Tribunal grants additional depreciation for 2011-12 and 2012-13 based on High Court ruling. AO to verify and allow 50% balance.

The tribunal allowed the assessee's claim for the balance additional depreciation for AY 2011-12 and AY 2012-13, following the precedent set by the Hon'ble Madras High Court. The tribunal directed the AO to verify the correctness of the amounts claimed for additional depreciation in successive years and allow the balance 50% additional depreciation accordingly, emphasizing the legislative intent to encourage investment in new plant and machinery.

---

---

Issues Involved:
1. Disallowance of Additional Depreciation under Section 32(1)(iia) of the Income Tax Act, 1961.
2. Restriction of Additional Depreciation to 50% for assets used for less than 180 days.
3. Non-adjudication of fresh claim for balance 50% additional depreciation for assets acquired in the previous year but used for less than 180 days.

Detailed Analysis:

1. Disallowance of Additional Depreciation under Section 32(1)(iia):
The appellant, engaged in the manufacturing of printed packaging materials, claimed additional depreciation of Rs. 6,48,97,045 under Section 32(1)(iia) of the Income Tax Act, 1961. Out of this, Rs. 6,08,48,418 was undisputed as it pertained to new plant and machinery used for more than 180 days. The dispute arose over the additional depreciation of Rs. 40,48,626 for new plant and machinery used for less than 180 days, which the AO restricted to 50% (i.e., 10% of the stipulated 20%) as per the second proviso to Section 32(1)(iia). The AO disallowed the remaining 50%, adding Rs. 20,24,313 back to the assessee's income.

2. Restriction of Additional Depreciation to 50% for Assets Used for Less than 180 Days:
The CIT(A) upheld the AO's decision, stating that there is no provision in the statute to allow additional depreciation beyond the first year of use. The CIT(A) maintained that only 50% of the stipulated rate of 20% (i.e., 10%) is allowable for assets used for less than 180 days, as per the second proviso to Section 32(1). The CIT(A) dismissed the assessee's contention for the remaining 50% additional depreciation.

3. Non-adjudication of Fresh Claim for Balance 50% Additional Depreciation:
The assessee also claimed additional depreciation of Rs. 29,92,833 for the preceding assessment year (AY 2011-12) for assets used for less than 180 days, which was not allowed by the CIT(A). The CIT(A) dismissed this claim, stating it did not arise from the assessment order. The assessee argued that the balance additional depreciation should be allowed in the subsequent year (AY 2012-13) as per the CIT(A)'s own decision for AY 2011-12.

Tribunal's Decision:
The tribunal dismissed grounds 1 to 3 as not pressed by the assessee. For ground 4, the tribunal referred to the assessee's own case in ITA Nos. 5403 & 5404/Mum/2016 and the decision of the Hon'ble Madras High Court in CIT v. T.P. Textiles Private Limited (2017) 394 ITR 483 (Mad.), which held that the balance 50% of additional depreciation can be claimed in the succeeding year. The tribunal observed that the amendment to Section 32 by the Finance Act, 2015, effective from 01.04.2016, clarified that the balance 50% of additional depreciation is allowable in the immediately succeeding year.

The tribunal allowed the assessee's claim for the balance additional depreciation for AY 2011-12 and AY 2012-13, subject to verification by the AO. The tribunal followed the precedent set by the Hon'ble Madras High Court and the tribunal's own earlier decision, concluding that the balance additional depreciation should be allowed in the subsequent year if the asset was used for less than 180 days in the year of acquisition.

Conclusion:
The appeal was partly allowed, with the tribunal directing the AO to verify the correctness of the amounts claimed for additional depreciation in the successive years and allow the balance 50% additional depreciation accordingly. The decision emphasized the beneficial nature of the provision and the legislative intent to encourage investment in new plant and machinery.

---