2024 (6) TMI 723

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....03.03.2023. 2. The sole issue arising in the instant appeal is if the amendment by way of insertion of the third proviso to section 32(1)(ii) by Finance Act, 2015, w.e.f. 01.04.2016, is retrospective in nature? While the assessee before us relies on the decisions in the following cases, the Revenue relies on the decision in Pr. CIT vs. Era Infrastructure(India) Ltd. [2022] 141 taxmann.com 289 (Del) (copy on record), rendered relying on the decision in Sedco Forex International Drill Inc. v. CIT [2005] 279 ITR 310 (SC): i. CIT vs. Aztec Auto Pvt. Ltd. TCA No., 267 of 2020 (Mad) Mentions that SLP in the case of Brakes India was dismissed by the Hon. Supreme Court. ii. Brakes India Ltd. vs. Dy. CIT, ITA 1464 of 2019, (Mad)....

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....n or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed- (i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual 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 .............. Provided further that where an asset referred to in clause (i) or clause (ii) or clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous ....

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.... 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, supplied) 3.3 The decisions relied upon by either side stand perused. In Rittal India Pvt. Ltd. (supra), the Hon'ble High Court was of the view that the provision being a one-time benefit with a view to encourage industrialisation, it is to be construed reasonably, liberally and purposefully. Reading it in a manner to allow the balance 50% depreciation in the following year would thus be in order. This was followed in Brakes India Ltd. (supra), which in turn was follow....

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....ce to decisions in CIT v. Goslino Mario [2000] 241 ITR 312 (SC); CIT v. S.R. Pattan [1992] 193 ITR 49 (Ker); and CIT v. S.G. Panatale [1980] 124 ITR 391 (Guj). An assessment, it explained, is to, in terms of the settled law, be made with reference to the law in force at the relevant time. The provision was accordingly held as prospective. Inasmuch as it is the ratio of a decision that has precedential value, we find the Revenue's reliance as apposite. 3.4 In our view, though, the correct manner of proceeding in the matter is to read the unamended law, and to come to a conclusion as to the clarificatory or otherwise nature of the amendment, on that basis, as was also undertaken by the Hon'ble Court in TP Textiles Pvt. Ltd. (supra) (pa....

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...., therefore, is to be read in that context. The law, however, restricting depreciation to 50% of that eligible where the asset under reference is put to use for less than 180 days during the relevant year, puts an artificial curb thereon. This would not be of much consequence in the normal course as the assessee would be, for the following year, entitled to depreciation on the WDV computed by reducing from its cost, thus, the depreciation actually allowed. However, in the case of additional depreciation u/s. 32(1)(iia), a one-time allowance, the said restriction, though applicable inasmuch as the depreciation u/s. 32(1)(iia) is only by way of an addition to that exigible u/s. 32(1)(ii), has no correlation with the WDV, though operates to ba....