Section 2(11)

Section 2(11) — the law in short

What the courts have decided on section 2(11), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v Oswal Agro Mills Ltd — depreciation on a block of assets cannot be split asset by asset for non-user High CourtHelps taxpayerValidity unconfirmed
  One of my units has been shut for years. The Assessing Officer has pulled the assets of that unit out of the block and disallowed the depreciation on them. Can he?
  No. The Delhi High Court held that after the 1988 amendment depreciation is allowed on the written down value of the block of assets, individual assets have lost their identity, and the Revenue cannot segregate a particular asset from the block on the ground that it was not put to use. The Revenue's appeals were dismissed even though the unit concerned had been closed for years.
• CIT v Bharat Aluminium High CourtHelps taxpayerValidity unconfirmed
  One machine in my block of assets was not used this year. Can the AO deny depreciation on it?
  No. Once assets are clubbed into a block they lose their individual identity and become an inseparable part of the block, so 'used for the purpose of business' means use of the block and not of any specific item. User of an individual asset is required only in the first year in which that asset is acquired.
• Nirma Ltd v DCIT — depreciation on goodwill from amalgamation, and the date the Finance Act 2021 closed it ITATHelps taxpayerSuperseded by amendment
  The Assessing Officer has disallowed depreciation on goodwill that arose when a company amalgamated into mine. Which years can I still claim it for?
  Only assessment years up to AY 2020-21. The Finance Act 2021 removed goodwill of a business or profession from the definition of block of assets in s.2(11) and from s.32, excluded it from Explanation 3(b) to s.32(1), and amended s.43(6)(c)(ii) to require the written down value of goodwill to be reduced from the opening WDV where goodwill already formed part of a block; those amendments apply prospectively from AY 2021-22. For earlier years the Tribunal here allowed the claim on Smifs Securities, and the amendment gives the Assessing Officer no ground to disturb it.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.