Finance Act 2015 amendment to section 32(1)(ii) removing 180-day restriction for additional depreciation is retrospective and clarificatory

ITAT Cochin-AT held that the Finance Act 2015 amendment to section 32(1)(ii) regarding additional depreciation is retrospective and clarificatory in nature. The amendment removing the 180-day restriction for additional depreciation on plant and machinery rectifies legislative intent, as the original provision created artificial discrimination between assessees based on usage days. The tribunal determined that since the qualifying conditions of acquisition and installation were met in the first year, the assessee is entitled to full additional depreciation regardless of usage duration, eliminating the discriminatory 50% restriction for assets used less than 180 days.

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Issues:
- Whether the amendment to section 32(1)(ii) by Finance Act, 2015, is retrospective in natureRs.

Analysis:
1. The appeal challenged the dismissal of the Assessee's appeal by the Commissioner of Income-Tax (Appeals) regarding its assessment under section 143(3) of the Income Tax Act, 1961 for Assessment Year 2015-16.

2. The main issue was the retrospective nature of the amendment to section 32(1)(ii) by Finance Act, 2015. The Assessee relied on certain cases, while the Revenue referred to other judgments, including Pr. CIT vs. Era Infrastructure(India) Ltd. The Tribunal clarified that decisions by the Hon'ble Apex Court or the jurisdictional High Court are binding, and in the absence of a contrary view, the Tribunal's decision prevails.

3. The Tribunal examined the relevant provision of section 32(1)(ii) and the third proviso inserted by Finance Act, 2015. Various judgments were reviewed, including Rittal India Pvt. Ltd., Brakes India Ltd., Aztec Auto Pvt. Ltd., Godrej Industries Ltd., and TP Textiles Pvt. Ltd. The Tribunal emphasized the need to interpret the law based on its unamended form to determine the nature of the amendment.

4. The Tribunal analyzed the legislative intent behind the amendment and concluded that the amendment was clarificatory and retrospective. It highlighted that the restriction on depreciation for assets used for less than 180 days was discriminatory and not in line with the legislative intent of providing additional depreciation to boost the industry.

5. Ultimately, the Tribunal allowed the Assessee's appeal, stating its decision on March 28, 2024, under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963.

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