TMI Blog2019 (11) TMI 1387X X X X Extracts X X X X X X X X Extracts X X X X ..... fer Pricing Officer s order - HELD THAT:- We find no merit in Revenue s instant grievance since various judicial precedents Tega Industries Ltd. vs. DCIT [ 2016 (9) TMI 1456 - ITAT KOLKATA] Bharti Airtel Ltd. vs. Addl. CIT [ 2014 (3) TMI 496 - ITAT DELHI] take note of the foregoing legislative amendment to hold that a corporate guarantee is not an international transaction u/s 92B of the Act. We decline the Revenue s instant grievance. Provision for leave encashment disallowance u/s 43B(f) - lower authorities have treated the same as a contingent liability being a mere provision only - HELD THAT:- It transpires during the course of hearing the hon ble jurisdictional high court s decision in the case of Exide Industries Ltd. vs. UOI [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] had quashed the very statutory provision itself as ultra vires. We therefore direct the Assessing Officer to keep this issue in abeyance for a fresh decision in view of their lordships final call in the above stated lis. This former substantive ground is accepted for statistical purposes. Education cess disallowance made u/s 40(a)(ii) - HELD THAT:- It emerges that the same is no more res integra a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cific provision, the benefit shall be available in subsequent years also. Further, the Ld, ARs stated that additional depreciation is allowed only on 'new assets' and the eligibility criteria of 'new assets' is applicable only for the initial assessment year when the asset is acquired and put to use for the first time and not for the subsequent years. Once the assets have been tested to be new in the first year, the said assets are eligible for depreciation in subsequent years. 3. In support of the above view, the Ld. ARs relied upon the various judgment of Hon'ble High Courts Tribunals including jurisdictional Tribunal. The issue under consideration has been dealt with by Hon'ble jurisdictional Tribunal in the case of DCIT -vs.-Gloster Jute Mills Limited (ITA No. 5/Kol/2011 dated 01.03.2017). In that case, the Hon'ble Tribunal has held that provision of Sec 32(1)(iia) does not provide for any restriction that the additional depreciation will be allowed only in one year or that it would be allowed only on the written down value. The condition imposed by the provision is that the plant and machinery must be new at the time of installation to be elig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 31.03.2005. However, the period the period during which such additional depreciation shall be allowed is not specified in the Act. Thus, one may conclude that the allowance of additional depreciation shall not only be restricted to the initial year but continue to second and subsequent years. 27. The claim for additional depreciation was however rejected by the CIT(A) for the reason that additional depreciation is available only in respect of new plant and machinery acquired and installed after 31.03.2005. The word 'new' is not defined in the Act. According to the Shorter Oxford Dictionary the word 'new' means not existing before; now made, or brought into existence, for the first time . The AO held that the assets on which additional depreciation was claimed by the assessee is neither new nor brought into existence in the hands of the assessee in the relevant previous year. It is already used in earlier years and is already depreciated and, therefore, old in the hands of the assessee in the previous year. He held that the qualification that the asset should be new was basic qualification for entitlement of additional depreciation as laid down in the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fteen per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii): Provided that such further deduction of fifteen per cent shall be allowed to-- (A) a new industrial undertaking during any previous year in which such undertaking begins to manufacture or produce any article or thing on or after the 1st day of April, 2002; or (B) any industrial undertaking existing before the 1st day of April, 2002, during any previous year in which it achieves the substantial expansion by way of increase in installed capacity by not less than *[ten per cent]: *Subs. for twenty-five per cent by Finance (No. 2) Act, 2004, (w.e.f. 1.4.2005). Sec.32(1)(iia) as substituted by Finance Act, 2005 w.e.f. 1.4.2006) reads as follows: (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 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): 29, It can be seen from the provisions of Sec. 32(1)(iia) as it existed from 1.4.1981 to 31.3.1988 and reinserte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional depreciation to the year in which the assets are installed but also in the second and subsequent years provided that the aggregate depreciation does not exceed the cost of the asset. It is settled law that a fiscal statute has to be interpreted the basis of the language used therein and not interpreted out of context the same as held by Apex Court in the case of Orissa State Warehousing Corporation, Mohammad Ali Khan and Madurai Mills Co. Ltd. (Referred to by the Appellant). Further, it is also imperative to state that Section 32(1)(iia) is a beneficial provision enacted with the view to provide benefit to the assessee. The same is also evident from the Explanatory Notes to the Finance Act. 2005 wherein it has been clarified that in order to encourage investment the provisions of sec. 32(1)(iia) have been amended. In so far as the language used in the provision in concerned one has to construe the language beneficially and in favour of the assessee as held by the Jurisdictional High Court in the case of Indian Jute Mill Association in 134 ITR 68. There is little merit in the contention of the AO that the asset is not new in the second year. In my view for claiming additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Tamil Nadu: 255 ITR 147 (SC) Apart from the above, it was also pointed out that DTC Bill 2013 has proposed expressly that additional depreciation would be allowed in the FY in which the P M is used for the first time and those provisions are not made with retrospective effect. It was argued that the legislature has consciously not restricted the allowance of additional depreciation on the original cost for AY 2006-07 till AY 2013-14 to one year only and therefore the additional depreciation should allowed on the original cost of the asset for the second and subsequent years as well. It was submitted that the condition imposed by the relevant provisions was that Plant and Machinery must be new at the time of installation to be eligible for additional depreciation u/ s 32(1)(iia) and not new in subsequent years. 32. We have given very careful consideration to the rival submissions and are of the view that the provision of section 32(1)(iia) as amended w.e,f, 01.04.2006 by the Finance Act 2005, there is no restriction that the additional depreciation will be allowed only in one year or that it would be allowed only on the written down value. The law as it prevailed prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ihari further quotes the tribunal s yet another decision in [2017] 82 taxmann.com 238 (Chennai-Trib) Brakes India Ltd. vs. ACIT as under: 15. We have considered the rival submissions. A perusal of the provisions of section 32 as applicable for the relevant assessment year clearly shows that additional depreciation is allowable on the plant and machinery only for the year in which the capacity expansion has taken place which has resulted in the substantial increase in the installed capacity. In the assessee s case this took place I the assessment year 2005-06 and the assessee has also claimed the additional depreciation during that year and the same has also been allowed. Each assessment year is separate and independent assessment year. The provisions of section 32 of the Act do not provide for carry forward of the residual additional depreciation, if any. In the circumstances, the finding of the learned CIT(A) on this issue is on a right footing and does not call for any interference. Consequently, ground no.1 of the assessee s appeal stands dismissed. We are therefore of the opinion that CIT(A) was justified in following the view taken by coordinate Bench of this Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Both the learned lower authorities have treated the same as a contingent liability being a mere provision only. It transpires during the course of hearing the hon ble jurisdictional high court s decision in the case of Exide Industries Ltd. vs. UOI [2007] 292 ITR 470 (Cal) had quashed the very statutory provision itself as ultra vires. Hon ble apex court stated thereof in SLP Civil No.22889/2008 stated to be pending till date. We therefore direct the Assessing Officer to keep this issue in abeyance for a fresh decision in view of their lordships final call in the above stated lis. This former substantive ground is accepted for statistical purposes. 8. Next comes the assessee s latter substantive ground seeking to delete education cess disallowance of ₹ 193,40,697/- made in both the lower proceedings u/s 40(a)(ii) of the Act. It emerges that the same is no more res integra as hon ble Rajasthan high court s decision in Chambal Fertilizers Ltd. vs. DCIT, Income Tax Appeal No.52 of 2018 dated 31.07.2018 has considered the CBDT circular issued long back dated 18.05.1967 that the expression tax does not include cess. We therefore go by their lordships view to d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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