TaxTMI 
TaxTMI 
2023 (2) TMI 465
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....ubsequent year of first usage of such plant or machinery, in favour of the Respondent assesse. The assessment orders for both AY 2009-10 and 2010-11 respectively, passed under Section 154, had been disallowed and added to the income of the Respondent. The amount of additional depreciation was claimed by the respondent in the subsequent assessment year to the assessment year in which such new machinery or plant was put to use. Such disallowance has been made on the ground that additional depreciation under Section 32(1)(iia) of Income Tax Act, 1961 (hereinafter to be referred as "the Act") can be claimed only in the first year of use of the new machinery and the additional depreciation cannot be taken in the subsequent year. The assessment orders passed by the Assessing Officer in connection with AY 2009-10 and 2010-11 was challenged by the Assessee before the CIT (A) in Appeal No. 44/JSR/2016-17 and Appeal No. 45/JSR/2016-17, who vide its order dated 15.09.2017 (A.Y. 2009- 10) and 12.09.2017 (A.Y. 2010-11) respectively, confirmed the addition. Being aggrieved, the Assessee challenged both the orders before the learned ITAT which was numbered as ITA No. 310/Ran/2017 for the AY 200....
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....deleting the disallowance of claim of additional depreciation during the relevant assessment years by relying upon the judgment passed by the Hon'ble Madras High Court in M/s Brakes India Limited versus DCIT. As a matter of fact, even the CIT has taken note of these facts in its order passed under Section 263 of the Act. He further submits that the disallowance made on the ground that additional depreciation under Section 32(1)(iia) of the Act can only be claimed in the first year of use of the new machinery and the additional depreciation cannot be taken in the subsequent year is correct proposition of law and both the Tax authorities were justified in making disallowance of claim of additional depreciation during the relevant assessment years and the learned Tribunal has made an error in relying the Order passed by the Hon'ble Madras High Court. So far as the second question of law is concerned; he contended that both these appeals are maintainable as it comes under the exception clause engraved in the same Circular which has fixed the monetary limit for filing appeal and he placed reliance on an audit objection made for the relevant assessment years in the case of respondent-A....
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.... the same report at its second page states that the department (Income Tax) has taken a stand that "there is no such provisions in the Income Tax that additional depreciation can be availed in the first year only and reiterated that it can be availed in the subsequent year also." Thus, it is very clear from this report itself that the Income Tax department was not in agreement with the audit objection and the department was aware that additional depreciation can be availed also in the subsequent years. From perusal of the entire record, it is crystal clear that though the revenue-Auditor has made objection, however, nowhere on record it transpires that the revenue objection was accepted. At this stage it is also relevant to note that as per the revenue own circular No. 3/2018 at paragraph 10, the CBDT has engrafted certain exceptions and at paragraph 10(c) it has been specifically provided that any appeal even below monetary limit can be entertained provided the audit objection has been accepted by the revenue. However, even after opportunities given to the learned standing counsel for revenue, he was unable to produce a single chit of paper to show that audit objection has been ....
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....t of the said judgment of the High Court of Karnataka is reproduced herein below for ready reference: "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 April 1, 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 year. 8. The aforesaid two conditions, i.e., the undertaking acquiring new plant and machinery should be a new industrial undertaking, or that it should be claimed in one year, have been done away by substituting clause (iia) with effect from April 1, 2006. The grant of additional depreciation, under the aforesaid provision, is for the benefit of the Assesse and with the purpose of encouraging industrialization, by either setting up a new industrial unit or by expanding the existing unit by purchase of new plant and 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 per cent, of the 20 per....
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....ional depreciation, in terms of Section 32 (1) (iia), can be availed in subsequent assessment year to the assessment year in which the machinery was first put to use. The relevant extract of the said judgment of the Hon'ble Madras High Court is reproduced herein below: "10. According to us, these are provisions included by the Legislature in the Statute to give a fillip to new industries as also to existing industries, which seek to expand its sway, by investing in and making use of new plant and machinery. 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. ......... 11.5. In any event, in so far as the Court is concerned, it has to go by the plain language of the unamended provision, and then, come to a conclusion in the matter. As alluded to above, our view, is that, upon a plain reading of the unamended provision, it could not be said that the Assessee could not claim balance depreciation in the A.Y., which follows the A.Y., in which, the machinery had been bought and used....