSSIONS AS TO PENAL CONSEQUENCES WHICH MAY FOLLOW IN CONSEQUENCE OF MAKING RECKLESS, IRRESPONSIBLE , UNTRUE AND/OR FALSE STATEMENTS BEFO RE HONBLE COURTS/TRIBUNAL. THUS AFTER HEARING BOTH THE PARTIES AND KEEPING IN VIEW STATEMENT MADE BY LEARNED COUNSEL OF THE ASSESSEE, WE ARE OF THE CONSIDERED V IEW THAT THIS PLEA OF THE ASSESSEE OF BUSINESS USER OF THESE TWO NEWLY ACQUIR ED IMMOVABLE PROPERTIES FOR BUSINESS PURPOSES AS GODOWN FOR ASSESSEES BUSINESS DURING THE PREVIOUS YEAR UNDER CONSIDERATION BEFORE BEING LET OUT ON RENT NE ED VERIFICATION BY AO AND THE MATTER NEED TO BE SET ASIDE AND RESTORED TO THE FIL E OF THE AO FOR FRAMING OF FRESH DE-NOVO ASSESSMENT AFTER CONSIDERING EXPLANATIONS/E VIDENCES FILED BY THE ASSESSEE DURING SAID DE-NOVO PROCEEDINGS BEFORE THE AO. THIS IS NOW IMPORTANT FOR ASSESSEE TO DEMONSTRATE WITH CREDIBLE, COGENT AND CLINCHING EVIDENCES BEFORE THE AO TO PROVE THAT NEWLY ACQUIRED IMMOVABLE PROPERTIES WERE USED FOR BUSINESS PURPOSES OF THE ASSESSEE AS GODOWN DURING THE YEAR UNDER CON SIDERATION BEFORE BEING LET OUT ON RENT. THIS IS A FACT FINDING EXERCISE WHICH COUL D ONLY BE DONE AFTER NECESSARY VERIFICATIONS OF THE FACTS BY THE AO. WE HAVE ALSO OBSERVED THAT SECTION 38(2) OF THE 1961 ACT CLEARLY STIPULATES THAT EVEN IN CASE OF BL OCK OF ASSETS DEPRECIATION SHALL BE RESTRICTED TO A FAIR PROPORTIONATE BASIS ON ASSETS HAVING REGARD TO THE USER OF SUCH ASSET FOR PURPOSES OF BUSINESS OR PROFESSION OF THE TAX-PAYER, WHICH ARE NOT EXCLUSIVELY BEING PUT TO USE FOR BUSINESS AND PROFE SSION PURPOSES. INCOME-TAX STATUTE IS A SELF CONTAINED CODE IN ITSELF. HEADS O F INCOMES ARE STIPULATED WITHIN 1961 ACT AND IF AN INCOME FALLS UNDER A PARTICULAR HEAD , COMPUTATION OF INCOME HAS THEREOF TO BE MADE ONLY IN ACCORDANCE WITH COMPUTAT ION PROVISIONS RELATING TO THAT HEAD OF INCOME ONLY. THE ASSESSEE HAS DECLARED ITS INCOME FROM RENT FROM LETTING OUT OF HOUSE PROPERTIES UNDER THE HEAD INCOME FROM HOUSE PROPERTY WHICH FALLS UNDER CHAPTER IV-C OF THE 1961 ACT CONTAINING SECTION 22 TO 27 . THE ASSESSEE WILL BE ENTITLED FOR DEDUCTIONS AS ARE STIPULATED U/S 22 TO 27 UNDER CHAPTER IV-C OF THE 1961 ACT WHILE COMPUTING INCOME FROM HOUSE PROPERTY CHARGEABLE TO TAX. THIS CHAPTER IV-C OF THE 1961 ACT DOES NOT PROVIDE FOR D EPRECIATION ON IMMOVABLE PROPERTIES AS ONE OF DEDUCTIONS FROM INCOME EARNED BY ASSESSEE FROM LETTING OUT OF SUCH HOUSE PROPERTY. SECTION 32 OF THE 1961 ACT PROVIDES FOR DEPRECIATION AND FALL S UNDER CHAPTER IV-D WHICH CONCERNS ITSELF WITH COMPU TATION OF INCOME FROM PROFITS OR GAINS FROM BUSINESS OR PROFESSION. THUS, THERE I S NO QUESTION OF ALLOWING ANY ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 10 DEDUCTION AS DEPRECIATION U/S 32 FROM RENTAL INCOME ON LETTING OUT OF THESE HOUSE PROPERTIES FOR THE PERIOD FOR WHICH THESE HOUSE PRO PERTIES WERE LET OUT AND INCOME THEREOF WAS OFFERED FOR TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTIES. REFERENCE IS DRAWN TO DECISION OF MUMBAI-TRIBUNAL I N THE CASE OF DCIT V. GODREJ PROPERTIES & INVESTMENTS LIMITED (2005) 93 ITD 308(MUMBAI) TO SUPPORT ABOVE PROPOSITION . COMING BACK TO TWO NEWLY ACQUIRED PRO PERTIES, THE ASSESSEE HAS RAISED FRESH CLAIM BEFORE THE TRIBUNAL FOR THE FIRS T TIME THAT THESE TWO NEWLY ACQUIRED PROPERTIES WHICH WERE LET OUT DURING THE P ART OF THE PREVIOUS YEAR ON RENT WERE PRIOR TO THEY BEING LET OUT WERE USED BY ASSES SEE AS GODOWN FOR ASSESSEES OWN BUSINESS AFTER ITS ACQUISITION BY THE ASSESSEE DURING THE PREVIOUS YEAR ITSELF , THE GENUINENESS OF SUCH ASSESSEES CLAIM AS TO ITS BONAFIDE OF BUSINESS USER OF THESE PROPERTIES FOR GODOWN PURPOSES REQUIRES VERIF ICATION BY THE AO. THE ASSESSEE HAS ALSO TO DEMONSTRATE PITH AND SUBSTANCE OF OBJEC TIVES OF ACQUISITION OF THESE TWO NEW IMMOVABLE PROPERTIES , WHICH ALSO REQUIRES VERIFICATION BY AO WHICH COULD ALSO , INTER-ALIA, BE GATHERED BY CONDUCT OF THE AS SESSEE WITH RESPECT TO DEALING WITH THESE TWO NEWLY ACQUIRED PROPERTIES OVER SUCCEEDING YEARS. THE ASSESSEE IS ALSO REQUIRED TO DEMONSTRATE WHETHER THESE PROPERTIES CO NTINUED TO BE LET OUT ON RENT IN SUCCEEDING YEARS OR WERE USED FOR OWN BUSINESS P URPOSES IN LATER YEAR. THE AO IS TO CONSIDER TOTALITY OF THE SURROUNDING CIRCUMSTANC ES TO ARRIVE AT CONCLUSION AS TO WHETHER FRESH CLAIM SET UP BY ASSESSEE AS TO USER O F THESE TWO IMMOVABLE PROPERTIES FOR GODOWN PURPOSES IN PREVIOUS YEAR UND ER CONSIDERATION BEFORE BEING LET OUT ON RENT WAS A GENUINE AND BONAFIDE CLAIM OR IS A FRIVOLOUS CLAIM SET UP IN AN ACT OF DESPERATION . THUS, UNDER THESE CIRCUMSTANCE S AND IN THE INTEREST OF JUSTICE, WE ARE INCLINED TO RESTORE THE MATTER BACK TO THE F ILE OF THE AO FOR FRAMING OF DENOVO DETERMINATION OF THE ISSUE ON MERITS IN ACCO RDANCE WITH LAW KEEPING IN VIEW OUR AFORESAID DIRECTIONS/DISCUSSIONS. THE ASSE SSEE SHALL BE ALLOWED BY AO TO FILE EVIDENCES/EXPLANATIONS IN ITS DEFENCE IN SET A SIDE PROCEEDINGS WHICH SHALL BE ADMITTED BY AO IN THE INTEREST OF JUSTICE AND THEN ADJUDICATED ON MERITS IN ACCORDANCE WITH LAW. WE CLARIFY THAT ALL THE CONTEN TIONS ARE KEPT OPEN . NEEDLESS TO SAY THAT PROPER AND ADEQUATE OPPORTUNITY OF BEING H EARD SHALL BE PROVIDED BY AO TO THE ASSESSEE IN SET ASIDE DE-NOVO ASSESSMENT PRO CEEDINGS IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LA