2015 (10) TMI 1409 - AT - Income Tax

Tribunal Upholds Assessee's Claim for Additional Depreciation on Machinery

The Tribunal upheld the Assessee's entitlement to additional depreciation under section 32(1)(iia) for machinery used in embroidery work on fabrics. The ... Additional depreciation u/s.32(1)(iia) rejected - Held that:- In a situation when the Assessee is in the business of embroidery processing and for that machinery was installed then he is entitled for additional depreciation u/s.32(1)(iia). We have also noted that the Hon’ble Apex Court in the case of S.S.M & Brothers Pvt. Ltd., (1999 (1) TMI 2 - SUPREME Court) has also held that a machinery used for the production of embroidery is entitled for the development rebate therefore applying the same legal ratio the Tribunal has held that such type of machinery is also entitled for additional depreciation. - Decided in favour of assessee. Issues:Grant of additional depreciation u/s.32(1)(iia)Analysis:The appeal and cross objection arose from the order of the CIT(A)-II, Surat, regarding the grant of additional depreciation u/s.32(1)(iia). The Assessee, engaged in embroidery work on fabrics, claimed 20% additional depreciation on machinery installed, which was initially disallowed by the AO. The CIT(A) considered previous Tribunal orders favoring the Assessee and directed to allow the claim. The ITAT, after hearing both sides, referred to a decision in the case of M/s. Hari Fashions and Haripriya Processor Pvt. Ltd., holding that machinery used for embroidery processing is entitled to additional depreciation u/s.32(1)(iia). Citing the legal precedent set by the Hon'ble Supreme Court in the case of S.S. & Brothers Pvt. Ltd., the Tribunal dismissed the Revenue's grounds, upholding the Assessee's entitlement to additional depreciation.The Cross Objections filed by the Assessee were in support of the CIT(A)'s decision and did not raise any new legal or factual questions for adjudication. Therefore, the Cross Objection was dismissed. Ultimately, both the Revenue's appeal and the Assessee's Cross Objection were dismissed by the Tribunal based on the aforementioned legal analysis and precedents cited.