TMI Blog2016 (6) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... to allow 50% of additional depreciation in the succeeding year as claimed by the assessee - Decided in favour of assessee - I.T.A.No.492/Mds/2015 - - - Dated:- 26-4-2016 - Shri Chandra Poojari, Accountant Member and Shri Duvvuru RL Reddy, Judicial Member For The Appellant : Shri Saroj Kumar Parida, Advocate For The Respondent : Mrs. S. Vijaya Prabha, JCIT ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) I, Coimbatore, dated 23.01.2015 relevant to the assessment year 2005-06. The assessee has raised two effective grounds viz., (1) assumption of jurisdiction in issuing notice under section 148 of the Income Tax Act, 1961 [ Act in short] and (2) disallowance of additional depreciation under section 32(1)(iia) of the Act. 2. At the time of hearing, the ld. Counsel for the assessee has sought for permission to withdraw the ground relating to assumption of jurisdiction in issuing the notice under section 148 of the Act and not pressed the ground before the Tribunal. Since the ld. Counsel for the assessee has endorsed in the grounds of appeal that G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra), the Coordinate Bench of the Tribunal in the case of Automotive Coaches Components Ltd. v. DCIT (supra) has observed and held as under: 5. We have considered the rival submissions on either side and perused the relevant material available on record. Section 32(1)(iia) provides for additional depreciation at the rate of 20%. The Assessing Officer allowed 10% of additional depreciation in respect of the plant and machinery purchased during the year under consideration. The Assessing Officer found that the additions to fixed assets were made in the second half of the financial year, therefore, 50% of additional depreciation has been claimed. The balance 50% was carried forward in the next year. The Assessing Officer found that the additional depreciation is allowable only during the year in which the machinery was installed and used for business of the assessee. There is no provision in the Income-tax Act for carry forward of the additional depreciation to the subsequent assessment year. This issue was examined by the Cochin Bench of this Tribunal in Apollo Tyres Ltd. v. ACIT (supra). The Cochin Bench found that if additional depreciation could not be allowed at the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery and plant shall be allowed as a deduction. It is not in dispute that the assessee has acquired and installed the machinery after 31-03- 2005. It is also not in dispute that the assessee is engaged in the manufacture of article or thing. Therefore, the assessee is eligible for additional depreciation which is equivalent to 20% of the actual cost of such machinery. The dispute is the year in which the depreciation has to be allowed. The assessee has already claimed 10% of the depreciation in the earlier assessment year since the machinery was used for less than 180 days and claiming the balance 10% in the year under consideration. Section 32(1)(iia) does not say that the year in which the additional depreciation has to be allowed. It simply says that the assessee is eligible for additional depreciation equal to 20% of the cost of the machinery provided the machinery or plant is acquired and installed after 31- 03-2005. Proviso to section 32(1)(iia) says that if the machinery was acquired by the assessing during the previous year and has put to use for the purpose of business less than 180 days, the deduction shall be restricted to 50% of the amount calculated at the prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while granting the additional allowance. This additional benefit is to give impetus to industrialization and the basic intention and purpose of these provisions can be reasonably and liberally held that the assessee deserves to get the benefit in full when there is no restriction in the statute to deny the benefit of balance of 50% when the new machinery and plant were acquired and used for less than 180 days. One time benefit extended to assessee has been earned in the year of acquisition of new machinery and plant. 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 I shall be allowed . Thus, the assessee had earned the benefit as soon as he had purchased the new machinery and plant in full but it is restricted to 50% in that particular year on account of period 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 restricted for that year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not restrain the assessee from claiming the balance of the benefit of additional depreciation in the subsequent assessment year. Accordingly, confirmed the order of the Bangalore Bench of this Tribunal. In fact, the Karnataka High Court has observed as follows:- 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 0l.04.2006. 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, OF that it should be claimed in one year, have been done away by substituting clause (iia) with effect from 01.0.2006. The grant of additional depreciation, under the aforesaid provision, is for the benefit of the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional depreciation during the year under consideration . 8. We have carefully gone through the order of the Coordinate Bench in the case of Automotive Coaches Components Ltd. v. DCIT (supra) and find that the issue involved is squarely covered in favour of the assessee. The ld. DR could not controvert the above findings of the Tribunal or filed any higher Courts decision having modified or reversed the findings of the either the decisions of the Cochin Benches of the Tribunal in the case of Apollo Tyres Ltd. v. ACIT (supra) or the decision of the Hon ble Karnataka High Court in the case of CIT v. Rittal India Pvt. Ltd. (supra), which were followed by the Chennai Benches of the Tribunal in the case of Automotive Coaches Components Ltd. v. DCIT (supra) to arrive at a conclusion that the assessee is entitled to claim 50% of additional depreciation in the succeeding year when the plant and machinery was put in use for less than 180 days in the preceding previous year. Thus, respectfully following the decision in the case of Automotive Coaches Components Ltd. v. DCIT (supra), we direct the Assessing Officer to allow 50% of additional depreciation in the succeeding year as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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