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TMI Blog2016 (8) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... ,04,88,781/- under section 32(1)(ii) of the Act. 3. Brief facts of the case are that the assessee is a private limited company engaged in the business of printing of booklets, catalogues, brochures and user manuals for mobile phones filed its return of income on 30.09.2008 for the assessment year 2008-09 declaring income of Rs. 82,62,94,244/- which was subsequently revised to Rs. 83,40,80,783/- on 25.03.2009. During the course of assessment proceedings it was noticed by the learned Assessing Officer that the assessee had claimed depreciation of Rs. 15,74,35,569/- which included additional depreciation of Rs. 6,48,72,265/-. It was further noticed by the learned Assessing Officer that amongst the claim of additional depreciation during the relevant assessment year an amount of Rs. 2,04,84,781/- pertained to the preceding "previous year" because the asset was put to use for less than 180 days in that year and hence not allowed as deduction in that year. The learned Assessing Officer opined that as per the 3rd proviso to section 32 the additional depreciation mentioned in clause (ii)(a) of section 32 is to be restricted to 10% of the asset put to use for less than 180 days and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the immediately succeeding previous year in respect of such asset: In the appellant's case unabsorbed additional depreciation amounting to Rs. 2,04,88,781 belonged to the previous year prior to the previous year to the relevant assessment year 2008-09, which has been claimed along with current additional depreciation for the relevant assessment year. As is seen in the first proviso to section 32 mentioned herein above that additional depreciation on the assets acquired during the relevant previous year which were put to use less than 180 days can be claimed only 50% of the entitled depreciation as per clause (iia) of section 32. There is no provision in the act to carry forward the balance 50% of additional depreciation to the succeeding year. In the appellant's case AO has allowed additional depreciation claimed during the previous year relevant to A.Y. 2008-09 but disallowed additional depreciation pertain to previous year prior to the previous year relevant year 2008-09. On perusal of the proviso relevant to A.Y. 2008-09, there is no scope to allow unabsorbed additional deprecation of an earlier year in the succeeding A.Y. It is also pertinent to note that the Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial 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 of 20% during the year in which the machinery was installed, the balance 50% has to be allowed in the subsequent year. In fact, the Cochin Bench of this Tribunal has observed as follows:- "9. We have considered the rival submissions on either side and also perused the material available on record. Section 32(1)(iia) reads as follows: "32(1)(iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder 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 prescribed rate. Therefore, if the machinery is put to use in any particular year, the assessee is entitled for 50% of the prescribed rate of additional depreciation. The Income-tax Act is silent about the allowance of the balance 10% additional depreciation in the subsequent year. Taking advantage of this position, the assessee now claims that the year in which the machinery was put to use the assessee is entitled for 50% additional depreciation since the machinery was put to use for less than 180 days and the balance 50% shall be allowed in the next year since the eligibility of the assessee for claiming 20% of the additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 to 50% on account of usage. The so earned incentive must be made available in the subsequent year. The overall deduction of depreciation u/s 32 shall definitely not exceed the total cost of machinery and plant . In view of this matter, we set aside the orders of the authorities below and direct to extend the benefit. We allow ground no.2 of the assessee's appeal. Since we have decided ground no.2 in favour of assessee, there is no need to decide the alternate claim raised in ground no.3. The same is dismissed." 13. This issue was also considered by another bench of this Tribunal at Delhi in SIL Investment Ltd (supra). At ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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, it nowhere restricts that the balance 10% would not be allowed to be claimed by the assessee in the next assessement year. 9. The language used in Clause (iia) of the said Section clearly provides that "a further sum 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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