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2016 (11) TMI 1299 - ITAT DELHI

2016 (11) TMI 1299 - ITAT DELHI - TMI - Disallowance of additional depreciation u/s 32(1)(iia) - asset put to use - Held that:- The assessee could not claim 100% of the depreciation in the year of installation of plant and machinery because it was put to use for the purpose of business for a period of less than 180 days and claimed 50% of depreciation in the year of installation of plant and machinery, the remaining 50% was claimed in the year under consideration. The intention of the legislatio .....

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ation. Therefore, by following the ratio laid down in the case of Commissioner of Income Tax and Another Vs. Rittal India Pvt. Ltd., (2016 (1) TMI 81 - KARNATAKA HIGH COURT ) the impugned order is set aside and the Assessing Officer is directed to allow the claim of the assessee. - ITA No. 144/Del/2016 - Dated:- 12-9-2016 - SH. N.K. SAINI, ACCOUNTANT MEMBER For The Appellant : Sh. Rajesh Jain, CA For The Respondent : Sh. Neeraj Kumar, Sr.DR ORDER This is an appeal by the assessee against the ord .....

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lant and machinery purchased & installed amounting to ₹ 5,12,39,700 (approx.) in financial year 2010-11 relevant to assessment year 2011-12 on which additional depreciation was claimed only @ 10%, during the year of installation and balance 10% was claimed during the assessment year under appeal, following the judgment of Hon. Supreme Court and IT AT. iii. The learned CIT(Appeals) erred in not following the judicial precedents of various Benches of Tribunal. iv. That the appellant crav .....

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5JB of the Act on book profit of ₹ 10,05,460/-. Later on, the case was selected for scrutiny. The Assessing Officer during the course of assessment proceedings noticed that the assessee had claimed ₹ 51,23,970/- as additional depreciation for the machinery purchased in the assessment year 2011-12. He, therefore, asked the assessee to explain as to why the depreciation should not be disallowed as it was allowable only once. The assessee submitted that it had claimed 50% of depreciatio .....

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riod of less than 180 days, for which the assesses Company claimed only 50% of the additional depreciation i.e. 10% of the actual cost of the machinery. Now remaining 50% additional depreciation claimed in the assessment year 2012-13. Calculation of same is as under:- Particulars Amount Additional Depreciation Plant & Machinery purchased during the Assessment year 2011-12 for less than 180 days 5,12,39,704.95 5,12,39,704.95*20%* 1/2= 51,23,970.49 Total 51,23,970.49 Section 32(1)(iia) of the .....

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turer by giving them benefit of additional depreciation @20% on new plant & machinery to encourage the industrialization in India. This additional benefit to give impetus to industrialization and the basic intention and purpose of these provisions can be fulfilled only when the assessee get the full benefit and this is possible only when there is no restriction in the statute to deny benefit of balance of 50% when the new plant and machinery were acquired and use for less than 180 days. Onet .....

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idering the submissions of the assessee upheld the view taken by the Assessing Officer by making the following observations: 5.3 A plain reading of the above explanation in the Memorandum indicates that the amendment was made to the remove the discrimination between the new plant & machinery put to use for less than 180 days and new plant & machinery put to use for 180 days or more in the matter of allowing additional depreciation. It was explained unequivocally that under the preamended .....

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or 50% additional depreciation in the year of acquisition and installation and balance 50% additional depreciation in the succeeding year. The amendment was not given retrospective effect, therefore, it shall only apply prospectively to the new plant & machinery acquired and installed during the previous years relevant to the AY 2016-17 and subsequent assessment years. In the present case the new plant & machinery were acquired and installed during the previous year 2010-11 relevant to t .....

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assessee is in appeal before the ITAT. 4. Learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that this issue is squarely covered in favour of the assessee by the decision of the Hon ble Karnataka High Court in the case of Commissioner of Income Tax vs. Rittal India Pvt. Ltd, reported in (2016) 380 ITR 423 (Ker.). The reliance was also placed on the decision of the ITAT, Delhi Benches, New Delhi, in the case of Deputy Commissioner .....

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f acquisition and installation of such plant and machinery shall be allowed in the immediately succeeding previous year. It was contended that the said amendment is clarificatory in nature so the intention of the legislation was very much clear therefore, the assessee was eligible to claim the deduction of the depreciation in the succeeding year because the machinery was used for less than 180 days in the year of installation and 50% of depreciation was claimed. Reliance was also placed on the j .....

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01.04.2016. Therefore, the amendment will take effect from the 1st April, 2016 and will accordingly apply in relation to the assessment year 2016-17 and subsequent years. However, for the year under consideration, the assessee was not eligible to claim the 50% of the additional depreciation which was not claimed in the year of acquisition and installation of the plant and machinery since it was put to use for less than 180 days. Reliance was placed on the judgment of the Hon ble Supreme Court i .....

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lip;…..that the beneficial legislation should be given liberal interpretation so as to benefit the assessee. The intention of the legislation is absolutely clear that the assessee shall be allowed certain additional benefit, which was restricted by the proviso to half being granted in assessment year, if certain condition was not fulfilled. But that would not restrain the assessee from claiming the balance of the benefit in the subsequent assessment year. The Tribunal had rightly held tha .....

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