METRO EXPORTS P.LTD, V. ASST CIT 6(3),

MA 414/MUM/2014

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 2692 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 17-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Keywords: Capital asset; Depreciation; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI . . , , BEFORE SHRI I. P. BANSAL, JM AND SHRI SANJAY ARORA , AM ./MA NO.414/MUM/2014 (ARISING OUT OF ITA NO. 7315/MUM/2012) ( / ASSESSMENT YEARS: 2008-09) METRO EXPORTERS PVT. LTD. KAKAD CHAMBERS, 132, DR. A. B. ROAD, WORLI, MUMBAI-400 018 / VS. ASST. CIT, CIRCLE 6(3), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI 400 020 ! ./# ./PAN/GIR NO. AABCM 0349 J ( APP LICANT ) : ( RESPONDENT ) & ./MA NO.414/MUM/2014 (ARISING OUT OF ITA NO. 7315/MUM/2012) ( / ASSESSMENT YEARS: 2008-09) INCOME TAX APPELLATE TRIBUNAL PRATISHTHA BHAVAN, 101, M. K. ROAD, MUMBAI-400 020 / VS. METRO EXPORTERS PVT. LTD. KAKAD CHAMBERS, 132, DR. A. B. ROAD, WORLI, MUMBAI-400 018 ! ./# ./PAN/GIR NO. AABCM 0349 J ( APP LICANT ) : ( RESPONDENT ) ./ I.T.A. NO. 7315/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) METRO EXPORTERS PVT. LTD. KAKAD CHAMBERS, 132, DR. A. B. ROAD, WORLI, MUMBAI-400 018 / VS. ASST. CIT, CIRCLE 6(3), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI 400 020 ! ./# ./PAN/GIR NO. AABCM 0349 J ( !$ /APPELLANT ) : ( %&!$ / RESPONDENT ) 2 MA NO. 414/MUM/2014 ITA NO. 7315/MUM/2012 (A.Y. 2008-09) METRO EXPORTERS PVT. LTD. ASSESSEE BY : SHRI PIYUSH CHHAJED REVENUE BY : SHRI VIVEK BATRA ' ( ) *+ / DATE OF HEARING : 16.01.2015 ,-. ) *+ / DATE OF PRONOUNCEMENT : 30.01.2015 / / O R D E R PER SANJAY ARORA, A. M.: THIS IS A SET OF TWO MISCELLANEOUS APPLICATIONS (MA S) ARISING OUT THE ORDER U/S. 254(1) OF THE INCOME TAX ACT, 1961 (THE ACT HEREI NAFTER) DATED 30/9/2014, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S. 143(3) OF THE ACT FOR ASSESSMENT YEAR (A.Y.) 2008-09. WE SHALL TAKE BOTH OF THEM IN SERIATIM. MA NO. 414/MUM/2014 (AT THE INSTANCE OF THE TRIBUNA L) 2. A RECTIFICATION WAS MOVED AT THE INSTANCE OF THE TRIBUNAL ITSELF VIDE ORDER SHEET ENTRY DATED 01.10.2014, THE COPY OF WHICH, STATING THE REASON/S FOR THE SAME, WAS COMMUNICATED TO THE PARTIES ALONG WITH THE NOTICE U /S. 254(2). THE BACKGROUND FACTS ARE THAT THE ASSESSEE HAD CLAIMED DEPRECATION ON A LEAS ED BUILDING, LEASE IN RESPECT OF WHICH HAD EXPIRED, SO THAT THE SAID PREMISES STOOD VACATE D BY IT. THE DISALLOWANCE OF THE SAID CLAIM (RS.1.92 LACS) FOR THE CURRENT YEAR WAS CONFI RMED BY THE TRIBUNAL WITH REFERENCE TO THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COU RT IN DINESHKUMAR GULABCHAND AGARWAL VS. CIT [2004] 267 ITR 768 (BOM) AND BY THE TRIBUNAL IN