Tribunal allows carry-forward of additional depreciation for plant & machinery under 180 days

The Tribunal upheld the CIT(A)'s decision, allowing the assessee to claim the balance additional depreciation of Rs. 1,46,75,508/- in the succeeding year. The Revenue's appeal was dismissed, confirming the entitlement to carry forward additional depreciation for plant and machinery used for less than 180 days in the previous year, as supported by relevant judicial precedents.

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Issues Involved:
1. Whether additional depreciation claimed at 10% in one year, for plant and machinery used for less than 180 days, can be claimed in the succeeding year.

Issue-Wise Detailed Analysis:

1. Additional Depreciation Claim:
The primary issue in this case is whether an assessee can claim the balance of additional depreciation in the succeeding year if the plant and machinery were used for less than 180 days in the previous year. The assessee, a company engaged in manufacturing sweets, namkeens, and running restaurants, had claimed additional depreciation of Rs. 1,46,75,508/- at 10% for the AY 2015-16 on plant and machinery installed during the previous FY 2013-14. The AO disallowed this claim, arguing that there was no provision in the Act, specifically under Section 32(1)(iia), allowing the carry forward of additional depreciation to the next year.

2. CIT(A) Decision:
The CIT(A) examined the issue and concluded that the assessee was entitled to claim the balance additional depreciation in the succeeding year. The CIT(A) relied on various judicial precedents, including decisions from the High Courts of Madras and Karnataka, and the Delhi Tribunal, which supported the view that additional depreciation could be claimed in the subsequent year if the plant and machinery were used for less than 180 days in the year of acquisition.

3. Revenue's Appeal:
The Revenue appealed the CIT(A)'s decision, contending that the CIT(A) erred in allowing the carry forward of additional depreciation. The Revenue argued that the second proviso to Section 32(1)(ii) restricts such allowances and does not permit the carry forward of additional depreciation to subsequent years.

4. Tribunal's Analysis:
The Tribunal carefully considered the submissions and the legal position. It noted that the additional depreciation of 20% is allowable under Section 32(1)(iia) for new plant and machinery acquired and installed. If the machinery is used for less than 180 days, only 50% of the additional depreciation is allowed in that year, and the balance can be claimed in the next year. The Tribunal referred to several judicial precedents, including the Delhi Tribunal's decision in Cosmo Films Ltd., the Karnataka High Court's decision in Rittal India (P) Ltd., and the Madras High Court's decision in CIT vs. Shri T.P. Textiles (P) Ltd., which supported the assessee's claim for the balance additional depreciation in the succeeding year.

5. Tribunal's Conclusion:
The Tribunal endorsed the CIT(A)'s view and concluded that the impugned disallowance by the AO was unsustainable. The Tribunal dismissed the Revenue's appeal, allowing the assessee to claim the balance additional depreciation of Rs. 1,46,75,508/- in the succeeding year.

Final Judgment:
The Revenue's appeal was dismissed, and the order pronounced in the open court on 23rd August 2022 confirmed that the assessee could claim the balance additional depreciation in the succeeding year.

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