TMI Blog2017 (4) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... ereinabove i.e. to encourage the industries by permitting the assessee setting up the new undertaking / installation of new plant and machinery and to give a boost to the manufacturing sector by allowing additional depreciation deduction. Thus, as rightly held by the learned ITAT the provision of section 32(1)(iia) of the IT Act is required to be interpreted reasonably and purposively as the strict and literal reading of section 32(1)(iia) of the IT Act will lead to an absurd result denying the additional depreciation to the assessee though admittedly the assessee has installed new plant and machinery. Under the circumstances, no error has been committed by the learned ITAT in allowing the additional depreciation at the rate of 20% on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order dt.03.03.2016 granted partial relief to the assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us and has raised the following grounds. 1. On the facts and in the circumstances of the case and in law, the honorable CIT (Appeal) erred in confirming the legality of rectification order passed by the learned AO under section 154 of the Income Tax Act, 1961 without appreciating the fact that there was no mistake apparent from record which needs to be rectified and the order is without jurisdiction and legally untenable. The appellant hereby prays that the order u/s 154 may please be vacated. 2. On the facts and in the circumstances of the case and in law, the honourable CIT (Appeal) erred in confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional depreciation. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A) who upheld the order of AO by holding as under : 6. I have carefully considered the facts of the case as well as reply of the appellant. In this case, it is seen that the appellant had claimed additional depreciation in respect of opening WDV in A.Y. 2006-07 which was already not admissible. The language of section 32(1)(iia) is quite clear i.e., any new machinery acquired and installed after 31st March is eligible for additional depreciation. This being so, machinery acquired before 31st March, 2005, though installed after 31st March, 2005, was not eligible for additional depreciation and there cannot be two views on this issue. Therefore, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re submitted that it was not the case of opening return on value on Plant and Machinery but it was opening capital investment in Plant and Machinery on which no depreciation was claimed in the previous year and was also not in use before 31.03.2005. He further submitted that provisions of Sec.32(1)(iia) is to encourage new investment in Plant and Machinery and is an incentive provision to encourage new investments. In support of his claim for depreciation placed reliance on the decision of Hon ble Gujarat High Court in the case of Commissioner of Income Tax Vs. IDMC Limited in Tax Appeal No.824/2016 order dt.25.01.2017. He also placed on record the copy of the aforesaid decision. He therefore submitted that the issue is directly covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as under : Whether on the facts and circumstances of the case and in law, the Tribunal was justified in law in allowing additional depreciation claim of 2,18,50,976/- @ 20% under Section 32[1](iia) of the Income-tax Act, 1961 on the machinery purchased before 31st March, 2005, but installed after 31st March, 2005 ? Thereafter the Hon ble Gujarat High Court decided the issue by observing as under [5.0] . The purpose and object of section 32( 1 )(iia) of the IT Act seems to be to give a boost to the manufacturing sector by allowing the deduction of a further sum equal to 20% (prior to amendment - 15%) of the actual cost of such machinery or plant acquired and installed. Therefore, underlying object and purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of the additional depreciation allowable under Section 32(1) (iia) of the IT Act. .. Thereafter after relying on the various decisions of Supreme Court cited in the order it observed as under : [7.0] Applying law laid down by the Hon'ble Supreme Court in the aforesaid decisions to the facts of the case on hand, if the submission on behalf of the Revenue is accepted, in that case it will lead to an absurd and unjust result and the purpose and object of granting the additional depreciation will be frustrated. If the contention on behalf of the Revenue is accepted, in that case, the assessee shall never get the additional depreciation as provided under Section 32(1)(iia) of the IT Act. In the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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