W. WE ORDER ACCORDINGLY. COMING TO TWO IMMOVABLE PROPERTIES WHICH WERE ACQUI RED IN EARLIER YEARS AND WERE LET OUT DURING THE ENTIRE YEAR UNDER CONSIDERA TION INCOME OF WHICH WAS OFFERED FOR TAXATION BY ASSESSEE UNDER THE HEAD IN COME FROM HOUSE PROPERTY , THESE TWO PROPERTIES WERE NEVER USED FOR THE PURPOS ES OF BUSINESS OF THE ASSESSEE DURING THE ENTIRE PREVIOUS YEAR RELEVANT TO IMPUGNE D ASSESSMENT YEAR AND ONE OF THE CONDITION STIPULATED U/S 32 FOR GRANT OF DEPREC IATION ON ASSETS IS ITS USER FOR BUSINESS PURPOSES, WHICH TEST THESE TWO HOUSE PROPE RTIES HAD FAILED.THE CLAIM SET UP BY ASSESSEE IS THAT SINCE THESE TWO PROPERTIES F ALL WITHIN BLOCK OF ASSET VIZ. BUILDING FOR WHICH SAME PERCENTAGE RATE OF DEPRECIA TION IS PROVIDED, THE DEPRECIATION HAS TO BE ALLOWED U/S 32 OF THE 1961 A CT. IT IS NOT THE CONTENTION OF THE ASSESSEE THAT THESE PROPERTIES WERE LET OUT TEM PORARILY DURING THE YEAR UNDER CONSIDERATION BUT WERE READY/AVAILABLE FOR BEING US ED FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE. MOREOVER , ONCE RENTAL INCOME FROM THESE HOUSE PROPERTIES IS BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SO URCES AND UNDISPUTEDLY THERE IS NO USAGE OF THESE HOUSE PROPERTIES BY ASSESSEE F OR ITS BUSINESS, THEN THERE IS NO SCOPE OF CLAIMING DEPRECIATION ON THESE HOUSE PROPE RTIES BY INVOKING PROVISIONS ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 11 OF SECTION 32 OF THE 1961 ACT WHICH FALLS UNDER CHAPTER IV- D DE ALING WITH INCOME FROM PROFIT AND GAINS OF BUSINESS OR PROFESSION BEC AUSE OF FACTUAL MATRIX OF THE CASE BEFORE US. THESE ARE ALTOGETHER DIFFERENT AND DISTINCT PROPERTIES WHICH ARE SEPARATELY IDENTIFIABLE. THESE TWO HOUSE PROPERTIES WERE LET OUT BY ASSESSEE EVEN IN PRECEDING YEAR(S) AND WERE LET OUT THROUGHOUT TH E YEAR UNDER CONSIDERATION. AS WE HAVE SEEN EARLIER THAT THE 1961 ACT IS A SELF CO NTAINED CODE IN ITSELF AND INCOMES ARE TO BE BROUGHT TO TAX UNDER DIFFERENT HEADS OF I NCOME WHICH ARE MUTUALLY EXCLUSIVE . THERE IS A RESIDUARY HEAD OF INCOME ALS O PROVIDED ADDITIONALLY IN THE 1961 ACT IN CASE THE INCOME DOES NOT FALL UNDER ANY OF THE FOUR SPECIFIED HEAD OF INCOME. ONCE INCOME FALLS UNDER A PARTICULAR HEAD O F INCOME, THEN IT IS TO BE BROUGHT TO TAX UNDER THAT HEAD ONLY AND CONSEQUENTL Y INCOME IS TO BE COMPUTED AFTER CLAIMING DEDUCTIONS AS PROVIDED UNDER THAT HE AD ONLY. THE ASSESSEE HAS DECLARED ITS INCOME FROM RENT FROM LETTING OUT OF T HESE TWO HOUSE PROPERTIES WHICH WERE ACQUIRED IN EARLIER YEARS UNDER THE HEAD INCO ME FROM HOUSE PROPERTY WHICH FALLS UNDER CHAPTER IV-C OF THE 1961 ACT CONTAINING