Samode Group, comprised of diversified business entities, is having its registered office located at Jaipur with various business verticals located at different places within and outside the country. The Board of directo

Depreciation on discarded asset forming part of large block The issue under consideration is whether claim of depreciation with regard to the discarded asset, in arriving at the written down value of the block of assets, is justified. One of the conditions for claim of depreciation under section 32 of the Income Tax Act, 1961 is that the eligible asset must have been put to use for the purpose of business or profession. The other aspect is whether merely discarding an obsolete machinery, which is physically available, will attract the expression 'moneys payable' as appearing in section 43(6) so as to deduct its value from the written down value of the block. In the present case, the machinery has not been sold as machinery or scrap and continues to exist in the physical form. Hence, there is no 'moneys payable' in this case, which is deductible while computing the WDV of the block to which it belongs. The facts in the present case are similar to the facts in the case of CIT vs. Yamaha Motor India Pvt. Ltd, (2010) 328 ITR 297 , where the Delhi High Court held that the expression 'used for the purposes of the business' in section 32 when applied with respect to discarded machine would mean the use in the business not only in the relevant financial year/previous year, but also in the earlier financial years. The machinery in present case was not used for full year as being discarded in July, 2018. However, depreciation can be claimed as long as it was used for the purposes of business in the earlier years provided the block continues to exist in the relevant previous year. Therefore, the condition for claiming depreciation in respect of the discarded machine stands satisfied as the machine was used in part during the year and in earlier years for the purpose of business. The claim of depreciation of ₹ 90,000/- on discarded machinery in July, 2018 for A.Y. 2019-20 is valid. However It will not be allowed separately but as a part of closing WDV of the block.