ASST. CIT VS. RISHIROOP POLYMERS (P.) LTD. [2006] 102 ITD 129 (MUM). THE ASSESSEES ALTERNATE CLAIM FOR ALLOWANCE OF TERMINAL DEPRECATION ON THE ENTIRE AMOUNT OF WRITTEN DOWN VALUE (WDV) OF THE RELEVANT ASSET, WRITTEN OFF IN ACCOUNTS, U/S .32(1)(III); THE SAID ASSET HAVING BEEN DISCARDED, WAS ALSO CONSIDERED INADMISSIBLE BY THE TRIBUNAL ON THE GROUND THAT THE ASSET HAD NOT BEEN BROUGHT TO USE IN ANY EARLIER YEAR. HO WEVER, IT SUBSEQUENTLY CAME TO ITS NOTICE THAT THE PROVISION OF SECTION 32(1)(III) IS APPLICABLE ONLY TO ASSETS SUBJECT TO 3 MA NO. 414/MUM/2014 ITA NO. 7315/MUM/2012 (A.Y. 2008-09) METRO EXPORTERS PVT. LTD. DEPRECATION U/S.32(1)(I), I.E., THE ASSETS OF AN UN DERTAKING ENGAGED IN THE GENERATION AND DISTRIBUTION OF POWER, ON WHICH DEPRECIATION IS ALL OWED AS A PERCENTAGE AS PRESCRIBED ON THE ACTUAL COST. SEC. 32(1)(III) WAS THUS NOT APPLI CABLE TO THE ASSET UNDER QUESTION. THOUGH IT DID NOT IMPACT THE RESULT, INASMUCH THE ASSESSEE S CLAIM FOR THE AMOUNT WRITTEN OFF STOOD REJECTED, THE SAID REASON AS RECORDED BY THE TRIBUNAL WAS INCORRECT ON FACTS AND IN LAW. AT THE TIME OF HEARING, OBSERVING THAT NO NUMBER HA D BEEN ALLOWED TO THE RECTIFICATION PROPOSED SUO MOTU BY THE TRIBUNAL, THE BENCH DIRECTED THE REGISTRY T O ASSIGN A NUMBER THERETO VIDE ORDER SHEET ENTRY DATED 14.11 .2014. THE ASSESSEE ALSO BRINGING TO THE NOTICE OF THE BENCH OF A PROPOSED MISCELLANEOUS PETITION U/S. 254(2) BY IT, HEARING WAS ADJOURNED TO A FRESH DATE. IT WAS ALSO MADE CL EAR THAT THE IMPUGNED ORDER, IF REQUIRED TO BE RECALLED ON A PARTICULAR ISSUE, THE SAME WOUL D ALSO BE HEARD ALONG WITH. ON THE NEXT DATE OF HEARING, IT WAS OBSERVED THAT THE REGISTRY HAD DUE TO SOME MISUNDERSTANDING ALLOTTED THE SAME NUMBER TO THE RECTIFICATION PROPO SED BY THE BENCH, I.E., AS TO THAT BY THE ASSESSEE, SINCE FILED ON 17.11.2014. HOWEVER, FINDI NG THAT THE APPLICATION MOVED BY THE ASSESSEE ALSO CONCERNED THE DISALLOWANCE OF THE CLA IM FOR DEPRECIATION ALLOWANCE ON LEASED BUILDING, THE HEARING WAS PROCEEDED WITH, SO THAT THE RECTIFICATION PROPOSED BY THE TRIBUNAL WOULD ALSO STAND TO BE COVERED UNDER THE S AME NUMBER, I.E., FOR IDENTIFICATION PURPOSES. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE ORDER SHEET ENTRY DATED 01.10.2014 READS AS UNDER: ORDER IN THE INSTANT CASE WAS PASSED ON 30.09.2014 . PER ITS THIRD GROUND THE ASSESSEE HAD, BESIDES THE CLAIM FOR DEPRECIATION TH EREON, ALSO RAISED AN ALTERNATE CLAIM IN RESPECT OF THE ENTIRE CAPITAL EXPENDITURE ON THE LEASED PREMISES, WRITTEN OFF IN BOOKS OF ACCOUNT ON THE VACATION OF THE SAID PREMISES. THE TRIBUNAL HAS DEALT WITH THIS ASPECT OF THE MATTER VIDE PARA 7 (P GS. 5-7) OF ITS ORDER, WITH THE RELEVANT FINDINGS BEING