SECTION 22 TO 27 . THE ASSESSEE WILL BE ENTITLED FOR DEDUCTIONS AS ARE STIPULATED U /S 22 TO 27 UNDER CHAPTER IV-C OF THE 1961 ACT WHILE COMPUTING INCOME FROM HOUSE PROP ERTY CHARGEABLE TO TAX. THIS CHAPTER IV-C OF THE 1961 ACT DOES NOT PROVIDE FOR D EPRECIATION ON IMMOVABLE PROPERTIES AS ONE OF DEDUCTIONS FROM INCOME EARNED BY ASSESSEE FROM LETTING OUT OF SUCH HOUSE PROPERTY. SECTION 32 OF THE 1961 ACT PROVIDES FOR DEPRECIATION AND FALL S UNDER CHAPTER IV-D WHICH CONCERNS ITSELF WITH COMPU TATION OF INCOME FROM PROFITS OR GAINS FROM BUSINESS OR PROFESSION. REFERENCE IS DRAWN TO DECISION OF MUMBAI- TRIBUNAL IN THE CASE OF DCIT V. GODREJ PROPERTIES & INVESTMENTS LIMITED (2005) 93 ITD 308( MUMBAI) AND ROLTA HOLDING & FINANCE CORPORATION LIM ITED V. DCIT REPORTED IN (2015) 153 ITD 6 (MUM-TRIB.), TO SUPPORT ABOVE P ROPOSITION . THUS, THERE IS NO QUESTION OF ALLOWING ANY DEDUCTION AS DEPRECIATION U/S 32 FROM RENTAL INCOME ON LETTING OUT OF THESE HOUSE PROPERTIES FOR THE PERIO D FOR WHICH THESE HOUSE PROPERTIES WERE LET OUT AND INCOME THEREOF WAS OFFE RED FOR TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTIES , KEEPING ALSO IN VI EW FIRSTLY THAT ADMITTEDLY THERE WAS NO BUSINESS USER OF THESE PROPERTIES BY ASSESSE E DURING THE ENTIRE YEAR UNDER CONSIDERATION AND SECONDLY THERE WAS NO POSSIBILITY OF THESE TWO PROPERTIES BEING AVAILABLE/READY TO BE USED FOR THE PURPOSES OF THE BUSINESS OF THE ASSESSEE. THE CONCEPT OF BLOCK OF ASSETS AS DEFINED U/S 2(11) OF THE 1961 ACT CANNOT BE STRETCHED TO AN EXTENT WHEREIN SEPARATE AND DISTINCT PROPERTI ES ACQUIRED BY ASSESSEE WERE LET OUT ON RENT FOR YEARS AND THERE IS NO USAGE OF THES E PROPERTIES FOR PURPOSES OF BUSINESS OR PROFESSION OF THE ASSESSEE NOR THERE IS ANY POSSIBILITY OF THESE PROPERTIES BEING READY /AVAILABLE TO BE USED FOR TH E PURPOSES OF BUSINESS OF THE ASSESSEE, MERELY ON THE GROUNDS THAT THESE PROPERTI ES CONTINUED TO FORM PART OF BLOCK OF ASSET AS DEFINED U/S 2(11). USER OF THE AS SET FOR THE PURPOSES OF BUSINESS OR PROFESSION OF THE ASSESSEE IS A PRE-CONDITION FOR G RANT OF DEPRECIATION U/S 32 OF 1961 ACT AND THESE TWO PROPERTIES WERE IN FACT LET OUT ON RENT FOR LENGTHY PERIOD OF TIME FROM EARLIER YEARS AS EMANATING FROM RECORDS A ND AS SUBMITTED BEFORE US BY LEARNED COUNSEL FOR THE ASSESSEE, INCOME OF WHICH W AS OFFERED FOR TAXATION BY ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTI ES. IT IS ALTOGETHER DIFFERENT THAT SOME OF THE ASSETS WHICH FORM PART OF THE BLOC K OF ASSETS MAY NOT BE TEMPORARILY USED FOR BUSINESS BUT SINCE THEY FORM P ART OF THE BLOCK OF ASSET ON WHICH SAME RATE OF DEPRECIATION