UNITEX PRODUCTS LTD. v. INCOME TAX OFFICER
[Citation -2008-LL-0125-5]

Citation 2008-LL-0125-5
Appellant Name UNITEX PRODUCTS LTD.
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 25/01/2008
Assessment Year 1996-97, 1997-98
Judgment View Judgment
Keyword Tags disallowance of depreciation • income chargeable to tax • reopening of assessment • depreciation allowance • business or profession • transport corporation • computation of income • plant and machinery • revenue authorities • transport business • issuance of notice • evidentiary value • business premises • change of opinion • value of property • trading activity • business purpose • renovation work • shipping agency • block of asset • capital asset • wear and tear • motor vehicle • demand notice • co-operative • passive user • letting out
Bot Summary: Before us the learned counsel for the assessee submitted that assessment has been reopened merely on the basis of change of opinion and there was no failure on the part of the assessee to disclose all material facts fully and correctly. No doubt assessment in both the years were made under s. 143(3) and thereafter these were reopened by issuance of notice under s. 148 in both t h e assessment years within 4 years the benefit of interdiction available in the proviso appended to s. 147, putting an embargo upon the power of the AO that in case a scrutiny assessment under s. 143(3) is made and 4 years have expired then no action shall be taken under s. 147 unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of assessee to disclose fully and truly all material facts, is not available to assessee. In order to demonstrate that the building was used for the purpose of business, the learned counsel for the assessee took us through paper book containing 33 pages filed by the assessee. The learned counsel for the assessee did not deny the fact that building was under renovation, but according to him it is not that assessee has totally abandoned the building. Their Lordships noted relevant provisions of the Motor Vehicles Act and on the question whether the assessee was entitled to depreciation under the above circumstances observed as under: That the assessee has purchased five new buses is not disputed. The provision should be so interpreted and the words used therein should be assigned such meaning as would enable the assessee to secure the benefit intended to be given by the legislature to the assessee. If we weigh the material produce by the assessee viz-a-viz the solitary statement of the estate manager elicited by the authority during the course of survey, then scale would tilt in favour of the assessee because the statement was recorded under sub-s.(iii) of s. 133A without administering the oath to the estate manager.


present two appeals are directed at instance of assessee against separate orders of even date i.e., 24th Oct., 2002 passed for asst. yrs. 1996-97 and 1997-98 by learned CIT(A). grounds of appeal taken by assessee are not in consonance with r. 8 of Tribunal Rules. They are argumentative and descriptive in nature. However, grievance of assessee in both years are common. In brief, assessee is seeking redressal of its grievances on 3 counts in both assessment years namely: Reopening of assessment by issuance of notice under s. 148 is bad in law. Disallowance of depreciation on SAPT building and Disallowance of maintenance of lift expenditure pertaining to said (SAPT) building. first common grievance in both years is that learned AO has erred in reopening of assessment already made under s. 143(3) by issuance of notice under s. 148 of Act. brief facts are that assessee company at relevant time was engaged in trading activity of cotton waste. It has filed its return of income on 27th Nov., 1996 and 1st Dec., 1997 declaring total income of Rs. 16,74,081 and Rs. 21,04,918 in asst. yrs. 1996-97 and 1997- 9 8 respectively. learned AO framed assessment under s. 143(3) on 8th Jan., 1999 and 17th Dec., 1999 in asst. yrs. 1996-97 and 1997-98 respectively. On 24th Aug., 2000 survey under s. 133A was carried at business premises of assessee. During survey statements of Shri D.R. Barucha one of Director and estate manager Shri S.R. Krishnan were recorded. According to AO they have disclosed that SAPT building was in bad condition and therefore in 1994 building was vacated for major structural reconstruction which included strengthening of columns and ceiling. This structural renovation work continued from March, 1994 to March, 1997 and thereafter part of building was let out to German Express Shipping Agency (I) (P) Ltd. This letting out happened in April, 1997. On basis of such revelation, learned AO formed opinion that this building was not used by assessee for purpose of its business during this period and hence depreciation claimed by assessee and allowed to it deserves to be withdrawn. He therefore, issued notice under s. 148 of Act on 31st Oct., 2000 in both assessment