CONTAINED IN THE PARAGRAPH STARTING WITH THE WORDS THE DISCARDING OF THE ASSET. (AT PG. 7 OF THE ORDER) . THE TRIBUNAL MOVED ON THE PREMISE THAT SECTION 32(1)(III) IS APPLICABLE TO TH E ASSESSEE, THOUGH THEREBY CITED ITS REASON/S FOR THE CLAIM BEING NOT ADMISSIBLE THERE-U NDER IN THE FACTS OF THE CASE. 4 MA NO. 414/MUM/2014 ITA NO. 7315/MUM/2012 (A.Y. 2008-09) METRO EXPORTERS PVT. LTD. THE SAID PROVISION HOWEVER IS APPLICABLE ONLY IN RE SPECT OF ASSETS OF AN UNDERTAKING ENGAGED IN THE GENERATION AND DISTRIBUT ION OF POWER, DEPRECIATION ON WHICH IS EXIGIBLE U/S.32(1)(I). THE ORDER BY THE TR IBUNAL THUS SUFFERS FROM A MISTAKE APPARENT FROM RECORD; THE ASSESSEE BEING AD MITTEDLY A COMPANY IN THE MANUFACTURING OF GARMENTS AND BICYCLES AND NOT ENGA GED IN THE PRODUCTION AND DISTRIBUTION OF POWER. THE DISCOVERY OF THE SAID MI STAKE, NOTICED SUO MOTU , WOULD NECESSITATE AMENDING THE ORDER WITH A VIEW TO RECTI FYING THE SAID MISTAKE APPARENT FROM THE RECORD. HOWEVER, WE ONLY CONSIDER IT PROPE R TO, BEFORE GIVING EFFECT THERETO, PUT THE PARTIES TO NOTICE OF THE PROPOSED AMENDMENT, ALLOWING AN OPPORTUNITY FOR BEING HEARD IN THE MATTER, I.E., AS TO THE NON-APPLICATION OF THE PROVISION OF SECTION 32(1)(III) IN THE INSTANT CASE . ACCORDINGLY, THE DATE OF HEARING FOR THE PURPOSE IS FIXED FOR 14.11.2014 . INFORM PARTIES. ISSUE NOTICE U/S. 254(2), ENCLOSING ALONG WITH A COPY OF THIS ORDER SHEET ENT RY. 3.2 THE REASON FOR THE PROPOSED RECTIFICATION IS AP PARENT FROM A READING OF THE ORDER SHEET AS WELL AS THE FACTS AS NARRATED AT PARA 2 OF THIS ORDER. NO OBJECTION THERETO WAS RAISED BY EITHER PARTY DURING HEARING, EVEN AS IT W AS CLARIFIED THAT THE HEARING HAD CALLED ONLY TO ALLOW THEM TO STATE THEIR OBJECTIONS, IF AN Y, THERETO. WE, ACCORDINGLY, CONFIRM THE DISALLOWANCE OF THE ASSESSEES ALTERNATE CLAIM OF D EPRECIATION FOR THE ENTIRE AMOUNT OF WDV OF THE RELEVANT ASSET, THOUGH FOR THE REASONS A FORE-STATED, AND FOR WHICH REFERENCE MAY BE MADE TO THE FOREGOING PARA (2) OF THIS ORDER AS WELL AS THE ORDER SHEET ENTRY DATED 01/10/2014, WHICH MAY BE READ ALONG WITH THE ORIGIN AL ORDER U/S.254(1) DATED 30.09.2014. THE PART OF THE PARA 7 THEREOF, BEGINNI NG WITH THE WORDS THE DISCARDING OF THE ASSET.., AND ENDING WITH THE WORDS .. ALSO N OT HOLD. IS TO BE EXPUNGED. WE DECIDE ACCORDINGLY. MA NO. 414/MUM/2014 (AT THE INSTANCE OF THE ASSESSE E) 4. THE ASSESSEE HAS ALSO MOVED A MISCELLANEOUS APPL ICATION, RAISING TWO ISSUES, WHICH WE SHALL TAKE UP IN SERIATIM. 