TaxTMI 
TaxTMI 
2016 (5) TMI 630
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....f section 32 of the I.T. Act, 1961." 3. The only issue involved in this appeal is with regard to allowability of additional depreciation amounting to Rs. 83,55,387/- u/s 32(1) (iia) of the Income Tax Act, 1961(hereinafter called "the Act"). 4. The Brief facts of the case are that during the course of assessment proceedings, the learned assessing officer (Hereinafter called "the A.O.") observed that the assessee company has made a claim for allowability of additional depreciation for which the machinery or plant should have been acquired and installed after 31-3-2005. However, from the accounts of the assessee company, the AO noted that even though the plant and machinery in question was installed after 31-3-2005, but a large part of the acquisitions of the machineries were made before 31st March 2005. The assessee company did not respond to the show cause notice issued by the A.O., hence, the A.O. disallowed the claim of additional depreciation u/s 32(1)(iia) of the Act , amounting to Rs. 83,55,387/-. 5. Aggrieved by the decision of the A.O., the assessee company preferred an appeal before the first appellate authority i.e. the CIT(A). 6. Before the CIT(A), the assessee....
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.... of Kadillac Chemicals Pvt. Ltd. (supra), the CIT(A) directed the A.O. to allow claim of additional depreciation of the assessee company amounting to Rs. 83,55,387/- u/s 32(1) (iia) of the Act. The CIT(A) held that the provisions of Section 32(iia) of the Act, as amended by Finance Act, 2005, are pari-passu to the pre-amended provisions, as far as the condition of "acquired and installed" is concerned. Only the date of acquired and installed has changed from 31.3.2002 to 31.3.2005. In the circumstances, the ratio of the above cited decision, in the absence of any contradictory decision is binding and has to be followed. Thus, CIT (A) vide orders dated 29-08-2011 allowed the appeal of the assesee company. 7.Aggrieved by the orders dated 29-08-2011 of the CIT(A), the Revenue is in appeal before the Tribunal. 8. The ld. D.R. submitted that as per provisions of Section 32(1)(iia) of the Act, the new plant and machinery are required to be acquired and installed after 31-3-2005 , as in the instant the same was also acquired prior to 31-03- 2005 but installed after 31-3-2005, hence, additional depreciation was not allowable because the conditions stipulated u/s 32(1)(iia) of the ....
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....d accounts ending 31-03-2005 and 31-3-2006 to substantiate his contentions that plant and machineries were acquired prior to 31-03-2005 as also post 31-03-2005 but the installation of new plant and machineries which commenced in financial year 2004-05 was completed after 31-3-2005 and commercial production started post 31-03-2005 . The Ld counsel prayed that the claim of additional depreciation should be allowed. The ld counsel relied upon decision of Mumbai Benches of the Tribunal in the case of Euro Pratik Ispat Private Limited v. ACIT in ITA no 1682/Mum/2011 , vide orders dated 02-04-2014. 10. We have heard the rival contentions and also perused the material available on record. We have observed that Section 32(1)(iia) of the Act was amended by Finance Act, 2005 . It is stated in the Memorandum to the Finance Bill 2005 that the provisions are amended in order to encourage new investment, the initial depreciation on new machinery and plant was proposed to be increased to 20 per cent from the existing level of 15 percent and consequently the initial depreciation will be available to all new plant and machineries except those referred to in the proviso to the clause (iia) of sec....
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....w plant and machineries were acquired by the assessee company starting from financial year 2004-05 , which process of acquiring plant and machineries also continued in the financial year 2005-06 as an integrated activity with the sole and common objective for setting up new industrial unit of coke production plant and finally concluded with the completion of installation of the said new plant and machineries in April 2005 and commencement of the commercial production of LAM coke in April 2005 i.e. financial year 2005-06 when new coke production plant became operational. Once a new industrial project is initiated by an enterprise to be set up, then the entire composite plant and machineries which are acquired and installed are an integrated activities as the said plant and machineries can only function when they are integrated together as per technical requirements and specifications which can there-after lead to successful commissioning of the project to produce or manufacture the desired products/articles. The plant and machineries so acquired cannot be visualized and seen in the individual and itemized context as they are in-capable of production or manufacture of desired product....
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....has purchased new plant and machinery in financial year 2004-05 which is undisputed and the same was shown in the Balance Sheet as at 31-03-2005 under the head 'Capital Work in Progress' and the same was capitalized in financial year 2005-06 along with those new plant and machineries which were acquired in financial year 2005-06 and the assessee company has not claimed any depreciation in the financial year 2004-05 on these new plant and machineries so acquired in financial year 2004-05. Thus, acquisition of the entire set of new machineries and plant whether acquired prior to or post 31-03-2005 was an integrated event in the chain of activity undertaken with common and sole goal of setting up new coke production plant by the asssessee company which process got completed in April 2005 i.e. financial year 2005-06 with the completion of installation of the entire new machineries and plant as composite , so acquired by the assessee company whether pre or post 31-03-2005 with the commencement of the production of coke production plant becoming operational in April 2005. We find that the conditions as stipulated u/s 32(1)(iia) of the Act are duly complied with by the assessee company an....
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.... for assessment year 2006-07 vide orders dated 2-4-2014 wherein the Tribunal allowed the claim of the tax-payer on identical ground as under: "2.3.We have heard the rival submissions and perused the material before us. Earlier the additional depreciation was allowed in the case of a new industrial undertaking during any previous year in which it would start manufacturing or producing any article or thing on or after the 01.04.2002 or to any industrial undertaking existing before that date if it achieved substantial expansion during the previous year by way of increase in its installed capacity by not less than ten per cent. However, in order to encourage investment, by inserting a new section, AD was allowed to the industry on the condition that the assets should have been acquired and installed after 31.3.2005. In our opinion, provisions of section 32(1)(iia) of the Act, do not requires that the P&M has to be put into use in the year in which it is acquired for the purpose of claiming AD. From the reading the explanatory notes; with regard to introduction of the section in the relevant year; it is evident that what is important and material is the year of acquisition in t....
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...., the relevant year for the grant of allowance would be the year in which the installation is completed. As in the case of investment allowance, so also in the case of additional depreciation, the material date is the date of installation and not the year of acquisition. The Tribunal categorically found on a perusal of the assessment order for the assessment years 1980-81 and 1981-82 and the relevant balance-sheets of the assesseecompany that the machines in question were shown as machines under installation in the previous years in the fixed assets schedule annexed to the balance-sheet. These machines have been only transferred to the machines account during the year under reference. No depreciation was claimed by the assessee on these machines and depreciation was only claimed on the machines which were shown as machines of the assessee in the fixed assets schedule. Two things would, therefore, be clear ; firstly, these machines were new and they were under installation and the installation was completed during the year under reference ; and secondly, no depreciation was ever claimed by the assessee prior to this assessment year on these machines. This finding of the Tribunal has....