Court allows additional depreciation claim for machinery acquired in second half, following Brakes India Ltd. The Court allowed the balance of additional depreciation to be claimed in the subsequent year if the plant and machinery were acquired in the second half ...
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Court allows additional depreciation claim for machinery acquired in second half, following Brakes India Ltd.
The Court allowed the balance of additional depreciation to be claimed in the subsequent year if the plant and machinery were acquired in the second half of the financial year and used for less than 180 days. It upheld the decision to allow the remaining additional depreciation for machinery purchased in a previous year. The Court dismissed the revenue's appeal and answered the substantial questions of law against the revenue, following the precedent set in the case of Brakes India Ltd.
Issues: 1. Allowability of additional depreciation in subsequent years. 2. Disallowance of claim of remaining additional depreciation. 3. Deletion of disallowance of additional depreciation.
Analysis: 1. The first issue raised by the revenue was whether the provision for allowing additional depreciation of remaining 50% is permissible in the subsequent year, even though the statute allowed it from a later date. The Court referred to the decision in Dy. CIT v. Brakes India Ltd. and Commissioner of Income Tax, Chennai Vs. Aztec Auto (P) Ltd. The Court held that if the plant and machinery were acquired in the second half of the financial year and put to use for less than 180 days, then the balance of additional depreciation could be allowed in the relevant subsequent year.
2. The second issue was regarding the disallowance of the claim of remaining additional depreciation for machinery purchased in the financial year 2008-2009. The Court noted that the decision in the case of Brakes India Ltd. was followed, where it was held that additional depreciation not claimed in the earlier year should be allowed. The Division Bench of the Court distinguished other cases and upheld the decision in favor of allowing the balance additional depreciation.
3. The third issue involved the deletion of the disallowance of 50% of additional depreciation claimed in the assessment year 2010-2011. The Court emphasized that the effect of the proviso inserted in 2016 did not impact the issue at hand. The decision in the case of Brakes India Ltd. was approved by the Supreme Court, and hence, the Court was bound by that decision. Consequently, the appeal filed by the revenue was dismissed, and the substantial questions of law were answered against the revenue.
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