years and reopened assessment. Challenging action of AO assessee contended that assessment under s. 147 r/w s. 143 was made after expiry of four years from end of accounting year in asst. yr. 1996-97. Therefore it is barred by limitation. learned CIT(A) has held that after amendment effected in s. 149(1) w.e.f. 1st April, 1989 time limits have been made to depend upon, whether case has been subject to scrutiny and also amount of income which has escaped assessment. If escaped income is Rs. 1 lakh or more notice can be issued beyond 7 years but upto 10 years from end of relevant assessment year. learned first appellate authority held that income escaped in these assessment years is more than Rs. 1 lakhs therefore, reassessment was framed well in time. Before us learned counsel for assessee submitted that assessment has been reopened merely on basis of change of opinion and there was no failure on part of assessee to disclose all material facts fully and correctly. On other hand learned Departmental Representative relied upon orders of Revenue authorities below. We have duly considered rival contention and gone through record carefully. No doubt assessment in both years were made under s. 143(3) and thereafter these were reopened by issuance of notice under s. 148 in both t h e assessment years within 4 years, therefore, benefit of interdiction available in proviso appended to s. 147, putting embargo upon power of AO that in case scrutiny assessment under s. 143(3) is made and 4 years have expired then no action shall be taken under s. 147 unless any income chargeable to tax has escaped assessment for such assessment year by reason of failure on part of assessee to disclose fully and truly all material facts, is not available to assessee. In present case notice under s. 148 was served within 4 years. basis for forming opinion that income has escaped assessment is outcome of survey carried out at business premises of assessee on 24th Aug., 2000 where according to AO it revealed that SAPT building was not used for purpose of business. On basis of such report learned AO arrived at conclusion that income has escaped assessment therefore information which has come to his possession is basis for forming prima facie belief about escapement of income. assessments have not been reopened merely on basis of change of opinion i.e., merely on basis of re-appreciation of material already possessed by AO. In view of above discussion we do not find any merit in first grievance of assessee. reopening of assessment is upheld in both years. next two issues are interlinked with each other in both assessment years. They relate to disallowance of depreciation on SAPT building as well as maintenance and lift expenditure incurred on this. basic reason for disallowance is that building was not used for purpose of business. brief facts are, as observed earlier survey under s. 133A was carried out at business premises of assessee wherein statement of Shri S.R. Krishnan, estate manager and Director Shri D.R. Barucha were recorded. estate manager in his statement has disclosed that SAPT building was not used by assessee for its business from April, 1994 till date of survey. AO as well as learned CIT(A) has reproduced question Nos. 2, 6 and 27 along with reply of estate manager in their order. On basis of this statement they arrived at firm conclusion that building was not used for purpose of business and therefore, assessee is not entitled for depreciation. appeal to learned CIT(A) did not bring any relief to assessee. orders in both assessment years are though separate but passed on even date and almost similarly worded on vital points. While impugning findings of learned CIT(A) learned counsel raised 3 fold submissions. He firstly contended that statement of estate manager was not recorded during course of search. It is statement recorded during survey and per se not admissible. Presumption of truth is not attached with this statement because it is recorded under s. 133A(3)(iii) and not 132(4) of Act. Copy of this statement was never supplied to assessee. Hence, without giving opportunity to cross examine this person statements cannot be used against assessee. In his second fold of submission he contended that merely on basis of this statement learned AO had arrived at wrong conclusion that building was not used for purpose of business. In order to demonstrate that building was used for purpose of business, learned counsel for assessee took us through paper book containing 33 pages filed by assessee. He pointed out that assessment in asst. yr. 1993-94 was made under s. 143(3) on 26th Oct., 1995 and depreciation was granted to assessee. Similarly in other assessment years i.e., 1994-95 and 1995-96 returns were accepted vide intimation issued under s. 143(1)(a) of Act and depreciation was granted to assessee. Learned counsel further, with view to indicate user of building took us through break-up of electricity