IS PRESCRIBED , THE DEPRECIATION STOOD ALLOWED ON CONCEPT OF PASSIVE USER BUT WHERE BUSINESS USAGE IS HIT BY DOCTRINE OF IMPOSSIBILITY ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 12 AS THESE PROPERTIES OVER YEARS CONTINUED TO BE LET OUT ON RENT , INCOME THEREOF BEING OFFERED TO TAX UNDER THE HEAD INCOME FROM HO USE PROPERTY , THE DEPRECIATION U/S 32 CANNOT BE ALLOWED MERELY BECAUS E THESE PROPERTIES CONTINUED TO BE PART OF BLOCK OF ASSETS DESPITE BEING NEVER U SED FOR BUSINESS PURPOSES UNINTERRUPTEDLY SPREAD OVER SEVERAL YEARS. MERELY B ECAUSE DEPRECIATION WAS ALLOWED BY REVENUE IN EARLIER YEARS ON THESE TWO PR OPERTIES DESPITE BEEN LET OUT ON RENT FOR UNINTERRUPTEDLY FOR SEVERAL YEARS MERELY O N GROUND THAT THESE PROPERTIES FALL WITHIN BLOCK OF ASSETS CANNOT BE A GROUND TO A LLOW THE SAME IN THE YEAR UNDER CONSIDERATION UNLESS STATUTE PERMITS THE SAME. IT I S WELL SETTLED THAT EVERY YEAR IS AN INDEPENDENT UNIT AND MERELY BECAUSE DEPRECIATION WA S ALLOWED EARLIER BY REVENUE ERRONEOUSLY DOES NOT MEAN THAT THE SAME WILL CONTIN UED TO BE ALLOWED IN THIS YEAR ALSO. ALLOWING DEPRECIATION U/S 32 OF THE 1961 ACT ON THESE TWO LET OUT PROPERTIES WHICH ARE DISTINCT, INDEPENDENT AND SEPARATELY IDEN TIFIABLE PROPERTIES, ON THE GROUNDS THAT THEY FORM PART OF BLOCK OF ASSET , WIL L LEAD TO TAKING CONCEPT OF BLOCK OF ASSET TO LIMITS OF ABSURDITY , KEEPING IN VIEW P ECULIAR FACTUAL MATRIX PREVAILING IN THE INSTANT APPEAL AND DOCTRINE OF SUPERVENING IMPO SSIBILITY OF BUSINESS USAGE OF THESE PROPERTIES . THERE IS ADMITTEDLY NO BUSINESS USER OF THESE TWO PROPERTIES BY ASSESSEE FOR ITS BUSINESS FOR THE ENTIRE YEAR UNDER CONSIDERATION AS WELL FOR EARLIER YEARS. THE CONCEPT OF BLOCK OF ASSET CANNOT BE STRE TCHED TO AN EXTENT WHERE IT LEADS TO AN ABSURDITY. REFERENCE IS DRAWN TO OBSERVATION OF LORDSHIPS IN T HE CASE OF OSWAL AGRO MILLS LIMITED(SUPRA) WHEREIN LORDSHIPS OBSERVED IN PARA 2 1 OBSERVED IN CONTEXT OF PASSIVE USER OF THE ASSETS AS UNDER: '21. WE FEEL THAT COUNSEL FOR THE REVENUE IS RIGHT IN THEIR SUBMISSION. IN THE INSTANT CASE, THE ENTIRE BHOPAL UNIT CAME TO A STAN DSTILL AND THERE WAS A COMPLETE HALT IN ITS FUNCTIONING FROM THE ASSESSMEN T YEAR 1997-98. IN THAT YEAR, THE ASSESSING OFFICER STILL ALLOWED THE DEPRE CIATION TREATING IT TO BE A 'PASSIVE USER'. HOWEVER, WHEN IT WAS FOUND THAT EVE N IN SUBSEQUENT YEAR, THE BHOPAL UNIT REMAINED NON-FUNCTIONAL, ASSESSING OFFICER(S) DISALLOWED THE DEPRECIATION. PRESENT APPEALS RELATE TO THE ASS ESSMENT YEARS FROM 1998- 99. IN THE PROCESS SIX YEARS PASSED TILL THE LAST A SSESSMENT YEAR BEFORE US, BUT THERE WAS NO SIGN OF THIS