5. PER THE FIRST ISSUE, RAISED VIDE GROUNDS 3 TO 10 OF ITS MA, THE ASSESSEE CONTENDS THAT IT HAD CHALLENGED THE DISALLOWANCE U/S.14A BEF ORE THE FIRST APPELLATE AUTHORITY ON THE GROUND THAT NO SATISFACTION HAD BEEN RECORDED BY TH E ASSESSING OFFICER (A.O.) PRIOR TO 5 MA NO. 414/MUM/2014 ITA NO. 7315/MUM/2012 (A.Y. 2008-09) METRO EXPORTERS PVT. LTD. EFFECTING THE DISALLOWANCE U/S.14A, WHICH IS MANDAT ORY, HAVING A BEARING ON THE VALIDITY IN LAW OF THE SAME. BEFORE THE TRIBUNAL ALSO A PLEA DING IN ITS RESPECT WAS MADE, ADVERTING TO THE DECISION IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT [2012] 347 ITR 272 (DEL). THE TRIBUNAL HAD THOUGH SET ASIDE THE MATTER BACK T O THE FILE OF THE LD. CIT(A), HAS NOT REFERRED TO THE SAID ASPECT OF THE MATTER, OR FOR T HAT MATTER TO THE SAID DECISION, CONSIDERING WHICH THE SET ASIDE ITSELF WOULD NOT HA VE BEEN WARRANTED. 6. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE FIRSTLY OBSERVE NO SPECIFIC GROUND RAISED BY THE ASSESSEE BEFORE TH E TRIBUNAL OR, FOR THAT MATTER BEFORE THE FIRST APPELLATE AUTHORITY, IN THE MATTER. FURTHER, NO PLEADING IN ITS RESPECT WAS ALSO MADE DURING THE COURSE OF THE HEARING. THE DECISION IN T HE CASE OF MAXOPP INVESTMENT LTD. (SUPRA) WAS NEITHER CITED BEFORE US NOR IS A COPY T HEREOF ON RECORD. IN ANY CASE, EVEN AS OBSERVED AT THE TIME OF HEARING, THE MATTER HAS BEE N SET ASIDE BACK TO THE FILE OF THE FIRST APPELLATE AUTHORITY TO ADJUDICATE THE ASSESSEES CA SE AFRESH, I.E., QUA THE SAID DISALLOWANCE, ALLOWING THE ASSESSEE OPPORTUNITY TO PRESENT ITS CASE ON BOTH THE FACTUAL AND LEGAL ASPECTS. WE ARE, THUS, UNABLE TO SEE AS TO HO W ANY PREJUDICE STANDS CAUSED BY THE SAID DECISION BY THE TRIBUNAL. THE RELEVANT GROUNDS ARE, ACCORDINGLY, DISMISSED. 7. VIDE ITS GROUNDS 11 TO 20, THE ASSESSEE SEEKS TO BRING TO THE NOTICE OF THE TRIBUNAL THAT THE ASSET UNDER REFERENCE IS NOT A BUILDING, B UT REPAIR AND RENOVATION EXPENDITURE IN RESPECT OF A LEASED BUILDING, WHICH STANDS CAPITALI ZED UNDER THE BLOCK OF ASSETS FURNITURE, FIXTURE AND ELECTRICAL FITTINGS. ACCORDINGLY, THE BASIS ON WHICH THE DISALLOWANCE HAS BEEN CONFIRMED BY THE TRIBUNAL, I.E., THE VACATION OF TH E PREMISES, AND, ACCORDINGLY, ITS NON- USER, WOULD NOT HOLD. REFERENCE IN THIS MATTER STAN DS MADE TO THE STATEMENT OF DEPRECIATION AT PB PG. 37, ATTENTION TO WHICH, IT I S CLAIMED, WAS DRAWN BY THE ASSESSEE DURING THE HEARING OF THE ASSESSEES APPEAL. 8. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE FIND THAT THE STATEMENT OF THE DEPRECIATION ALLOWABLE UNDER THE A CT (ANNEXURE VIII TO FORM 3CD, AT PB PG. 37) WAS MADE BY THE LD. AUTHORIZED REPRESENT ATIVE (AR) DURING HEARING, 6 MA NO. 414/MUM/2014 ITA NO. 7315/MUM/2012 (A.Y. 2008-09) METRO EXPORTERS PVT. LTD. SPECIFICALLY ADVERTING TO THE OPENING WDV OF THE BL OCK OF ASSETS FURNITURE, FIXTURE AND ELECTRICAL FITTINGS, WHICH IS STATED AT RS.53,09,0 65/-. THE TRIBUNAL HAS