AI Drafter 
TaxTMI 
TaxTMI 
2017 (9) TMI 34
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....cial to the interest of the revenue. 2. The Appellant prays that it be held that the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the revenue and accordingly the action of the Pr. CIT in invoking provisions of section 263 of the Act is ab-initio and/ or otherwise void and /bad-in-law. WITHOUT PREJUDICE TO GROUND I: GROUND 11: DISALLOWANCE OF ADDITIONAL DEPRECIATION AMOUNTING TO Rs. 12,29,935/- 1. On the facts and circumstances of the case and in law, the Pr. CIT erred in erred setting aside the order passed by the AO u/s. 143(3) of the Act on the allegation that adequate inquiry and investigation was not conducted while allowing the claim of the Appellant in respect of additional depreciation u/s 32 of the Act, amounting to Rs. 12,29,935/-. 2. He failed to appreciate and ought to have held that benefit of additional depreciation u/s 32(1)(iia) has to be construed liberally there is no restriction on assessee to carry forward additional depreciation and, thus, where only 50 per cent of additional depreciation 'is allowed in year of purchase of machinery as it was put to use for lass than 180 days during said year, balan....
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.... year 2010-11, is not allowable in A.Y. 2012-13. 1.4. A perusal of the records and the assessment order shows that the AO has not made the disallowance of depreciation to the extent of Rs. 12,29,935/- being the additional depreciation claimed in respect of additions in assets made during the second half of the financial year 2010-11 relevant to A.Y. 2011-12. 1.5. In view of the above, it is clear that there is a failure on the part of the assessing officer to examine the issue of claim of additional depreciation in terms of provisions of section 32(1), which has rendered the impugned assessment order passed u/s.143(3) of the I.T. Act erroneous, in so far as it is prejudicial to the interests of revenue, in terms of explanation 2 to Section 263 of the IT Act. 5. After referring explanation 2 to Section 263, CIT concluded as under:- 5. I have considered the submissions made by the assessee [as reproduced herein above para 3] in respect of the issue under reference. The show cause notice [which is reproduced in para 2 herein above] is given to revise the assessment order, as while making assessment, the AO has not examined the issue of claim of additional depreciation in r....
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....ion of learned AR was that there is no restriction on assessee to carry forward additional depreciation u/s 32(1)(iia) and claim the same in the subsequent year where only 50 percent of additional depreciation is claimed in the year of purchase on the plea that it was put to use for less than 180 days during the said year. In support of the proposition, reliance was placed on the following judicial pronouncements:- 1 CIT v. hri T.P. Textile (P.) Ltd. (394 ITR 48) (Mad. HC) 2 CIT . Rittal India (P.) Ltd. (380 ITR 423) (Kar. HC) 3 DCIT v. M/s.Godrej Industries Ltd. (ITA o. 6438/Murnl2013) (Mum. Trib.) 4 M/s Well known Polysters Ltd. . JCIT (ITA 0.70 15/Mum/20 15) (Mum. Trib.) 5 M/s MITC Rolling Mill P. Ltd. v. AClT (ITA o. 2789/Mum/2012) (Mum. Trib) 6 TV Motor Company Ltd. . ACIT (77 taxmann.com 105) (Chen. Trib.) 7 India Pistons Ltd. . ACfT (75 taxmann.com 99) (Chen. Trib.) M/s Automotive Coaches & Components Ltd. v. DCIT (ITA o. I 789/Mds/20 14) 8 (Chen. Trib.) 9 Universal Cables Ltd. v. DCIT (68 OT 307) (Kol. Trib.) 10 Birla Corporation Ltd. v. DCIT (69 OT 21 ) (Kol. Trib.) 11 Apollo Tyres Ltd. v. ACIT (64 SOT 203) (Cochin Trib.) 12 ITO v. MI As....
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....nserted by the Finance Act 2015. 13. We have considered rival contentions and gone through the orders of the lower authorities. We have deliberated on the judicial pronouncements cited by learned AR. The eligibility to carry forward and set off 50% of the additional depreciation to the subsequent year on the plea of machinery having been worked for less than six months has been decided by Madras High Court in case of T.P.Textiles Pvt. Ltd., 394 ITR 482 for the A.Y. 2011-12, wherein Court held as under:- * The plain language of Section 32(1)(iia) read along with the relevant proviso would have us come to the conclusion that, there is no limitation in the assessee claiming the balance 10% of additional depreciation in the succeeding assessment year. * As a matter of fact, with effect from 01.04.2016, 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. * A perusal of the Memorandum explaining provisions of Financial Bill, 2015 would show that the legislature recognised the fact that the matter in which the revenue chose to interpret the....
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....ear that only 50 per cent of the 20 per cent would be allowable, if the new plant and machinery so acquired is put to use for less than 180 days in a financial year. However, it nowhere restricts that the balance 10 percent would not be allowed to be claimed by the assessee in the next assessment year. The language used in clause (iia) of the said section clearly provides that 'a further sum equal to 20 per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii)'. The word 'shall' used in the said clause is very significant. The benefit which is to be granted is 20 per cent additional depreciation. By virtue of the proviso referred to above, only 10 per cent can be claimed in one year, if plant and machinery is put to use for less than 180 days in the said financial year. This would necessarily mean that the balance 10 per cent additional deduction can be availed in the subsequent assessment year, otherwise the. very purpose of insertion of clause (iia) would be defeated because it provides for 20 per cent deduction which shall be allowed. It has been consistently held by this Court, as well as the Apex Count, that benefi....