HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 349/2011 Commissioner of Income Tax, Alwar. Appellant Versus Gilleette India Ltd. Global Business Park, Tower-A, Mehroli Road, Gurgaon. Respondent For Appellant(s) : Mrs. Parinitoo Jain with Mr. Mukesh Meena For Respondent(s) : Mr. Sanjay Jhanwar with Mr. Prakul Khurana & Ms. Archana HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE DR. JUSTICE VIRENDRA KUMAR MATHUR Judgment Per Hon ble Jhaveri, J. 23/05/2017 1. department has moved application (6634/2015) for framing additional substantial questions of law. 1.1 We have gone though application. 1.2 application was moved after matter was admitted. Even otherwise, questions which are sought to be framed are appreciation of facts and no substantial question of law is made out. 1.3 Therefore, application stands disposed of. 2. By way of this appeal, appellant has challenged judgment and order of Tribunal whereby Tribunal has 2 partly allowed appeal preferred by assessee and dismissed appeal of department. 2.1 This Court while admitting appeal on 29.10.2014 has framed following substantial questions of law: (i) Whether addition of Rs.3,02,29,057/- made u/s 36(1) (vii) on account of provisions of bad and doubtful debts could be allowed ignoring provisions of Section 36(2) of Act? (ii) Whether under facts and circumstances of case, addition of Rs.9,02,523/- made on account of foreign exchange fluctuation could be deleted? (iii) Whether under facts and circumstances of case ITAT was justified in deleting addition of Rs.5,71,22,994/- made on account of dis- allowance of depreciation? (iv) Whether order of Tribunal is erroneous in deleting addition made by Assessing Officer while computing book profits u/s.115 JB? 3. Counsel for appellant has taken us to order of Assessing Officer and CIT(A) and contended that Tribunal has wrongly taken view contrary to view taken by Assessing Officer. He has further contended that bad debts which are allowed by Tribunal and also foreign exchange fluctuation is bad in law and is required to be reversed. 3.1 Counsel for respondent has relied upon decision of Supreme Court in case of T.R.F. Ltd. vs. Commissioner of Income Tax [2010] 323 ITR 397 which has been relied upon in case of assessee itself in case of commissioner of Income Tax vs. M/s Gillette India Ltd. in DB Income Tax Appeal No.65/2008, decided on 03.05.2017 and this Court in 3 para 6 has followed said decision: 6. issues No.3 & 4 are covered by decision of Supreme Court in case of T.R.F. Ltd. vs. Commissioner of Income Tax (2010) 323 ITR 397. issue No.5 on facts is covered by decision of this Court in case of Commissioner of Income Tax vs. Dr. A.M. Singhi (2008) 302 ITR 26 (RAJ) and in case of Commissioner of Income Tax vs. Lake Palace Hotels and Motels Pvt. Ltd. (2002) 258 ITR 526 (RAJ). 3.2 Therefore, issue No.(i) is required to be answered in favour of assessee and against department. 4. Regarding issue No.(ii), in view of decision of Supreme Court in case of Commissioner of Income Tax vs. Woodward Governor India (P) Ltd. (2009) 312 ITR 254 which was followed by this Court in case of present assessee itself as under: 5. Counsel for respondent Mr. Jhanwar has contended that issue No.1 & 2 are squarely covered by decision of Supreme Court in case of Commissioner of Income Tax vs. Woodward Governor India (P) Ltd. (2009) 312 ITR 254 and both issues with regard to fluctuation loss are to be decided in favour of assessee. 4.1 In that view of matter, issue is answered in favour of assessee and against department. 5. In so far as issue No.(iii) is concerned, Tribunal relying upon decision of Delhi High Court in case of CIT vs. Bharat Aluminum Company Ltd. 187 Taxman 111, 124(Del.) and in case of CIT vs. Yamaha Motors India Pvt. Ltd. 226 4 CTR 304 and Gujarat High Court in case of CIT vs. Sonal Gum Industires 322 ITR 542 in para 52 to 56 has held as under: 52. We have heard rival submission and considered them carefully. After considering relevant material along with written submission and various case laws, we find that assessee deserves to succeed. It is fact on record that M/s Duracell batteries India Limited amalgamated with assessee company in A.Y. 2000-01. On amalgamation its plant & Machinery was included in block of plant & Machinery of assessee company. This block was used for purpose of business in A.Y.2000-01 & 2001-02. In A.Y. 2002-03 assessee did not fulfill condition laid down u/s 72A and therefore unabsorbed losses and depreciation of amalgamating company M/s Duracell batteries India Limited which was set off in A.Y. 2000-01 and 2001-02 was withdrawn and offered in income in A.Y. 2002-03. However fact remain is that plant & Machinery of Duracell battery India Limited merged in block of assets of assessee company on its amalgamation and on such block depreciation for A.Y. 2000-01 & 2001-02 was allowed under block concept of depreciation once asset