ITAT grants partial success for 2009-10, full success for 2010-11. Additional depreciation disallowance overturned. TUF subsidy treatment dismissed.

The ITAT allowed the appellant's appeal for the assessment year 2009-10 in part, and fully allowed the appeal for the assessment year 2010-11. The disallowance of additional depreciation was overturned as the tribunal found no merit in the AO's decision, allowing the appellant's claim for depreciation. However, the issue regarding the treatment of TUF subsidy as a revenue receipt was dismissed as not maintainable at that stage since it was not raised earlier during assessment or appeal proceedings.

---

---

Issues:
1. Disallowance of additional depreciation.
2. Treatment of TUF subsidy as revenue receipt.

Issue 1: Disallowance of additional depreciation
The appellant filed appeals against the CIT(A)-Mumbai's order for the assessment years 2009-10 & 2010-11, primarily challenging the disallowance of additional depreciation. The AO observed that the deduction claimed for additional depreciation was not in order as it was allowable only in the year the asset was put to use. The appellant contended that the additional depreciation was claimed as per the provisions of section 32(1)(iia) and the intent was to stimulate the manufacturing sector. The AO, however, found the claim to be incorrect and withdrew the additional depreciation, resulting in a recomputed loss. The CIT(A) upheld the AO's decision, leading the appellant to appeal further.

The ITAT considered the contentions and found that the appellant had claimed additional depreciation on eligible assets acquired in the financial year 2007-08, used for less than 180 days, as per section 32(1)(iia). The tribunal noted that there was no restriction on the number of assessment years over which the additional depreciation could be claimed. Referring to a similar case, the tribunal held that if the additional depreciation was restricted in the year of purchase due to asset usage, the balance should be allowed in the succeeding year. Therefore, the tribunal concluded that there was no merit in disallowing the appellant's claim for depreciation.

Issue 2: Treatment of TUF subsidy as revenue receipt
In the assessment year 2009-2010, the appellant raised an additional ground regarding the treatment of TUF subsidy received as a revenue receipt. The AO had assessed the subsidy as a revenue receipt based on the appellant's own offer for taxation. The appellant did not challenge this during the appeal before the CIT(A). Subsequently, when the AO disallowed the depreciation claim under section 154, the appellant raised the issue of TUF subsidy treatment, citing a case law. The tribunal found that the appellant's claim was not maintainable at that stage since the issue had not been raised earlier during assessment or appeal proceedings. The tribunal emphasized that the treatment of the subsidy as a revenue receipt had not violated any statutory provision during assessment. Therefore, the claim regarding the nature of TUF subsidy was dismissed as not maintainable at that stage.

In conclusion, the ITAT allowed the appeal for the assessment year 2009-10 in part, while the appeal for the assessment year 2010-11 was fully allowed.

---