2017 (3) TMI 739

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... against the order dated 30.03.2015. 4. The issue, which arose for consideration before the Tribunal, and which, emanated from the order dated 30.03.2015, was, as to whether, the claim, made by the Assessee, with respect to balance 10% of additional depreciation, under Section 32(1)(iia) of the Act, was sustainable. 5. In order to adjudicate upon the appeal, the following facts, need to be noticed: 5.1. The Assessee is engaged in the business of manufacture and sale of building products and textiles. The Assessee had filed a return of income qua A.Y.2011-12, on 23.09.2011, whereby, the total income, as declared, was stated as Rs. 2,98,68,587/-. The Assessee's return was picked up for scrutiny, after which, an order, under Section 143(3) of the Act, was passed, on 27.02.2014. 5.2. The record shows that during the perusal of papers pertaining to A.Y.2011-2012, the Revenue formed a prima facie view that the assessment order dated 27.02.2014, passed qua the Assessee was both, erroneous and prejudicial to its interest. 5.3. Accordingly, a Show Cause Notice (in short SCN) notice dated 20.02.2015, was issued under Section 263 of the Act. By way of the said SCN, the Asse....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s placed on the judgment of the Karnataka High Court in the case of : CIT V. Rittal India (P.) Ltd., [2016] 66 taxmann.com 4 (Karnataka). 7.2. The issue, which arose for consideration before the Tribunal in the Fresh & Honest Cafe Ltd. V. DCIT, was also, whether the Assessee could be allowed balance additional depreciation in the relevant A.Y., following the A.Y., in which, the machinery had been purchased, and put to use, albeit, for a period of less than 180 days. 7.3. The Tribunal has, thus, in the context of the provisions of Section 263 of the Act, considered, as to whether the assessment order, as passed, qua the issue encapsulated above, erroneous and/or prejudicial to the interest of the Revenue. 7.4. In order to appreciate the issue at hand, relevant provisions of Section 32 of the Act, to the extent applicable in the A.Y. in issue, would be required to be noticed : "Section 32 (1) In respect of depreciation of - (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acq....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ding a new industrial unit, by purchasing and installing a new machinery, or, plant, and putting the same to use for the purposes of business. 8.1. The Court, went on to say, that while, the proviso appearing in Section 32(1) restricts the claim of depreciation to 50% of the amount calculated at the percentage prescribed for an asset referred to in clause (iia), nowhere does it restrict allowance of the balance 50% of the additional depreciation, which in percentage terms, would be 10% in the succeeding A.Y. 8.2. The relevant observations made by the Division Bench of the Karnataka High Court in the case of CIT V. Rittal India (P.) Ltd., as contained in paragraphs 7, 8 and 9 of the said judgment, for the sake of convenience are extracted hereafter :  "..... 7. Clause (iia) of Section 32(1) of the Act, as it now stands, was substituted by the Finance Act, 2005, applicable with effect from 01.04.2006. Prior to that, a proviso to the said Clause was there, which provided for the benefit to be given only to a new industrial undertaking, or only where a new industrial undertaking begins to manufacture or produce during any year previous to the relevant assessment yea....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....2016, the ambiguity, if any, in this regard, in the mind of the Assessing Officer, stands removed by virtue of the Legislature, incorporating in the Statute, the necessary clarificatory amendment. 10.3. The amendment brought in the relevant proviso obtaining in Section 32, reads as follows: ".... 32. (1) ...... Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business for a period of less than one hundred and eighty days in that previous year, and the deduction under this sub-section in respect of such asset is restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (iia)for that previous year, then, the deduction for the balance fifty per cent of the amount calculated at the percentage prescribed for such asset under clause (iia) shall be allowed under this sub-section in the immediately succeeding previous year in respect of such asset: ......." ( Emphasis is ours) 11. We may only indicate that during the course of the arguments, our at....