2016 (4) TMI 34 - AT - Income Tax

Tribunal grants assessee additional depreciation claim for 2008-09, citing provisions and precedents.

The Tribunal allowed the appeal of the assessee regarding the disallowance of additional depreciation claimed for the assessment year 2008-09. The ... Disallowance of additional depreciation claimed - Held that:- The assessee is entitled for remaining 10% of the depreciation during the year under consideration. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow balance 50% of depreciation, namely, 10% of additional depreciation during the year under consideration. - Decided in favour of assessee Issues Involved:1. Disallowance of additional depreciation claimed by the assessee.Issue-wise Detailed Analysis:1. Disallowance of Additional Depreciation:The appeal concerns the disallowance of additional depreciation claimed by the assessee for the assessment year 2008-09. The assessee argued that additional depreciation under Section 32(1)(iia) of the Income-tax Act, 1961, was claimed for machinery installed in the second half of the year, resulting in 50% depreciation being claimed in the previous year. The remaining 50% was claimed in the current year.The Assessing Officer disallowed this claim, stating that there is no provision in the Income-tax Act for allowing the remaining 50% of depreciation in the succeeding assessment year. The assessee relied on the decision of the Cochin Bench of the Tribunal in Apollo Tyres Ltd. v. ACIT, which allowed the balance 50% of additional depreciation in the subsequent year.The assessee also cited the amendment made by the Finance Act, 2015, which allowed additional depreciation on plant and machinery used for less than 180 days in the succeeding assessment year and argued that this amendment should apply retrospectively. The Karnataka High Court's unreported judgment in CIT v. Rittal India Pvt. Ltd. was also cited, supporting the claim for additional depreciation in the subsequent year.The Departmental Representative contended that there is no provision for carrying forward depreciation in the subsequent assessment year and referenced a similar case, I.P. Rings Ltd. v. DCIT, where additional depreciation carry forward was disallowed.Upon review, the Tribunal noted that Section 32(1)(iia) provides for additional depreciation at 20%. The Assessing Officer allowed only 10% additional depreciation for machinery used for less than 180 days in the previous year, disallowing the balance 50% in the subsequent year. The Tribunal referred to the Cochin Bench's decision in Apollo Tyres Ltd., which allowed the balance 50% of additional depreciation in the subsequent year.The Tribunal also reviewed the Delhi Bench's decision in Cosmo Films Ltd., which supported the carry forward of additional depreciation to the subsequent year, and the Mumbai Bench's decision in MITC Rolling Mills (P.) Ltd., which had a similar stance.The Tribunal emphasized the Karnataka High Court's judgment in Rittal India Pvt. Ltd., which interpreted beneficial legislation liberally to benefit the assessee, allowing the balance of additional depreciation in the subsequent year.Conclusion:The Tribunal concluded that the assessee is entitled to the remaining 10% of the additional depreciation for the year under consideration. The orders of the lower authorities were set aside, and the Assessing Officer was directed to allow the balance 50% of depreciation, i.e., 10% of additional depreciation, during the year under consideration.Result:The appeal of the assessee was allowed. The order was pronounced on 12th February 2016 at Chennai.