TMI Blog2015 (8) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... opting an implied meaning to second proviso to section 32(1)(ii) - since the second proviso to section 32(1)(ii) does not expressly prohibit the allowance of the balance 50% depreciation in the subsequent year, second proviso to section 32(1)(ii) shall not be interpreted to mean that it impliedly restrict the additional depreciation to be allowed in the subsequent AY - the assessee is entitled for 50% additional depreciation, because in the year in which the machinery was first put to use the assessee claimed only 50% of additional depreciation for the reason that the same was put to use for less than 180 days, in this assessment year for the balance of depreciation - Decided in favour of assessee. Disallowing 1% of dividend income in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o use for less than 180 days in the immediately preceding year. The relevant ground no.1 reads as under: 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not directing the AO to allow balance 50% of initial depreciation to the extent of ₹ 2828430 u/s. 32(1)(ii) on Plant Machinery put to use for a period of less than 180 days during the financial year 2005-06 relevant to Assessment Year 2006-07. 3. Brief facts are that during financial year 2005-06 relevant to AY 2006-07, the assessee purchased and installed new plant and machinery for its manufacturing unit. Such plant and machinery was put to use for a period less than 180 days during the aforesaid financial year and claimed balance 50% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances of the case. The facts are admitted and there is no dispute on the facts. Only issue for adjudication is whether the assessee is entitled for the balance 50% additional depreciation in view of sec. 32(1)(iia) of the Act in the next assessment year for remaining unutilized additional depreciation. We have gone through the relevant provisions of second proviso to section 32(1)(ii) and 32(1)(iia) of the Act. In the present case before us, the assessee has purchased and installed new plant and machinery for its manufacturing unit and put to use for a period of less than i.e. 180 days, during the FY 2005-06 relevant to AY 2006-07 and claimed 50% additional depreciation u/s. 32(1)(iia) of the Act in view of the second proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant was acquired and installed after 31-03-2005. There is no restrictive condition in the clause for the eligibility of the assessee to claim additional depreciation. When the assessee is eligible for depreciation @ 20%, in the absence of any specific provision, the AO cannot cut down the scope of deduction by referring to second proviso to section 32(1)(ii) of the Act. He also pointed out that even if there is any contradiction between sections 32(1)(iia) and second proviso to section 32(1)(ii), it has to be reconciled so as to give harmonious effect to the legislative intent. The benefits conferred on the assessee by way of incentive provision cannot be taken away by adopting an implied meaning to second proviso to section 32(1)(ii) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idend income amounting to ₹ 7,56,642/-. The AO applied Rule 8D(2)(iii) of the I. T. Rules, 1962 and estimated the disallowance i.e. average of the value of investment at 1 % at ₹ 14,16,710/- u/s. 14A of the Act read with Rule 8D(2)(iii) of the I. T. Rules, 1962. Aggrieved, assessee preferred appeal before CIT(A), who following the decision of Coordinate Bench of ITAT C Bench, Kolkata in ITA No.954/Kol/2010 dated 29.04.2011 restricted the disallowance to 1% of dividend income. Relevant portion of his order reads as under: 16. The Hon ble ITAT C Bench, Kolkata in the case of assessee for assessment year 2006-07 in ITA No. 954/Kol/2010 dated 29.4.2011 has held as follows: In view of facts of this case and the principle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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