TaxTMI 
TaxTMI 
2019 (8) TMI 798
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....was allowed to the assessee. Further it was seen from the details available on record (Form No. 3AA) that the assets (plant & machinery) amounting to Rs. 37,41,53,459/- on which additional depreciation amounting to Rs. 5,61,23,019/- was allowed were purchased before 01.04.2002 but installed after 01.04.2002. ii. The additional depreciation was introduced by the Finance Act, 2002 and it was to be allowed only if assets are acquired and installed after 01.04.2002. Therefore, the additional depreciation of Rs. 5,61,23,019/- was wrongly allowed as the company acquired the assets before 01.04.2002 even though the assets were installed after 01.04.2002." 3. The Ld. CIT accordingly issued a notice u/s 263 on 08.03.2007 pointing out the aforesaid errors of the assessee and requiring the assessee to show cause as to why the order passed by the AO u/s 143(3) should not revised. In reply, the following explanation was offered by the assessee: "Additional depreciation u/s 32(1)(iia) of the Act claimed by the assessee company was wholly and exclusively on the new machineries acquired and installed during the previous year ending on 31st March, 2003 relevant to assessment ye....
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....he assessment completed u/s 143(3) and the said order passed by the AO thus was erroneous as well as prejudicial to the interest of the revenue. She accordingly directed the AO to withdraw the claim of the assessee for additional depreciation to that extent vide an order dated 27.03.2007 passed u/s 263. 6. Against the order passed by the Ld. CIT u/s 263, an appeal was preferred by the assessee before the Ld. CIT and after considering the submissions made by both the sides as well as the material available on record, the Tribunal decided the issue relating to the assessee's claim for additional depreciation in favour of the assessee vide paragraph No. 14 to 14.2 of its order dated 30.10.2007 passed in ITA No. 1121/Kol/2007 which read as under: "14. We have given our careful consideration to the rival submissions made before us and have perused the orders of tax authorities. We have also considered the Paper Book filed by the learned counsel for the assessee and the material available on recorded. The Ld. CIT in this case has objected to the action of the AO in accepting the plea of the assessee that the purchases were only made after 31.03.2002. She has observed that the....
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....bunal dealing with additional depreciation by observing as under: "The reasons sought to be advanced by the tribunal, regrettably show absolute non-application of mind. Where evidence is cited in support of proof of a fact the exact materials on which such inference is being drawn have to be specified. After all, the tribunal is the final fact finding authority. Saying 'all the documents will be found in the paper book' amounts to dealing with the matter very cursorily. The factum of sale/acquisition of the machines has to be proved legally in terms of payment of consideration, date of delivery, passing of property, the terms and conditions of contract etc. The installation of the assets has also to be established in a like manner. In our opinion, such absence of reasons on a factual issue in the order of the tribunal which is the final authority on facts is itself a substantial question of law from which an appeal lies to the High Court under section 260A of the Income Tax Act. Otherwise, a party would be deprived of remedy." 8. In compliance with the direction given by the Hon'ble Calcutta High Court in the judgement delivered on 31.09.2009, the case was fixe....
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....iven by the Hon'ble Calcutta High Court while remanding the issue for re-consideration by the Tribunal is very specific to find out the factum of sale/acquisition of machines with reference to passing of property, the terms and conditions of contract etc. He contended that the machinery was acquired by the assessee before 01.04.2002 as per the details furnished on record by the auditor in Form No. 3AA and since the additional depreciation is allowable to the assessee only in respect of machinery acquired and installed after 01.04.2002, it was not entitled for additional depreciation on the machinery acquired before 01.04.2002 and installed after 01.04.2002. He contended that there was thus an error in the order of the AO passed u/s 143(3) allowing the claim of the assessee for additional depreciation and the same being prejudicial to the interest of the revenue, the Ld. CIT was fully justified in revising the same by exercising her power u/s 263. 11. The learned DR contended that the assessee for claiming additional depreciation has to acquire the machinery after 01.04.2002 and since this condition was no satisfied by the assessee in the present case, there was an error in the o....
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....ssessee engaged in the business of manufacture or production of any article or thing, a further sum equal to 15%, of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii)" 14. On examination of the relevant assessment records, the concerned Ld. CIT found from the details given in the audit report that the plant & machinery amounting to Rs. 37,41,53,459/- on which additional depreciation amounting to Rs. 5,61,23,019/- was allowed by the AO were purchased before 01.04.2002 but installed after 01.04.2002. She held that the said machinery having been purchased / acquired by the assessee before 01.04.2002 was not eligible for additional depreciation and accordingly the claim allowed by the AO for additional depreciation was withdrawn by her vide an order dated 27.03.2007 passed u/s 263. On appeal, the Tribunal set aside the order of the Ld. CIT u/s 263 on this issue and restore the order of the AO allowing the claim of the assessee for additional depreciation after having found that the purchases of machinery were actually materialised only in the previous year relevant to AY 2003-04 as established on the basis of documents and evidences forming p....
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....05) 19.07.2002 (Bill of entry P-106 After 19.07.2002 14.08.2002 Certified P-107 18.07.2002 (Additional checklist) P-108 40,28,544.00 4 Maini Meterials Movement Pvt. Ltd. (inplant material) 10.03.2002 (P-109) 30.03.2002 (P-109) 28.04.2002 (Challan) P-110 28.04.2002 (P-111) 10.07.2002 (Additional checklist) P-112 20.07.2002 (Additional checklist) P-112 (same-116) 259,780.00 5 Mukund Ltd. (EOT Crane) 20.10.2001 (P-117) 19.04.2002 (P-118) 22.05.2002 (P-119) 16.07.2002 (P-117) 04.05.2002 (P-118) 06.11.2002 (P-119) 12.04.2002 (Gr. Slip) P-120 12.04.2002 (Gr. Slip) P-120 08.05.2002 (Certified) P-121 21.12.2002 (Additional checklist) P-122 26,77,947.00 37,41,53,459.00 Additional Depreciation claimed Rs. 5,61,23,019.00 [15% of Rs. 37,41,53,459.00] 16. As rig....
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....is interpretation given by the AO was not found acceptable by the Hon'ble Gujarat High Court by holding that it would lead to an absurd and unjust result and the purpose of object of granting the additional depreciation would be frustrated. It was held by their lordship that section 32(1)(iia) is required to be interpreted reasonably and purposively as strict and literal reading of section 32(1)(iia) would lead to an absurd result denying the additional depreciation to the assessee though admittedly assessee had installed new plant and machinery. 18. In the case of Lotus Energy (India) Ltd. (supra), additional depreciation u/s 32(1)(iia) was claimed by the assessee on plant & machinery which was installed after 31.03.2005 but large part of acquisitions of machineries were made before 31.03.2005. The AO disallowed the claim of the assessee for additional depreciation on the ground that the twin conditions of acquisition and installation were not satisfied in the relevant year i.e. AY 2006-07. When the matter reached the Tribunal, the claim of the assessee for additional depreciation was allowed by the Mumbai Bench holding that the conditions as stipulated u/s 32(1)(iia) were duly....