UNIT BECOMING FUNCTIO NAL. THE 'PASSIVE USER', IN THESE CIRCUMSTANCES, CANNOT BE EXTENDED TO ABSURD L IMITS. OTHER- WISE, THE WORDS 'USED FOR THE PURPOSE OF BUSINESS' WILL LOSE THEIR TOTAL SANCTITY. IT CANNOT BE THE INTENTION OF THE LEGISLATURE THAT THE WORDS 'USED' WHEN IT IS TO BE INTERPRETED IN A WIDER SENSE TO MEAN, 'READY TO USE', THE SAME IS STRETCHED TO THE LIMITS OF NON-USER FOR NUMBER OF Y EARS.' (EMPHASIS SUPPLIED BY US) THE CASE LAWS RELIED UPON BY ASSESSEE ARE DI STINGUISHABLE. IN THE CASE OF OSWAL AGRO(SUPRA), THE TAX-PAYER WAS IN BUSINESS AND ITS BHOPAL UNIT WAS LYING CLOSED FOR SEVERAL YEARS BUT SINCE THE ASSET FORMED PART OF BLOCK OF ASSET, HONBLE DELHI HIGH COURT HELD DEPRECATION U/ S 32 SHALL BE ALLOWED KEEPING IN VIEW NEW SCHEME OF TAXATION WHEREIN CONC EPT OF BLOCK OF ASSETS AS DEFINED U/S 2(11) IS INTRODUCED BY FINANCE(NO. 2 ) ACT, 1998 W.E.F. 01.04.1999. IN THE CASE OF OSWAL AGRO(SUPRA), THE Q UESTION BEFORE THE COURT WAS NOT THAT THE USER OF THE SAID ASSET CHANGED FRO M BEING FOR THE PURPOSES OF THE BUSINESS OF TAX- PAYER TO THAT OF LETTING OU T ON RENT , INCOME OF WHICH IS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HO USE PROPERTY. THE ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 13 BHOPAL UNIT ALBEIT WAS LYING CLOSED FOR SEVERAL YEA RS WAS INFACT CONTINUED TO BE BUSINESS ASSET OF THE ASSESSEE. SIMILAR, IS THE CASE OF G.R.SHIPPING LIMITED (SUPRA) RELIED UPON BY ASSESSEE. IN THIS CASE OF G. R.SHIPPING LIMITED (SUPRA) , ONE BARGE NAMED JAY-II COULD NOT BE USED BY TAX- PA YER FOR ITS BUSINESS OWING TO ACCIDENT NOR IT WAS SENT FOR REPAIRS, THE TRIBUNAL ALLOWED DEPRECIATION AS IT FORM PART OF BLOCK OF ASSET. THE SAID BARGE WAS LATER SOLD BY THE TAX-PAYER. THE SAID ORDER OF TRIBUNAL WAS UP HELD BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. G.R.SHIPPING LIMIT ED IN ITA NO. 598 OF 2009 VIDE JUDGMENT DATED 28.07.2009. THE FACT REMAINS TH AT SAID BARGE JAY II NEVER CEASED TO BE BUSINESS ASSET OF THE TAX-PAYER. IN THE INSTANT CASE BEFORE US, THE TWO HOUSE PROPERTIES MAY AT SOME POI NT OF TIME SEVERAL YEARS AGO WAS USED FOR BUSINESS OF THE ASSESSEE BUT FOR L AST SEVERAL YEARS , THESE PROPERTIES WERE LET OUT INCOME THEREOF OFFERED FOR TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTIES. THE ASSESSEE MANIFE STED ITS INTENTION OF CHANGE OF USER FROM BUSINESS TO THAT OF GIVING THES E PROPERTIES ON RENT FOR LONGER PERIOD OF TIME WHEREIN DOCTRINE OF SUPERVENI NG IMPOSSIBILITY HAD SET IN PREVENTING BUSINESS USER OF THESE PROPERTIES FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE. SIMILAR IS THE CASE OF ANSAL PROPE