expenses, break-up of telephone expenses pertaining to this building as well as other places in Mumbai and other places in country. On strength of telephone expenses he pointed out that at SAPT building apart from other phones, one telephone connection bearing No. 2626344 was available and for this telephone assessee had incurred Rs. 18,197 during this year. Similarly, demonstrating electricity expenses he pointed out that sum of Rs. 5,37,444 was incurred for Bombay. This sum include repair of Rs. 3,28,603 and payment of Rs. 15,907 and Rs. 1,85,748.66 to BEST. specific details are available on p. 14 of paper book. Further taking us through statement reflecting sales n d purchases at Bombay during 1995-96 and 1996-97 he submitted that substantial business activities have been carried out by assessee. In this connection he drew our attention towards page Nos. 12-13 where sales and purchase statement are available. He further contended that address of registered office of assessee is in SAPT building. All correspondence were made on that address. Even in assessment order address of SAPT building is appearing. He pointed out that demand notice was also served on this address. Thus it do indicates that business activities were carried out from this building. learned counsel for assessee did not deny fact that building was under renovation, but according to him it is not that assessee has totally abandoned building. It was using it for its business purpose as well as carrying out renovation work. He pointed out that in series of authoritative pronouncements it has time and again held that depreciation will not only be granted on actual user of asset but it is admissible even on passive user of asset. He emphasized that in case of assessee it is not passive use only but assessee was using building actually. Some part of building is if under renovation its claim cannot be rejected. He relied upon following decisions: (1) Skyline Engineering Contracts (I) (P) Ltd. vs. Dy. CIT (2005) 94 TTJ (Del) 201; (2) Sumerpur Co-operative Marketing Society Ltd. vs. Asstt. CIT (2002) 75 TTJ (Jd) 322; (3) CIT vs. Refrigeration & Allied Industries Ltd. (2000) 163 CTR (Del) 498: (2001) 247 ITR 12 (Del); (4) CIT vs. P.I. Simon (1991) 187 ITR 302 (Ker); (5) CIT vs. Geo Tech Construction Corporation (2000) 162 CTR (Ker) 528: (2000) 244 ITR 452 (Ker). In his next fold of submission he contended that this building is part of assessee s block of assets. Depreciation is admissible on block of asset and not on individual assets. In some of years this has been granted to assessee by treating it as part of block of assets. In case version of AO if accepted then it will give rise to dispute for computation of income on sale of this asset. On strength of following Tribunal decisions (a) Packwell Printers vs. Asstt. CIT (1997) 59 ITD 340 (Jab), (b) Natco Exports vs. Dy. CIT (2004) 89 TTJ (Hyd) 503: (2003) 86 ITD 445 (Hyd) he contended that after amendment in s. 32 w.e.f. 1st April, 1998, individual assets once taken into block of assets would loose its identity and for purpose of allowing depreciation only block of asset is to be considered. If block of assets is owned by assessee and used for purpose of business, depreciation will be allowed. Controverting contention of learned counsel for assessee, learned Departmental Representative relied upon orders of Revenue authorities. He took us through question and replies of statement of Shri Krishnan, estate manager, reproduced by Revenue authorities below. H e submitted that this statement do indicate that asset was not used for business of assessee and hence it is not entitled for depreciation. With regard to grant of depreciation even on passive user he submitted that Hon ble jurisdictional High Court in case of Dineshkumar Gulabchand Agrawal vs. CIT (2004) 267 ITR 768 (Bom) has held that expression "used" as employed in s. 32 of IT Act denotes actual user of asset. If assets are actually used depreciation would be admissible to assessee otherwise not. We have duly considered rival contention and gone through record carefully. Interpretation of expression "used" employed in s. 32 had come up on number of occasions before Hon ble Supreme Court, Hon ble High Court and Tribunal. Recently Hon ble President of Tribunal while sitting as 3rd Member in case of Sanghvi Movers (P) Ltd. vs. Dy. CIT (2007) 111 TTJ (Pune)(TM) 687: (2008) 110 ITD 1 (Pune)(TM) has made lucid enunciation of law on this point. We cannot do better than to extract some of findings recorded in para 15 of his order which reads as under: "15. I have given careful thought to rival submissions of parties. There is no dispute first condition for getting depreciation, i.e., ownership of asset has been fully established in this case. controversy relates to second condition, i.e., user of asset for purposes of business. Facts leading to controversy have already been noted above. I would like now to refer to relevant