TaxTMI 
TaxTMI 
2017 (2) TMI 644
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.... pharmaceuticals, beverages and other other industries. That the assessee filed the return of income for the Assessment Year 2006-07. That thereafter the Assessing Officer framed the scrutiny assessment under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'IT Act") assessing total income at Rs.NIL, after settling of depreciation to the extent of income available of Rs. 6,83,33,991/. That thereafter the assessment for AY 2006-07 was reopened under Section 147 of the IT Act, on the Revenue's audit objection. It is required to be noted that the assessee claimed the additional depreciation under Section 32(1)(iia) of the IT Act of Rs. 2,18,50,976/at 20% on newly purchased Flexo Printing Machinery of Rs. 10,92,54,880/. The said machinery was purchased on 12.02.2004 i.e. in the previous assessment year. However, the said machinery was installed during the year under consideration on 15.04.2005. Therefore, the Revenue Audit Party raised the objection that as the machinery was purchased before 31.03.2005 and hence, additional claim of depreciation was not allowable to the assessee. Therefore, in reassessment proceedings the Assessing Officer disallowed the assessee'....
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....tly submitted that in the facts and circumstances of the case the learned ITAT has materially erred in allowing the additional depreciation claimed of Rs. 2,18,50,976/at 20% under Section 32(1)(iia) of the IT Act on the plant and machinery as claimed by the assessee. [3.1] It is further submitted by Shri Parikh, learned Counsel appearing on behalf of the Revenue that in the present case the plant and machinery on which the additional depreciation under Section 32(1) (iia) of the IT Act was claimed was purchased before 31.03.2005 but installed after 31.03.2005 and therefore, the conditions for claiming the additional depreciation under Section 32(1)(iia) of the IT Act are not satisfied. [3.2] It is vehemently submitted by Shri Parikh, learned Counsel appearing on behalf of the Revenue that for claiming the additional depreciation under Section 32(1)(iia) of the IT Act, the assessee is required to install and use the plant and machinery in the year under consideration. It is submitted that therefore twin conditions of installation and use in the year under consideration is required to be fulfilled and satisfied. It is submitted that as in the present case the twin conditions of ins....
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.... that in the present case the plant and machinery was purchased on 12.02.2004 i.e. before 31.03.2005. It is submitted that however certain damaged parts of the machinery were replaced by the supplier at Germany on 13.12.2004. Therefore, the said machinery was installed during the year under consideration on 15.04.2005 i.e. 31.03.2005. It is submitted that if the case on behalf of the Revenue is accepted, in that case, the assessee will never get any additional depreciation either under the previous assessment year or for the year under consideration i.e. either in AY 200506 or in AY 2006-07. It is submitted that by such an interpretation grant of additional depreciation under Section 32(1)(iia) of the IT Act shall be frustrated. [4.4] Shri Shah, learned Counsel appearing on behalf of the assessee has submitted that while interpreting the particular statute the object of enacting the same is required to be considered and the section is required to be interpreted in such a manner as not to nullify the object of enacting particular provision. It is submitted that even while interpreting and/or considering the fiscal statutes the principles of reasonable construction is required to be....
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.... the facts and circumstances of the case, twin conditions of the purchase and installation of the machinery in the same year shall not be fulfilled and in that case the assessee shall never get the additional depreciation under Section 32(1)(iia) of the IT Act. It is submitted that in such a situation the assessee shall not get additional depreciation either in the preceding assessment year in which the assessee purchased the plant and machinery and at the same time shall also not get the additional depreciation in the year under consideration in which the plant and machinery was actually installed. It is submitted that thus the purpose and object of grant of additional depreciation on plant and machinery shall be frustrated. Therefore, it is requested to have a reasonable and purposeful construction of Section 32(1)(iia) of the IT Act. Making above submissions it is submitted that the learned ITAT has not committed any error in allowing the additional depreciation under Section 32(1)(iia) of the IT Act as claimed by the assessee. Making above submissions it is requested to dismiss the present Tax Appeal and answer the question in favour of the assessee and against the Revenue. ....
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....)(iia) of the IT Act seems to be to give a boost to the manufacturing sector by allowing the deduction of a further sum equal to 20% (prior to amendment - 15%) of the actual cost of such machinery or plant acquired and installed. Therefore, underlying object and purpose is to encourage the industries by permitting the assessee setting up the new undertaking / installation of new plant and machinery to claim the benefit of additional depreciation. Keeping in mind the above object and purpose the question posed for consideration of this Court is required to be considered. [5.1] It is the case on behalf of the Revenue that the language used in section 32(1)(iia) of the IT Act is that a further sum equal to 20% of actual cost of any new machinery or plant acquired and installed after 31st Day of March 2005 by the assessee engaged in the business of manufacturing or production of any article or thing, is allowed as deduction as further depreciation. Therefore, it is the case on behalf of the Revenue that on literal interpretation of the provision of Section 32(1)(iia) of the IT Act, while framing the deduction as further depreciation under Section 32(1)(iia) of the IT Act, the assessee....
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....inary grammatical meaning of the words of the enactment as affording the best guide, but to winch up the legislative intent, it is permissible for courts to take into account of the ostensible purpose and object and the real legislative intent. Otherwise, a bare mechanical interpretation of the words and application of the legislative intent devoid of concept of purpose and object will render the legislature inane." "In given circumstances, it is permissible for Courts to have functional approaches and look into the legislative intention and sometimes it may be even necessary to go behind the words and enactment and take other factors into consideration to give effect to the legislative intention and to the purpose and spirit of the enactment so that no absurdity or practical inconvenience may result and the legislative exercise and its scope and object may not become futile." [6.5] In the case of K.P. Varghese (Supra), it is observed and held as under: "A statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. Where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could ....
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....at a fiscal statute is to be construed strictly and nothing should be added or subtracted to the language employed in the section, yet a strict construction of a provision does not rule out the application of the principles of reasonable construction to give effect to the purpose and intention of any particular provision of the IT Act. [6.9] In the case of Sanjeev Lal (Supra), it is observed by the Hon'ble Supreme Court that purposive interpretation of the provisions of the Act should be given while considering a claim for exemption from tax. [7.0] Applying law laid down by the Hon'ble Supreme Court in the aforesaid decisions to the facts of the case on hand, if the submission on behalf of the Revenue is accepted, in that case it will lead to an absurd and unjust result and the purpose and object of granting the additional depreciation will be frustrated. If the contention on behalf of the Revenue is accepted, in that case, the assessee shall never get the additional depreciation as provided under Section 32(1)(iia) of the IT Act. In the facts and circumstances of the case, the twin conditions of the acquired and installed shall never be satisfied in a year and therefore, the ass....