RTIES(SUPRA), WHEREIN THE HONBLE DELHI HIGH COURT WAS NOT SEIZED OF THE MATT ER CONCERNING CHANGE OF USER OF THE ASSETS BY THE TAXPAYER. THUS, SO FAR AS THESE TWO HOUSE PROPERTIES WHICH WERE ACQUIRED IN EARLIER YEARS AND WERE LET OUT ON RENT FROM YEARS INCLUDING YEAR UNDER CONSIDERATION , INC OME THEREOF WAS OFFERED FOR TAXATION BY ASSESSEE UNDER THE HEAD INCOME FRO M HOUSE PROPERTY , NO DEPRECIATION CAN BE ALLOWED U/S 32 AS THERE IS NO B USINESS USER OF THESE TWO PROPERTIES BY ASSESSEE FOR THE ENTIRE YEAR AS WELL FOR EARLIER YEARS. THESE TWO PROPERTIES ARE NOT EVEN AVAILABLE OR READY TO B E USED FOR BUSINESS PURPOSES AS THESE ARE LET OUT ON RENT FOR YEARS AND DOCTRINE OF SUPERVENING IMPOSSIBILITY OF BUSINESS USER HAS SET IN KEEPING I N VIEW LONG PERIOD OF THESE PROPERTIES BEING LET OUT . THE ASSESSEE HAS MANIFES TED ITS INTENTIONS BY LETTING OUT THESE PROPERTIES ON RENT FOR LAST SEVER AL YEARS THAT IT INTENDS NOT TO USE THESE PROPERTIES FOR THE PURPOSES OF ITS BUS INESS WHICH IS WRIT LARGE FROM THE FACTS AS EMANATING FROM RECORDS AND AS STA TED BY LEARNED COUNSEL OF THE ASSESSEE BEFORE US. UNDER THESE CIRCUMSTANCE S , WE HOLD THAT NO DEPRECATION U/S 32 OF THE 1961 ACT CAN BE ALLOWED O N THESE TWO PROPERTIES WHICH WERE ACQUIRED IN EARLIER YEARS AND WERE LET O UT THROUGHOUT THE YEAR UNDER CONSIDERATION INCOME THEREOF BEING OFFERED FO R TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTIES, AS DOCTRINE OF SUPERV ENING IMPOSSIBILITY HAS SET IN AS NEITHER THESE PROPERTIES WERE USED FOR BU SINESS PURPOSES, NOR READY TO BE USED FOR BUSINESS NOR AVAILABLE FOR BUS INESS USER FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE, FOR THE ENTIR E YEAR UNDER CONSIDERATION. THUS, DEPRECATION U/S 32 OF THE 1961 ACT UNDER THESE CIRCUMSTANCES CAN NOT BE ALLOWED ON THESE TWO PROPE RTIES MERELY ON THE GROUNDS THAT ONCE THESE PROPERTIES ENTERED BLOCK OF ASSETS VIZ. BUILDING MANY YEARS BACK AND CONTINUES TO BE PART OF BLOCK O F ASSET VIZ. BUILDING DESPITE THE FACT THAT FACTUAL MATRIX SURROUNDING TH ESE TWO PROPERTIES HAD UNDERGONE SUBSTANTIAL CHANGE OVER YEARS WHICH CANNO T BE GIVEN COMPLETE GO BYE. WE ORDER ACCORDINGLY. ITA NO.2957/M/2018 M/S. EMCO DYESTUFF PVT. LTD. 14 12. SINCE THE ISSUE INVOLVED IN THE CURRENT YEAR IS ALSO IDENTICAL, WE DIRECT THE AO TO DECIDE THE SAME BY F OLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN A. Y. 2013-14 AS STATED ABOVE. ACCORDINGLY, THE APPEAL OF THE ASSES SEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18.02.2020. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 18.02.2020. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.