decisions on controversy. In Machinery Manufacturers Corporation Ltd. vs. CIT (1957) 31 ITR 203 (Bom), Bombay High Court has observed that expression used is s. 10(2)(vi) of Indian IT Act, 1922, corresponding to s. 32 of Act, has to be given wider meaning. expression includes passive as well as active user. It has been judicially held in number of cases that depreciation might be allowed in certain cases even though machinery was not in use or was kept idle. words used for purposes of business are capable of larger and narrower interpretation. If expression used is construed strictly, it can be taken as connoting or requiring active requirement or actual working of machinery, plant or building in business. On other hand, wider meaning will include not only cases where machinery and plant, etc., are actively employed but also case where there is what may be described as passive user of same in business and same can be said to be in use when it is kept ready for use. In case of Whittle Anderson Ltd. (supra), their Lordships of Bombay High Court were concerned with question whether ginning machines remaining idle under pooling agreement could be said to be used so as to be entitled to depreciation. Their Lordships made following relevant observations: Now expression use or used has several times received interpretation at hands not only of this Court and of other High Courts but by Supreme Court itself. So far as this Court is concerned, in CIT vs. Viswanath Bhaskar Sathe (1937) 5 ITR 621 (Bom), in case which was very similar to present case, this Court, with reference to provisions of s. 10(2)(vi) of Indian IT Act, said that word used in that section should be understood in wide sense so as to embrace passive as well as active user. They pointed out that when machinery is kept ready for use at any moment in particular factory under express agreement from which taxable profits are earned, machinery can be said to be used for purpose of business which earned profits, although it was not actually worked, and depreciation allowance granted by s. 10(2)(vi) could be given in respect of such machinery. No doubt, that was said in connection with cl. (vi) of s. 10(2), but Supreme Court has pointed out that all these clauses are in pari materia and expression used in either of them would apply to other: see Liquidators of Pursa Ltd. vs. CIT (1954) 25 ITR 265 (SC): (1954) SCR 767 (SC). In Viswanath Bhaskar Sathe s case (supra), facts were similar to present case. assessee owned ginning factory and was member of pool with owners of other ginning factories. During assessment year in question in that case assessee s factory had not been actually employed in work of ginning in accordance with pooling agreement, though he had received share of profits. That was because assessee was under agreement bound at his own expense to keep gins and other working plant and machinery in good repair and condition and working order even when his factory was not working, so that it may be ready for actual use at any moment. It w s held that, under these circumstances, assessee was entitled to allowance under s. 10(2)(vi). Their Lordships further made reference to decision of Supreme Court as under: In Liquidators of Pursa Ltd. vs. CIT (1954) 25 ITR 265 (SC): (1954) SCR 767 (SC) referring to this expression in s. 10(2)(vi), used for purpose of business , Supreme Court ruled that it meant used for purpose of enabling owner to carry on business and earn profits in business . In penultimate para, their Lordships held as under: agreement clearly provided that, although two out of four presses which were directly in pooling arrangement were to remain idle while two presses worked, it is clear that owners of those presses which were idle had to keep them ready for use at any time and contingency for their use could also, upon terms of agreement, arise at any time and having regard to definition of word used as indicated in authorities to which we have referred, it is clear that even these presses which remained under forced idleness were in use during entire period of year. In case of Dilip Singh Sardarsingh Bagga (supra), Bombay High Court on question of allowing depreciation and after relevant provisions of Motor Vehicles Act, observed as under: In view of foregoing discussion, we are of clear opinion that assessee, who had purchased motor vehicle for valuable consideration and used same for his business, cannot be denied benefit of depreciation on ground that transfer was not recorded under Motor Vehicles Act or that vehicles stood in name of vendor in records of authorities under Motor Vehicles Act. In case of CIT vs. Salkia Transport Associates (1983) 33 CTR (Cal) 198: (1983) 143 ITR 39 (Cal) five buses owned by assessee were not registered under Motor Vehicles Act. Their Lordships noted relevant provisions of Motor Vehicles Act and on question whether assessee was entitled to depreciation under above circumstances