TMI Blog2016 (8) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... F INCOME-TAX (LTU) VERSUS M/S RITTAL INDIA PVT. LTD. (NO. 1) [2016 (1) TMI 81 - KARNATAKA HIGH COURT] We hereby hold that the assessee is entitled to claim the remaining 10% of the additional depreciation of ₹ 2,04,84,781/- for the relevant assessment year 2008-09 in the case of the assessee. It is ordered accordingly. Since we have decided the issue on merits, we do not find it necessary to adjudicate the issue with respect to reopening of assessment since it would be only academic. - Decided in favour of assessee - I.T.A. No.909/Mds/2016 - - - Dated:- 24-8-2016 - SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER For The Appellant : Mr. Saroj Kumar Parida, Advocate For The Respondent : Mr. A.V.Sreekanth, JCIT ORDER Per A. Mohan Alankamony, AM: This appeal is filed by the assessee aggrieved by the order of the learned Commissioner of Income Tax (Appeals)- 3, Chennai dated 28.01.2016 in ITA No.75/CIT(A)-3/2014- 15 passed under section 143(3) r.w.s 147 250(6) of the Act. 2. The assessee has raised several grounds in its appeal, however, the cruxes of the issues are as follows:- i) The learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09. At this juncture, it is relevant to mention proviso to section 32. Provided further that where an asset referred to in clause (i) or clause (ii) [for clause [iiia] [or the first proviso to clause (iia) , as the case may be, is acquired by the assesse during the previous year and is put to use for the purposes of business or profession for a period of less than on hundred and eighty day in that previous year, the deduction under this sub section in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause(ii) [for clause (iia)], as the case may be :] It is also important to mention new proviso inserted in Finance Act, 2015 w.e.f. 1.4.2016. Following third proviso shall be inserted after the second proviso to clause (ii) of sub section (1) of section 32 by the Finance Act, 2015, w.e.f 1-4-2016: Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assesse during the previous year and is put to use for the purposes of business for a period of less than one hundred and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e section 32 by inserting another proviso w.e.f 1.4.2016. In view of the stated position of the law as on date, I hold that appellant company is not entitled to claim additional depreciation prior to previous year relevant to A.Y. 2008-09. Hence, the addition made by the AO of ₹ 2,04,88,781 is confirmed. All the grounds on this issue are dismissed. 5. Before us, at the outset the learned Authorized Representative submitted that the issue is covered by the decision of the Tribunal in the case of Automotive Coaches Components Ltd. Vs. DCIT in ITA No.1789/Mds/2014 vide order dated 12.02.2016, wherein it was held that the assessee is entitled to claim for the remaining 10% of the depreciation during the relevant assessment year. 6. The learned Departmental Representative could not controvert to the submissions of the learned Authorized Representative. 7. After hearing both sides, we find merit in the contentions of the learned Authorized Representative. On the earlier occasion as pointed out by the learned Authorized Representative in the case of Automotive Coaches Components Ltd. Vs. DCIT cited supra, this Bench of the Tribunal held the issue as follows:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable 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 assessee during the previous year and is put to use for the purpose of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) or clause (iia) as the case may be. 11. A bare reading of this section 32(1)(iia) clearly says that in case a new machinery or plant was acquired and installed after 31-03-2005 by an assessee, who is engaged in the business of manufacture or produce of article or thing, then, a sum equal to 20% of the actual cost of the machinery and plant shall be allowed as a deduction. It is not in dispute that the assessee has acquired and installed the machinery after 31-03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 180 days in the year of acquisition. This restriction is only on the basis of period of use. There I no restriction that balance of one time incentive in the form of additional sum of depreciation shall not be available in the subsequent year. Section 32(2) provides for a carry forward set up of unabsorbed depreciation. This additional benefit in the form of additional allowance u/s 32(1)(iia) is one time benefit to encourage the industrialization and in view of the decision of Hon'ble Supreme Court in the case of Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 188, the provisions related to it have to be construed reasonably, liberally and purposive to make the provision meaningful while granting the additional allowance. This additional benefit is to give impetus to industrialization and the basic intention and purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subsequent year, therefore, the orders of the lower authorities on this issue are set side and the assessing officer is directed to allow the claim of balance 50% additional depreciation in the year under consideration. We have also carefully gone through the judgment of Karnataka High Court in Rittal India Pvt. Ltd. (supra). The Karnataka High Court, after extracting the provisions of Section 32(1)(iia) of the Act, found that beneficial legislation has to be interpreted liberally so as to benefit the assessee. Karnataka High Court has also found that the intention of the legislation is to allow additional benefit. The Karnataka High Court opined that the proviso would not restrain the assessee from claiming the balance of the benefit of additional depreciation in the subsequent assessment year. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 from claiming the balance of the benefit in the subsequent assessment year. The Tribunal, in our view, has righly held, that additional depreciation allowed under Section 32(1)(iia) of the Act is a one time benefit to encourage industrialization, and provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting additional allowance. We are in full agreement with such observations made by the Tribunal. 6. In view of the above, this Tribunal is of the considered opinion that the assessee is entitled for remaining 10% of the depreciation during the year under consideration. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow balance 50% of depreciation, namely, 10% of additional depreciation during the year under consideration. 8. Following the above decision of the Tribunal, we hereby hold that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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