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2019 (4) TMI 1432
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....ts in upholding the Disallowance of Additional Depreciation u/s 32(1)(iia) of the Income Tax Act, 1961 (the 'Act') of Rs. 20,24,313 as made by the Learned Assessing Officer (the 'LAO'). 2. The Ld. CIT(A) erred in upholding the disallowance made by the LAO under section 32(1)(iia), by restricting the claim of additional depreciation to 50% as per second proviso to section 32(1)(iia) instead of l00%. 3. The Ld. CIT (A) failed to appreciate the purpose and intent of such beneficial provision introduced by the legislation, which is to provide incentives for investment in industrial sector and thereby increase the industrial growth. Being a beneficial provision, such benefit cannot be denied arbitrarily by the LAO. 4. The Ld. CIT(A) erred in not adjudicating fresh claim of balance 50% additional depreciation amounting to Rs. 29,92,833/- for plant and Machinery acquired and installed in Assessment year(AY) 2011-12 but used for less than 180 days, despite of CIT(A)'s own order for AY 2011-12, wherein it was held that additional depreciation on assets acquired and used for less than 180 days should be restricted to 50% of rate in the current y....
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....ct. 4. The assessee filed first appeal with learned CIT(A) which was dismissed by the ld. CIT(A) as in the opinion of learned CIT(A) there is no provision in the statute for allowing additional depreciation beyond the first year in which the new plant and machinery was first put to use and hence the contention of the assessee with respect to disallowance of additional depreciation of 50% of stipulated rate of 20% i.e. 10% on the ground that new plant and machinery was put to use for less than 180 days also stood dismissed by learned CIT(A) keeping in view provisions of Section 32(1)(iia) of the 1961 Act read with second provisio to Section 32(1) of the 1961 Act. The assessee also made claim before learned CIT(A) for allowing additional depreciation of Rs. 29,92,833/- in AY 2012-13 for the new plant and machinery acquired and installed in immediately preceding assessment year viz. AY 2011-12 but was put to use for less than 180 days in the immediately preceding year i.e. AY 2011-12 for which only additional depreciation to the tune of 10% ( 50% of stipulated rate of 20%) stood allowed in AY 2011-12 while the rest of the additional depreciation stood disallowed in AY 2011-12, whic....
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....such new plant and machinery in AY 2011-12 while the rest of the additional depreciation which was disallowed in AY 2011-12 be allowed in the impugned assessment year i.e. AY 2012-13. It is claimed that Rs. 29,92,833/- is the additional depreciation u/s 32(1)(iia) of the 1961 Act which remained disallowed in AY 2011-12 which is to be allowed in this year i.e. AY 2012-13. Similarly on the same analogy, it is submitted that the assessee be allowed to claim rest of the additional depreciation u/s 32(1)(iia) of Rs. 20,24,313/- which stood disallowed in the impugned assessment year AY 2012-13 on the ground that new plant and machinery acquired during the year was put to use for less than 180 days, in the succeeding assessment year i.e. AY 2013-14. The assessee submitted that the tribunal in assessee's own case in ITA No. 5403 & 5404/Mum/2016 for A.Y. 2009-10 and 2011-12 respectively vide common order dated 23.02.2018 has allowed claim of the assessee. 5.4 The ld. D.R. on the other hand fairly did not raise objection to allowability of the claim of aforesaid additional depreciation subject to verification by the AO . 5.5 We have heard rival contentions and perused the material on r....
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.... 10.1 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. 10.2 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. 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 f....
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....claim balance depreciation in the A.Y., which follows the A.Y., in which, the machinery had been bought and used, albeit, for less than 180 days. 12. Thus, having regard to the foregoing discussion, we are of the view that no interference is called for with the impugned judgment of the Tribunal. 13. The appeal is, accordingly, dismissed." The Mumbai-tribunal in assessee's own case for A.Y. 2009-10 and 2011-12 in ITA Nos. 5403 and 5402/Mum/2016 , vide common order dated 23.02.2018 has decided this issue in favour of the assessee wherein tribunal followed the decision of Hon'ble Madras High Court in the case of CIT v. Shri T.P.Textiles Private Limited (2017) 394 ITR 483(Mad.) and also order of the Mumbai-tribunal in the case of Rashtriya Chemicals and Fertilizers Limited v. CIT in ITA no. 5160/Mum/2014 dated 29.06.2016 to hold in favour of the assessee, by holding as under : "7. We have heard the rival submissions and perused the orders of the authorities below and the decisions relied upon. The AO while completing the assessment disallowed 50% of additional depreciation which was claimed by the assessee during the current assessment year on the plant an....
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....al cost thereof to the assessee as may be prescribed; (ii) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed: Provided .... (a) & (b).... Provided further that where an asset referred to in clause (i) or clause (ii) or 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 or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this subsection in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) or clause (iia), as the case may be: Provided also & Explanation 1 to Explanation 5 (iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing or generation or generation and distribution of power, a further sum equal to twenty per cent of the actual cost of s....
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....d machinery, and putting it to use for the purpose of business. The proviso to Clause (ii) of the said Section makes it clear that only 50% of the 20% 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, if nowhere restricts that the balance 10% would not be allowed to be claimed by the assessee in the next assessment year. 9. The language used in Clause (iia) of the said Section clearly provides that "a further sum equal to 20% 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% additional depreciation. By virtue of the proviso referred to above, only 10% 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% 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% deduction which shall be allowed....." 9. We are in resp....
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....ery acquired and used for less than 180 days which has not been allowed in the year of acquisition and installation of such plant and machinery, shall be allowed in the immediately succeeding previous year. This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years." 11.2. A perusal of the extract of the Memorandum relied upon would show that the legislature recognised the fact that the manner in which the Revenue chose to interpret the provision, as it stood prior to its amendment would lead to discrimination, in respect of plant and machinery, which was used for less than 180 days, as against that, which was used for 180 days or more. 11.3. In our opinion, as indicated above, the amendment is clarificatory in nature and not prospective, as is sought to be contended by the Revenue. The Memorandum cannot be read in the manner, in which, the Revenue has sought to read it, which is, that the amendment brought in would apply only prospectively. 11.4. We are, clearly, of the view that the Memorandum, which is sought to be relied upon by the Revenue, only....