observed as under: That assessee has purchased five new buses is not disputed. only argument is that vehicles were not registered in name of assessee under Motor Vehicles Act. But that is one of factors that has to be taken into consideration for deciding questions of ownership of buses. It cannot be said as matter of law that unless buses are registered in name of assessee, assessee cannot be regarded as owner of buses. On contrary, essential pre-requisite for registration under s. 22(1) of Motor Vehicles Act is ownership of motor vehicle. Unless person is owner of motor vehicle he is not entitled to get it registered in his name under s. 22(1) of Motor Vehicle Act. Tribunal in this case has come to conclusion on review of facts and also of agreement that assessee was owner of five new buses and as such was entitled to claim depreciation allowance on these buses. Tribunal has not committed any error of law in coming to this conclusion. requirement of s. 32 of IT Act is that vehicles must be owned by assessee . This section does not require that assessee must be registered owner of vehicles in order to claim depreciation allowance in respect of them. We are of view that, in facts of this case, new buses were owned by assessee within meaning of s. 32 of IT Act and assessee was entitled to claim depreciation allowance on these vehicles. In case of Anil Bulk Carriers (P) Ltd. vs. CIT (2005) 194 CTR (All) 226: (2005) 276 ITR 625 (All), trucks purchased by assessee for oil transport business were registered with transport authority only on 1st April, 1997. These trucks were also fined for their user for year ending 31st March, 1997. On question whether assessee was entitled to depreciation in asst. yr. 1997-98 on above trucks, their Lordships after considering all relevant decisions, observed as under: Tribunal was obsessed with view that since registration of vehicle by registering officer under Motor Vehicle Act, 1988 was granted on 1st April, 1997, vehicle could not be plied on 31st March, 1997. Tribunal approached said problem with wrong angle. For income-tax purposes Tribunal was required to examine as to whether assets (oil tankers) were used during previous assessment year or not. user of oil tankers even prior to obtaining registration from registering-authority or without payment of road tax, etc., may be violative of provisions of Motor Vehicle Act, 1988. But nonetheless if vehicle was plied even without obtaining registration or payment of road tax, etc. it cannot be said, as matter of fact, that vehicle has not been used. attention of Tribunal was not drawn towards r. 47 of Motor Vehicles Rules which gives seven days time to apply for registration of vehicle with registering authority under Motor Vehicles Act. finding recorded by Tribunal that oil tankers were not used on last date of previous year is not based on legal evidence, and has given rise to substantial question of law involved in appeal and, therefore, it is not correct to say that appeal is concluded by finding of fact and is not maintainable. In view of above exposition of law case in hand is to be examined. two oil tankers along with mounted bodies were purchased for business by assessee who is transporter during accounting year. It is not case o f Department that these oil tankers were not necessary for business purposes of assessee appellant. These oil tankers were actually plied on road on last date of accounting year were challanged and also fined by CMM, Kanpur. Therefore, oil tankers were actually put to use in relevant accounting year by assessee for its business purposes. Alternatively assessee was entitled for depreciation on these two oil tankers as they were purchased during relevant accounting year for business purposes and were ready to use, road tax was deposited and oil tankers were got registered with registering authority on last date of accounting year. Failure of assessee to produce hire contract with parties is in respect of two oil tankers is of little significance in view of exposition of law that word used under s. 32 of Act has to be given wider meaning and it will include assets ready for use. Punjab & Haryana High Court in CIT vs. Pepsu Road Transport Corporation (2002) 172 CTR (P&H) 72: (2002) 253 ITR 303 (P&H) has held that assessee who was transporter had to keep spare engines in store, was entitled to depreciation on spare engines in store, as engines were meant to be used in case of need. There is normal depreciation of value even when machines or equipment is merely kept in store. Looking to nature of business of that assessee, who was transporter it was held that keeping spare engines in store to meet emergent situations, was requirement of business. In case of Mysore Minerals Ltd. vs. CIT (1999) 156 CTR (SC) 1: (1999) 2 3 9 ITR 775 (SC), their Lordships of Supreme Court in respect of claim of depreciation made following observations: Sec. 32 of IT Act, 1961, confers benefit