MOVED ON THE BASIS THAT THE ASSET UNDER REFERENCE IS A BUILDING COVERE D UNDER EXPLANATION 1 TO SECTION 32(1)(II). THE DECISION THUS STANDS RENDERED ON AN INCORRECT FACTUAL PREMISE OR, IN ANY CASE, ONE INCONSISTENT WITH THE CONTENTIONS BY THE ASSESSEE IN ITS RESPECT, WITHOUT MEETING THE SAME. THE ORDER BY THE TRIBUNAL, ACCORDINGLY, C ONTAINS A MISTAKE APPARENT FROM RECORD, I.E., QUA THIS ASPECT, AND IS ACCORDINGLY RECALLED FOR BEING CONSIDERED AFRESH. WE DECIDE ACCORDINGLY, ALLOWING THE RELEVANT GROUNDS O F THE MA. RESULT 9. MA NO. 414/2014 IS ACCORDINGLY DISPOSED OF ON TH E AFORE-SAID TERMS, AND IS IN RESULT PARTLY ALLOWED. ORDER U/S. 254(1) (IN ITA NO. 7315/MUM/2012) 10. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. THE BACKGROUND FACTS DESCRIBING THE ISSUE, LEADING TO THE RECALL O F THE ORDER, STAND NOTED AT PARAS 2, 3, 7 & 8 OF THIS ORDER. EXPENDITURE ON REPAIR AND RENOVATI ON OF A LEASED PREMISES WAS CAPITALIZED BY THE ASSESSEE UNDER THE HEAD FURNITURE AND FITTI NGS, INCLUDING THE SAME IN THE RELEVANT BLOCK OF ASSETS. THE SAID PREMISES BEING VACATED BY THE ASSESSEE ON THE EXPIRY/ TERMINATION OF THE LEASE AGREEMENT, THE ASSESSEE WR OTE OFF THE ENTIRE BALANCE, WORKED OUT AT RS.19.20 LACS, AS INCLUDED IN THE TOTAL OPENING VALUE OF THE RELEVANT BLOCK OF ASSETS OF RS.53.09 LACS. WE OBSERVE NO FINDING OF FACT IN ITS RESPECT IN THE ORDERS OF THE AUTHORITIES BELOW, WHO HAVE DISALLOWED THE ASSESSEES CLAIM OF DEPRECIATION THEREON (AT RS.1,90,200/-)(THOUGH THE CORRECT SUM OF DEPRECIATI ON ON THE CORRESPONDING VALUE OF OPENING WDV OF THE RELEVANT BLOCK OF ASSETS WOULD S EEM TO US TO BE RS.1.92 LACS) SOLELY ON THE BASIS OF THE RELEVANT ASSET BEING NO LONGER IN EXISTENCE, OR OF THE ASSESSEE BEING NO LONGER ITS OWNER. WE ALSO DO NOT OBSERVE ANY NOTE IN THE BALANCE-SHEET OR IN THE COMPUTATION STATEMENT ACCOMPANYING THE ASSESSEES R ETURN (PB PGS. 1-3). THE MATTER WOULD THEREFORE REQUIRE BEING RESTORED BACK FOR DET ERMINATION OF FACTS. WE, ACCORDINGLY, 7 MA NO. 414/MUM/2014 ITA NO. 7315/MUM/2012 (A.Y. 2008-09) METRO EXPORTERS PVT. LTD. RESTORE THE MATTER BACK TO THE FILE OF THE FIRST AP PELLATE AUTHORITY, AS WAS DONE IN THE CASE OF DISALLOWANCE U/S.14A, FOR THE PURPOSE. ON PRINCIPLE, I.E., ASSUMING THE AMOUNT, AS CLAIMED , FORMS PART OF THE BLOCK OF ASSETS FURNITURE AND FITTINGS, AND STANDS CARRIED OVER FROM AN EARLIER YEAR, WE FIND THE ASSESSEES CLAIM AS VALID. SECTION 43(6)(C), DEFINI NG WDV OF A BLOCK OF ASSETS, CLEARLY STIPULATES A REDUCTION FROM THE OPENING WDV FOR THE MONEYS PAYABLE IN RESPECT OF ANY ASSET FALLING WITHIN A BLOCK OF ASSETS, WHICH IS SO LD OR DESTROYED OR DEMOLISHED OR DISCARDED DURING THE RELEVANT PREVIOUS YEAR. FURNIT URE AND