Additional depreciation and CSR donation deductions: remaining depreciation can be claimed later, and section 80G is independent of section 37 disallowance.
Beneficial additional depreciation under section 32(1)(iia) was treated as carrying forward the remaining allowance to the succeeding year where plant and machinery was used for less than 180 days, because the Finance Act, 2015 amendment was read as curative and clarificatory. The claim was therefore considered allowable. CSR-related donations were treated as capable of separate deduction under section 80G, and that deduction was not to be denied merely because the same amount had been suo motu disallowed under section 37; the claim remained subject to satisfaction of the statutory conditions under section 80G. Both issues were resolved in favour of the assessee.
Issues: (i) Whether the balance additional depreciation under section 32(1)(iia) of the Income-tax Act, 1961 could be claimed in the succeeding year where the plant and machinery was put to use for less than 180 days and the proviso inserted by the Finance Act, 2015 was applicable from 01.04.2016. (ii) Whether CSR-related donations were eligible for deduction under section 80G of the Income-tax Act, 1961 and whether such claim could be denied merely because the amount had been suo motu disallowed under section 37 of the Income-tax Act, 1961.
Issue (i): Whether the balance additional depreciation under section 32(1)(iia) of the Income-tax Act, 1961 could be claimed in the succeeding year where the plant and machinery was put to use for less than 180 days and the proviso inserted by the Finance Act, 2015 was applicable from 01.04.2016.
Analysis: The provision for additional depreciation is beneficial in nature and is intended to promote investment. The amendment brought in by the Finance Act, 2015 was treated as curative and clarificatory, aimed at removing hardship where assets were used for less than 180 days in the year of acquisition. On that reasoning, the restriction to 50% in the first year does not destroy the entitlement to the remaining amount, and the balance additional depreciation can be carried forward to the subsequent year.
Conclusion: The claim of balance additional depreciation in the succeeding year was allowable, and the disallowance was not sustainable. The issue was decided in favour of the assessee.
Issue (ii): Whether CSR-related donations were eligible for deduction under section 80G of the Income-tax Act, 1961 and whether such claim could be denied merely because the amount had been suo motu disallowed under section 37 of the Income-tax Act, 1961.
Analysis: CSR expenditure was treated as not having a nexus that would bar a separate claim under section 80G, and the deduction under section 80G was considered independent of any disallowance under section 37. The claim was also to be examined on satisfaction of the statutory conditions governing section 80G, rather than being rejected solely by linking it to the prior disallowance under section 37.
Conclusion: The deduction under section 80G could not be denied merely on the basis of the section 37 disallowance, and the matter was directed to be allowed subject to verification of the statutory conditions. The issue was decided in favour of the assessee.
Final Conclusion: The revenue's challenge failed on both substantive issues, and the assessee secured relief on the merits of the additions/disallowances in dispute.
Ratio Decidendi: A beneficial and curative amendment governing additional depreciation may be applied so as to permit the remaining eligible deduction in the subsequent year where the asset was used for less than 180 days, and a claim under section 80G stands independently of a disallowance made under section 37 when the statutory conditions for section 80G are otherwise satisfied.