Assets not in use and Admissibility of deduction towards Depreciation 

As per Sec 32 of the Income Tax Act, Depreciation is calculated on the WDV of a Block of assets.

Block of assets is a group of assets falling within a class of assets. Once an asset forms a part of block of assets, that asset loses its individual existence.

Whether the depreciation is admissible of the assets is not in use or has been abandoned by the assessee?

Here is an interesting case before Delhi ITAT as under:

Case Details: Pawan Hans Helicopters Ltd. v. DCIT – [2021] 132 taxmann. com 271 (Delhi – Trib.)

Facts:

1. Assessee-Pawan Hans Limited had claimed the depreciation on Westland Helicopters which were the part of block of assets.

2. These assets had been acquired in 1986-87, however, the same were not used during the current assessment year. Depreciation is being provided since 196-87.

3. Assessing Officer (AO) held that the depreciation claimed by the assessee was not allowable since the asset was not used in the current year.

ITAT Delhi held as below:

1. Once an asset is part of the block of assets and depreciation is granted on that block, it cannot be denied in its subsequent year on the ground that one of the assets is not used by the assessee in some of the years.

2. Thus, assessee cannot be denied the benefit of depreciation claimed under section 32 with regard to the Westland Helicopters.

Conclusion:

Once an asset is a part of block of assets, lack of subsequent use is not relevant: ITAT