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TMI Blog2014 (6) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the embroidery work does not give any product which is distinct in quality and shape from that of the input raw material was not appreciated." 3. Brief facts of the case are that assessee is engaged in the business of embroidery work on clothes. During the year under consideration assessee claimed 20 % of additional depreciation of Rs. 35,45,700/- u/s 32(1)(iia) of the Act on the machinery installed by him claiming himself involved in the business of manufacturer or production of article or thing. According to A.O. the activities of the assessee are basically of job work of embroidery on finished clothes obtained from his clients which are neither manufactured nor processed by him therefore assessee cannot be considered as man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nadmissible as per provisions of section 32(1)(iia). The Ld. CIT(A) has given relief to the assessee by following the decision of ITAT, Delhi in the case of DCIT vs. Cosmo Films Ltd (124 Taxman.com 189) wherein it has been held that the additional depreciation cannot be restricted to 50 % and it has to be allowed in succeeding years if it is not allowed full in the relevant year. For the sake of convenience the relevant portion of the order is as under:- "17. We have heard both the sides on this issue. Section 32(1)(iia) inserted by Finance (No. 2) with effect from 1.4.2003. In speech of Finance Minister this clause was inserted to provide incentive for fresh investment in industrial sector. This clause was intended to give impetus to new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head "profits and gains of business or profession of any previous year." Thus, this incentive in the form of additional sum of depreciation is not available to any plant or machinery which been used either within India or outside India by any other person or such machinery and plant are installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house or any office appliances or road transport vehicles, or any machinery or plant the whole of actual cost of which is allowable as deduction (where by way of depreciation or otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded to assessee has been earned in the year of acquisition of new plant and machinery. It has been calculated @ 15% but restricted to 50% only on account of usage of these plant & machinery in the year of acquisition. In section 32(1(iia) the expression used is "shall be allowed". Thus the assessee had earned the benefit as soon as he had purchased the new plant and machinery in full but it is restricted to 50% in that particular year on account of period of usages. Such restrictions cannot divest the statutory right. Law does not prohibit that balance 50% will not be allowed in succeeding year. The extra depreciation allowable u/s 32(1)(iia) in an extra incentive which has been earned and calculated in the year of acquisition but restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X
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