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TMI Blog2016 (12) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional depreciation u/s 32(1)(iia) of the Act. The assessee has acquired the assets during the second half of the assessment year 2009-10 and claimed 50% of the additional depreciation since the assets were put to use less than 180 days and the balance amount of 50% depreciation was claimed in the year under consideration. The Assessing Officer disallowed the assessee's claim observing that additional Depreceiation is allowable only for the new assets added during the year and there is no provision in the Act permitting the balance Depreciation to be allowed in succeeding year. 3. Aggrieved by the order of the Assessing Officer, the assessee went on appeal before the ld. CIT(A) and the ld. CIT(A) confirmed the addition made by the Assessing Officer against which the assessee is in appeal before this Tribunal. 4. The ld. AR submitted that the assessee claimed balance additional depreciation during the year under consideration. The ld counsel further clarified that the plant and machinery were installed in the second half of the earlier year and claimed 50% of the additional depreciation, hence, the assessee claimed 50% of additional depreciation during the year under considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii): Provided that no deduction shall be allowed in respect of - (A) Any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or (B) Any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house; or (C) Any office appliances or road transport vehicles; or (D) Any machinery or plant, 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 one previous year." 10. We have also carefully gone through the Second Proviso to section 32(1)(ii) of the Act, which reads as follows: "Provided further that where an asset referred to clause (i) or clause (ii) or clause (iia), as the case may be, is acquired by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance 50% shall be allowed in the next year since the eligibility of the assessee for claiming 20% of the additional depreciation cannot be denied by invoking Second Proviso to section 32(1)(ii) of the Act. 12. This issue was considered by the Delhi Bench of this Tribunal in the case of Cosmo Films Ltd (supra). The revenue has taken a similar ground as taken before this Tribunal that the assessee cannot carry forward the additional depreciation to be allowed in the subsequent assessment year. The Delhi Bench of this Tribunal after considering the provisions of section 32(1)(iia) and proviso to section 321)(ii) of the Act found that when there is no restriction in the Act to deny the benefit of balance 50%, the assessee is entitled for the balance additional depreciation in the subsequent assessment year. In fact, the Delhi Bench of this Tribunal has observed as follows at pages 641 and 642 of the ITD: "......Thus, the intention was not to deny the benefit to the assessees who have acquired or installed new machinery or plant. The second proviso to section 32(1)(ii) restricts the allowances only to 50% where the assets have been acquired and put to use for a period less than 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed." 13. This issue was also considered by another bench of this Tribunal at Delhi in SIL Investment Ltd (supra). At page 233 of the TTJ, the Tribunal has observed as follows: "40. There is nothing on record to show that the directions given by the learned CIT(A) are not proper. The eligibility for deduction of additional depreciation stands admitted, since 50 per cent thereof had already been allowed by the AO in the asst.yr.2005-06, i.e. the immediately preceding assessment year. Therefore, obviously, the balance 50 per cent of the deduction is to be allowed in the current year, i.e. asst. yr. 2006-07. The learned CIT(A) has merely directed the verification of the contentions of the assessee and to allow the balance additional depreciation after such factual verification. Accordingly, finding no merit therein, ground No.3 raised by the Department is rejected." 14. A similar view was taken by Mumbai Bench of this Tribunal in MITC Rolling Mills (P.) Ltd. (supra). In view of the above decisions of the co-ordinate benches of this Tribunal on identical set of facts this Tribunal is of the considered opinion that the balance 50% of the depreciation has to be allowed in the subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equal to 20% of the actual cost of such machinery or plant shall be allowed as deduction under Clause (ii)". The word "shall" used in the said Clause is very significant. The benefit which is to be granted is 20% additional depreciation. By virtue of the proviso referred to above, only 10% can be claimed in one year, if plant and machinery is put to use for less than 180 days in the said financial year. This would necessarily mean that the balance 10% additional deduction can be availed in the subsequent assessment year, otherwise the very purpose of insertion of Clause (iia) would be defeated because it provides for 20% deduction which shall be allowed. 10. It has been consistently held by this Court, as well as the Apex Court, that beneficial legislation, as in the present case, should be given liberal interpretation so as to benefit the assessee. In this case, the intention of the legislation is absolutely clear, that the assessee shall be allowed certain additional benefit, which was restricted by the proviso to only half of the same being granted in one assessment year, if certain condition was not fulfilled. But, that, in our considered view, would not restrain the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal. 11. During appeal, the ld. AR argued that the lease rentals were debited to the Profit & Loss Account amounting to Rs. 8,44,362/- being interest component included in lease rentals. In order to get full deduction for the sum of Rs. 19,46,333/- representing the part of lease rental payment in the memo of adjustment of total income, the assessee has added back the interest component and claimed the gross amount of lease rent paid i.e Rs. 19,46,333/- as deduction. The above method of deduction has been necessitated in view of Accounting Standard-19 issued by the Institute of Chartered Accountants of India. The lease payments should be apportioned between the finance charges and the reduction of the outstanding liability for income-tax purposes. The entire lease payment was claimed as deduction since the assets taken on lease were not capitalized for the purpose of Income-tax Act, 1961 and also depreciation has not been claimed. Therefore, the ld. AR contended that the assessee has rightly claimed the deduction of lease payment. The ld. AR placed reliance on the decision of the Co-ordinate Bench of this Tribunal in assessee's own case in I.T.A.No. 2245/Mds/2012, dated 2.7.2013 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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