FITTINGS, TO THE EXTENT IT IS THE PART OF THE LEASEHOLD BUILDING, COULD NOT BE REMOVE D BY THE ASSESSEE ON ITS VACATION. IN ANY CASE, THE DECISION TO CONTINUE TO USE THE SAME OR DISCARD AN ASSET WOULD ONLY BE WITHIN THE EXCLUSIVE DOMAIN OF THE ASSESSEE AS ITS OWNER OR USER. FURTHER, TO THE EXTENT NO SUM HAS BEEN REALIZED ON THE DISCARD OF THE ASSET, MONEYS PAYABLE U/S. 43(6)(C)(I)(B) WOULD BE NIL. FURTHER ON, EVEN WHERE THE AMOUNT UND ER REFERENCE (OR A PART THEREOF), AS PRESUMED BY THE TRIBUNAL WHILE PASSING ITS EARLIER ORDER DATED 30/9/2014, IS A PART OF THE BLOCK OF ASSETS BUILDING, OR LIABLE TO BE SO CONS IDERED, DEPRECATION ON THAT PART OF THE WDV OF THE RELEVANT BLOCK OF ASSETS CAN, IN OUR VIE W; THE QUALIFYING CONDITIONS OF THE RELEVANT PROVISION (SECTION 43(6)(C)) BEING SATISFI ED, BE CLAIMED. TRUE, THE DEEMING OF OWNERSHIP UNDER EXPLANATION 1 TO SECTION 32(1)(II) WOULD EXTEND TO THE PERIOD F OR WHICH THE ASSESSEE HOLDS LEASE OR OTHER RIGHT OF OCCUPANC Y OF THE PREMISES, SO THAT THE ASSESSEE CAN NO LONGER BE CONSIDERED AS AN OWNER OF THE RELE VANT ASSET, I.E., EITHER FOR THE PURPOSES OF THE RELEVANT PROVISION (U/S.32(1)(II)), OR EVEN GENERALLY. SO, HOWEVER, HOW, ONE MAY ASK, COULD ONE CONTINUE TO BE AN OWNER OF AN ASSET WHICH IS SOLD OR DESTROYED OR DEMOLISHED OR EVEN DISCARDED ? THE CONDITION OF CONTINUING OWNERSHIP OF A DEPREC IABLE CAPITAL ASSET IS NOT A PRE-CONDITION FOR THE ALLOWA NCE OF DEPRECIATION UNDER ANY OF THE INSTANCES SPECIFIED IN SECTION 43(6)(C)(I)(B). DEPR ECIATION IS, IT NEEDS TO BE APPRECIATED, AFTER THE INTRODUCTION OF THE CONCEPT OF BLOCK OF ASSETS, NO LONGER ALLOWED ON OR WITH REFERENCE TO A PARTICULAR CAPITAL ASSET, BUT ON THE VALUE OF ALL THE ASSETS WHICH COMPRISES A BLOCK OF ASSETS, I.E., ASSETS FALLING IN A PARTICUL AR CLASS OF ASSETS, AS SPECIFIED, FOR WHICH A 8 MA NO. 414/MUM/2014 ITA NO. 7315/MUM/2012 (A.Y. 2008-09) METRO EXPORTERS PVT. LTD. PARTICULAR RATE OF DEPRECIATION IS PRESCRIBED, FOR THE TIME BEING. IT IS FOR THIS REASON THAT THOUGH AN ASSET FORMING PART OF THE BLOCK OF ASSETS STANDS SOLD, ETC., DEPRECIATION ON ITS CORRESPONDING VALUE, I.E., AS INCLUDED IN THE WDV O F THE RELEVANT BLOCK OF ASSETS, SAVE THE ADJUSTMENT THERETO FOR THE VALUE REALIZED ON ITS SA LE, ETC., DEFINED AS MONEYS PAYABLE, WHICH MAY EVEN EXCEED THE BLOCK (CARRYING) VALUE, W OULD CONTINUE TO BE ALLOWED. IT IS THIS THAT HAS LED THE HONBLE COURTS TO HOLD THAT O NCE AN ASSET ENTERS A BLOCK OF ASSETS, IT LOSES ITS IDENTITY, SO AS TO UNABLE THE APPLICATION OF THE USER TEST. THE ASSET MUST, OF- COURSE, I.E., IMMEDIATELY PRIOR TO ITS SALE, ETC. B E A BUSINESS ASSET AND, THUS, A QUALIFYING ASSET, ON WHICH ASPECT WE OBSERVE NO DOUBT OR