has formed part of block it can t be reduced except by monies payable in respect of any assets falling in that block which is sold or discarded or demolished or destroyed as per section 43(6) of Income tax Act. Money becomes payable in A.Y.2004-05 when such plant & Machinery were sold for Rs.29,98,65,810/- in A.Y. 2004-05 and Rs.1,26,23,967/- in A.Y. 2005-06 when such amount was reduced from block of plant & machinery. example given by Ld. AR in his written note amply illustrate mechanism of allowance of depreciation u/s 32 after block concept of asset. Therefore, notional disallowance of depreciation in respect of plant & machinery of Duracell batteries which formed part of block of assets of assessee is not permitted in law. 5 53. Delhi High court of CIT V/s. Bharat Aluminium Company Ltd. 187 Taxman 111, 124 (Del.) held that though as per section 32(1), in order to get entitled to claim depreciation, asset is to be owned by assessee and it is also be used for purpose of business and profession but this expression when applied to block of assets and not any specific building, machinery, plant or furniture in said block of assets as individual assets loose their identity after becoming inseparable part of block of assets. 54. Gujarat High Court in case of CIT V/s. Sonal Gum Industries 322 ITR 542 held that in relation to block of assets it is not possible to segregate items falling with in block for purpose of granting depreciation or restricting claim thereof. Once it was found that assets were used for prupose of business, it was not necessary that all items falling within plant and machinery have to be simultaneously used for being entitled to depreciation. 55. Delhi High Court in case of CIT V/s. Yamaha Motors India Pvt. Ltd. 226 CTR 304 held that Expression Used for purpose of business in section 32 has to be read harmoniously with expression Discarded occurring in Clause III of sub section (1) thereof. On harmonious reading of these expressions, Used for purpose of business only means that assessee has used machinery for purpose of business in earlier years. Therefore once depreciation was allowed on block of assets in previous year actual user of machinery is not required with respect to discarded machinery and condition for eligibility of depreciation that machinery is used for purpose of business would mean that discarded machine is used for purpose of business in earlier years for which depreciation is allowed. 56. Mumbai ITAT in case of M/s. Swati synthetics Lts. V/s. ITO 2010 TIOI. 78 held that depreciation is allowable on entire block even if some of assets of block have not been used. use of individual asset for purpose of business can be examined only in first year when asset is purchased. In subsequent years use of block of assets is to be examined. 6 Existence of individual assets in block of assets itself amounts to use for purpose of business. 5.1 In view of decisions of two High Courts and one decision of Tribunal, Tribunal has not committed any error and we affirm view taken by Tribunal and also view taken by Delhi High Court and Gujarat High Court. 5.2 In that view of matter, issue is answered in favour of assessee. 6. In so far as issue No.(iv) is concerned, Tribunal while considering this issue has relied upon decision of Supreme Court in case of Apollo Tyres Ltd. vs. CIT 255 ITR 273 and observed in para 62 as under: 62. As regard excess depreciation provided in books Rs. 1,65,09,748/-, we note that depreciation charged by assessee company is in commensurate with provisions of Companies Act (Schedule VI and Schedule XIV) as well as Accounting Standards 6 issued by Institute of Chartered Accountants of India (ICAI), which is mandatory for preparation of Companies accounts. There is no qualification by auditor in this regard. Supreme Court in Apollo Tyres Ltd. Vs. CIT 255 ITR 273 has held that in computing income u/s 115JA AO while computing income has only power of examining whether books of accounts certified by auditors under Companies Act has been maintained in accordance with schedule VI. AO thereafter has limited power of making increases and reduction as provided for in explanation to ld section. Since so-called excess depreciation provided by assessee is not in deviation from accounting principles and standards laid down by Companies Act / ICAI, this cannot be added in computing book profit u/s 115JB. This addition to book 7 profit is therefore directed to be deleted. 6.1 said decision was followed by this Court in case of Commissioner of Income Tax, Kota vs. Chambal Fertilizers & Chemicals Ltd. in DB Income Tax Appeal NO.866/2008, decided on 15.05.2017. 6.2 In that view of matter, issue is required to be answered in favour of assessee and against department. 7. Accordingly, appeal stands dismissed. (VIRENDRA KUMAR MATHUR),J. (K.S. JHAVERI),J. Asheesh Kr. Yadav/188 Commissioner of Income-tax, Alwar v. Gilleette India Ltd