on assessee. provision should be so interpreted and words used therein should be assigned such meaning as would enable assessee to secure benefit intended to be given by legislature to assessee. It is also well settled that where there are two possible interpretations of taxing provision, one which is favourable to assessee should be preferred. Generally speaking depreciation is allowance for diminution in value due to wear and tear of capital asset employed by assessee in his business. Black s Law Dictionary (fifth edition) defined depreciation to mean, inter alia: fall in value; reduction of worth. deterioration, or loss or lessening in value, arising from age, use, and improvements, due to better methods. decline in value of property caused by wear or obsolescence and is usually measured by set formula which reflects, these elements over given period of useful life of property... Consistent, gradual process of estimating and allocating cost of capital investments over estimated useful life of asset in order to match cost against earnings. overall view of above said authorities shows that very concept of depreciation suggests that tax benefit on account of depreciation legitimately belongs to one who has invested in capital asset, is utilizing capital asset and thereby losing gradually investment caused by wear and tear, and would need to replace same by having lost its value fully over period of time. It is evident from above noted decisions that depreciation is allowance for diminution in value due to wear and tear of capital asset and that claim on account of depreciation legitimately belongs to one who has invested in capital asset. Reference to s. 32(1) as existing in all material time reveals that building, machinery and other assets mentioned in sub-s. (1) when owned by assessee and used for purposes of business or profession are entitled to depreciation. It has been noted that s. 32 confers benefit on assessee and it is required to be construed liberally and in manner which is favourable to assessee. I find force in assessees submission that decision of Hon ble Bombay High Court in case of Dineshkumar Gulabchand Agrawal (supra) has to be read in light of other decisions of Bombay High Court and of Supreme Court and when so read, it does not lay any different law. Expression used is to be construed in context of facts and circumstances of case and would include not only active use of asset but also passive use of asset for purposes of business. This is what has been consistently held by Supreme Court and Bombay High Court in decisions cited supra. Permanent registration under Motor Vehicles Act is not sine qua non for claim of depreciation. Temporary registration for limited period pending permanent registration is good enough to claim depreciation on asset owned by assessee and used in business, as noted in decisions of different High Courts. No decision taking contrary view was cited before me. Hiring of asset is one way of establishing user of asset in business. But user or used can be proved independent of hiring agreement. Through other evidence assessee can prove that assets were used for purposes of business or profession. expression purposes of business itself is very wide expression and it is not necessary that receipt of income must be shown to be entitled to claim depreciation." depreciation." (Emphasis supplied) In light of above principle let us examine facts of present case. For negating claim of assessee learned Revenue authorities are harping upon solely on statement given by Shri Krishnan, estate manager in survey carried out under s. 133A of Act on 24th Aug., 2000. learned Revenue authorities below have reproduced question and replies given by Shri Krishnan at time of survey. Apart from this statement they have not brought anything on record for negating claim of assessee with regard to depreciation. During course of survey officer could record statement of person under sub-s. (3)(iii) of s. 133A of Act. This clause authorise authority to record statement of any person which may be useful for or relevant to any proceedings under Act. However, officer is not authorized to record statement on oath and hence, statement taken during course of survey has no evidentiary value. It is simply information which can be used for corroboration purpose for deciding any issue in favour or against, assessee. This issue has come up before Hon ble Kerala High Court in case of Paul Mathews & Sons vs. CIT (2003) 181 CTR (Ker) 207: (2003) 263 ITR 101 (Ker) and Hon ble Court at p. 108 had made following observations: "Sec. 133A(3)(iii) enables authority to record statement of any person which may be useful for, or relevant to, any proceeding under Act. Sec. 133A, however, enables IT authorities only to record any statement of any person which may be useful, but does not authorize taking any sworn statement. On other hand, we find that such power to examine person on oath is specifically conferred on authorised officer only under s. 132(4) of IT Act in course of any search or seizure. Thus, IT Act, whenever it thought fit and necessary to confer such power to examine person on oath, same has been expressly provided whereas s. 133A does not empower any ITO to examine any person on oath. Thus, in contradistinction to power under s. 133A, s. 132(4) of IT Act enables authorised officer to examine person on oath and any statement made by such person during such examination can also be used in evidence under IT Act. On other hand, whatever statement is recorded under s. 133A of IT Act it is not given any evidentiary value obviously for reason that officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law. Therefore, there is much force in argument of learned counsel for appellant that statement elicited during survey operation has no evidentiary value and ITO was well aware of this." Contrary to these facts possessed by AO assessee has demonstrated that building though was under renovation, it was not totally abandoned. It has been using this building for business purposes. It has incurred electricity expenses, telephone expenses made sales and purchases from this office. details of these expenses have duly been placed before us. reference to page Nos. 13 to 26 of paper book can be made in this regard. assessee has also pointed out that all correspondence is being made by this office premises only. Even demand notice was served on this premises. It was also pointed out that registered office address is also of this building. It is cardinal principle of appreciation of facts that when explanation or defense of assessee based on number of facts supported by evidence and circumstances required consideration, whether explanation is sound or not, must be determined not by considering weight to be attached to each single fact in isolation but by assigning cumulative fact of all facts in their setting as whole. If we weigh material produce by assessee viz-a-viz solitary statement of estate manager elicited by authority during course of survey, then scale would tilt in favour of assessee because statement was recorded under sub-s. (3)(iii) of s. 133A without administering oath to estate manager. This is just information which required corroboration for deciding issue against assessee. AO has not brought any corroborative piece of evidence in support of this information. In past depreciation was granted to assessee. Orders for asst. yrs. 1993-94 to 1995-96 have been brought to our notice exhibiting this fact. AO failed to establish that building was not used for purpose of business. Apart from all these things, even if we take statement of estate manager as Gospel Truth then also assessee had demonstrated that it has not abandoned building totally. It s staff was there and it was using building partially. As far as 2nd limb of argument is concerned building was part o f assessee s block of assets learned counsel for assessee in this connection pointed out details of block of assets available at p. 11 of paper book. Tribunal in case of Packwell Printers (supra) has considered similar issue and observed as under: "20.1 Therefore, we hold that after amendment by Direct Tax Laws (Amendment) Act, 1986, w.e.f. 1st April, 1988, individual assets have lost its identity and for purpose of allowing of depreciation, only block of assets has to be considered. It has to be seen whether particular block of assets is owned by assessee and used for purpose of business. If block of assets is owned by assessee and used for purpose of business, depreciation will be allowed. Therefore, test of user had to be applied upon block as whole instead of upon individual asset. Now applying this test to facts of case under consideration, we hold that when two trucks out of three in said block were admittedly used for purpose of business, said block of assets was used for purpose of business and depreciation has to be allowed on WDV of said block of assets, as per percentage of depreciation prescribed in respect of said block of assets. We direct AO to allow depreciation as per our above direction." This order of Tribunal was subsequently followed in case of Natco Exports (supra), etc. According to these decisions once asset was part of block of asset and depreciation was granted on that block it cannot be denied in subsequent year on ground that one of asset was not used by assessee in some of years. user of assets has to apply upon block as whole instead of individual asset. Contrary to these decision no other decision was brought to our notice by learned Departmental Representative. In view of above we allow both these grounds and direct AO to grant depreciation as well as other expenses i.e., maintenance and lift charges on SAPT building. In result appeal of assessee are partly allowed. *** UNITEX PRODUCTS LTD. v. INCOME TAX OFFICER
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