DISPU TE IN THE INSTANT CASE. COMING TO THE DECISION IN THE CASE OF RISHIROOP POLYMERS (P.) LTD. (SUPRA), RENDERED FOLLOWING THE DECISION BY DINESHKUMAR GULABCHAND AGARWAL (SUPRA), RELIED UPON BY THE LD. CIT(A), IN OUR VIEW, THE SAID RELIA NCE IS MISPLACED. COULD AN ASSET, ONE MAY ASK, BE USED OR SUBJECT TO USER WHERE THE SAME IS NO LONGER IN THE ASSESSEES OWNERSHIP OR EXISTENCE OR INCAPABLE OF BEING USED, WHICH IS WHAT THE CONDITION/S OF SALE; DESTROYED; DEMOLISHED; DISCARD, AS PRESCRIBED U/S.4 3(6)(C)(I)(B), CONTEMPLATE. THE QUESTION OF THE CONDITION OF USER OR ITS APPLICABIL ITY DOES NOT ARISE UNDER SUCH CIRCUMSTANCES. WE ARE NOT FOR A MOMENT, WE MAY CLAR IFY, MEANING TO SUGGEST OR ADVOCATE THAT THE CONDITION OF USER IS NO LONGER A PRIMARY C ONDITION FOR THE GRANT OF DEPRECIATION, AS CLARIFIED BY THE TRIBUNAL IN RISHIROOP POLYMERS (P.) LTD. (SUPRA) WITH REFERENCE TO THE DECISION IN THE CASE OF CIT VS. ORIENTAL COAL CO. LTD. [1994] 206 ITR 682 (CAL), RENDERED FOLLOWING THE DECISION IN THE CASE OF LIQUIDATORS OF PURSA LIMITED VS. CIT [1954] 25 ITR 265 (SC). OR, THAT THE USER DOES NOT IMPLY AN ACTIV E USER, BUT COULD ALSO INCLUDE A READY TO USE STATE, AS CLARIFIED TO BE NOT SO BY THE HON BLE JURISDICTIONAL HIGH COURT IN DINESHKUMAR GULABCHAND AGARWAL (SUPRA). SO HOWEVER, THE ASSETS WHICH ARE SUBJECT T O ANY OF THE CONDITIONS PROVIDED IN SECTION 43(6)(C)( I)(B) ARE NO LONGER IN THE ASSESSEES DOMAIN, WHILE THE VALUE REALIZED IN THEIR RESPECT S TANDS TO BE ADJUSTED, SO THAT THE QUESTION OR ISSUE BOILS DOWN TO ONE OF VALUE ADJUST MENT. IT ALSO NEEDS TO BE NOTED THAT THE CHANGED METHOD OF ALLOWANCE OF DEPRECIATION, I.E., AFTER INTRODUCTION OF THE CONCEPT OF 9 MA NO. 414/MUM/2014 ITA NO. 7315/MUM/2012 (A.Y. 2008-09) METRO EXPORTERS PVT. LTD. BLOCK OF ASSETS, DOES AWAY WITH THE ALLOWANCE OF TERMINAL DEPRECIATION, WHICH IS SINCE APPLICABLE ONLY TO THE ASSETS FALLING U/S. 32(1)(I) , I.E., WHERE DEPRECIATION IS CHARGED ON INDIVIDUAL ASSETS (ALSO REFER SECTION 32(1)(III) R/ W S.41(2)). 11. IN VIEW OF THE FORE-GOING, THE ASSESSEE STANDS TO SUCCEED ON ITS GROUND NO. 3, I.E., WHICH IS A SUBJECT MATTER OF THE RECALL ORDER. WE D ECIDE ACCORDINGLY. 12. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. 0.*1 20* ) 3/ 4 * ) * 56 ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 30, 2 015 SD/- SD/- (I. P. BANSAL) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ' ( MUMBAI; 7 DATED : 30.01.2015 . ../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. !$ / THE APPLICANT 2. %&!$ / THE RESPONDENT 3. ' 8* ( ) / THE CIT(A) 4. ' 8* / CIT - CONCERNED 5. ;< %* = , + =. , ' ( / DR, ITAT, MUMBAI 6. <>2 ?( / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI