TMI Blog2019 (3) TMI 1821X X X X Extracts X X X X X X X X Extracts X X X X ..... Respectfully following the above decision of the Tribunal, we direct the Assessing Officer to allow the balance 50% of depreciation i.e., 10% additional depreciation as claimed by the assessee in the following assessment year - Ground raised by the assessee is allowed. - ITA No.1021/Chny/2018 - - - Dated:- 19-3-2019 - Shri George Mathan, Judicial Member, And Shri A. Mohan Alankamony, Accountant Member Department by: Mr.Clement Ramesh Kumar, Addl. CIT Assessee by: Mr.N. Arjun Raj, CA ORDER George Mathan, This is an appeal filed by the Revenue against the Order of the Commissioner of Income Tax (Appeals)-6, Chennai, in ITA No.400/CIT(A)-6/2016-17 dated 26.12.2017 for the AY 2014-15. 2. Mr. Clement Ramesh Kumar, Addl.CIT represented on behalf of the Revenue and Mr. N.Arjun Raj, CA, represented on behalf of the assessee. 3. In the Revenue s appeal, the Revenue raised the following grounds: I .The Order of the learned Commissioner of Income Tax (Appeals) is contrary to the Law and facts of the case. 2.1. The CIT(A) erred in holding that additional depreciation can be allowed in the next year in case the same cannot be allowed in the earlier y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer found that the additions to fixed assets were made in the second half of the financial 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the machinery was used for less than 180 days and claiming the balance 10% in the year under 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 allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated @15% but restricted to 50% only on account of usage of these plant machinery in the year 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, 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, 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 assessment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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