TMI Blog2017 (4) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... ). The said clause (iia), admittedly, was inserted by virtue of the Finance (No.2) Act, 2002, with effect from 01.04.2003.In so far as the second Circular is concerned, i.e, Circular no.8 of 2002 dated 27.08.2002, in our view, in no way, helps the case of the Revenue. The Circular does not dwell on the point which we are confronted with.In any case, according to us, the Circulars are not binding on the Court, though, they may be binding on the Revenue. [See CIT V. Hero Cycles Pvt. Ltd., (1997 (8) TMI 6 - SUPREME Court )]. The last submission that Mr.Ravi advanced, was, in fact, predicated on the reasoning given by the Assessing Officer, which, according to us, is misconceived, as the manner of calculation of depreciation, cannot, to our minds, impede the claim of the Assessee for balance additional depreciation, in the year following the previous year, in which, the said asset is installed and put to use. - Decided against revenue - T.C.A. No. 551 of 2013 - - - Dated:- 14-3-2017 - Rajiv Shakdher And R. Suresh Kumar, JJ. For the Appellant : Venkatnarayanan, M/s. Subbaraya Aiyar For the Respondent : T. Ravikumar JUDGMENT Rajiv Shakdher, J. 1.This is an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be required to be noticed : Section 32 (1) In respect of depreciation of - (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed - (i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed; (ii) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed: Provided .... (a)... (b).... Provided further that where an asset referred to in clause (i) or clause (ii) or clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. 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, or that it should be claimed in one year, have been down away by substituting clause (iia) with effect from 01.04.2006. 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 plant and machinery, and putting it to use for the purpose of business. The proviso to Clause (ii) of the said Section makes it clear that only 50% of the 20% would be allowable, if the new plant and machinery so acquired is put to use for less than 180 days in a financial year. However, if nowhere restricts that the balance 10% would not be allowed to be claimed by the assessee in the next assessment year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntage prescribed for such asset under clause (iia) shall be allowed under this subsection in the immediately succeeding previous year in respect of such asset: ....... (Emphasis is ours) 11. We may only indicate that during the course of the arguments, our attention was drawn to the Memorandum Explaining the provisions in Financial Bill, 2015 , whereby, the aforementioned amendment was brought about. 11.1. The relevant part of the Memorandum is extracted hereafter: ..... To remove the discrimination in the matter of allowing additional depreciation on plant or machinery used for less than 180 days and used for 180 days or more, it is proposed to provide that the balance 50% of the additional depreciation on new plant or machinery acquired and used for less than 180 days which has not been allowed in the year of acquisition and installation of such plant and machinery, shall be allowed in the immediately succeeding previous year. This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years. 11.2. A perusal of the extract of the Memorandum relied upon wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e year of installation and use the written down value of the asset is made part of the block of assets, and it is this block of assets, which are subjected to depreciation, and therefore, the Assessee is not permitted to calculate and provide for depreciation separately, qua, the asset, on which, additional depreciation is provided. 5.In order to appreciate the aforesaid submissions, the following facts are required to be noticed: 5.1. The Assessee had claimed additional depreciation under Section 32(1)(iia) amounting to ₹ 1,89,67,159/- during the relevant assessment year, i.e., AY 2006-07. 5.2. The additional depreciation was claimed at the rate of 7.5% being 50% of the prescribed rate, which was 15%. 5.3. The depreciation was claimed at the said rate as the subject asset was used for less than 180 days. 5.4. The said depreciation was claimed in the preceding assessment year, i.e., AY 2005-06, which is, when the asset was installed and put to use. 5.5. In the relevant assessment year i.e., AY 2006-07, the Assessee sought to claim the balance depreciation equivalent to 7.5%. The Assessing Officer, however, rejected the claim made by the Assessee qua the bala ..... X X X X Extracts X X X X X X X X Extracts X X X X
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