TMI Blog2021 (9) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted. This proposition is also duly supported by Hon ble Supreme Court decision in the case of Alom Extrusions[ 2009 (11) TMI 27 - SUPREME COURT] and Calcutta Exports Company [ 2018 (5) TMI 356 - SUPREME COURT] that when an amendment is made to clarify or remove the hardship, the same is to be treated as clarificatory amendment and it applies retrospectively. There certainly can be view on this issue that the assessee is eligible for allowance for depreciation on assets which have been acquired earlier, but were installed during the present assessment year. Assessee has provided the details of computation of depreciation including that u.s 32AC to the AO. The grievance of the Ld.CIT, which is echoed by CIT-DR before us is that the AO has not obtained the details of assets acquired earlier, which has been installed during the year. As in the Ld.CIT s view the assets acquired prior to the financial year are not eligible for depreciation u.s 32AC. There certainly can be a legally sustainable view that assessee is eligible for allowance of depreciation on assets, which have been acquired earlier, but were installed during the present assessment year. CIT is not correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is beneficial provision and accordingly, where two views are possible, the view beneficial to the taxpayer should be adopted. 3. The learned CIT erred in disallowing deduction under section 32AC of the Act without appreciating the fact that for the purpose of section 32AC the significant date is the date of installation. If installation falls after 31 March 2013 but before 31st March 2015, the appellant would be entitled to the deduction under section 32AC. 4. The learned CIT erred in not considering the detailed submission made by the appellant vide its letter dated 6 March 2018 and in directing the AO to disallow deduction under section 32AC of the Act in respect of new assets acquired and installed during the FY 2013-14 with invoice date before 1st April 2013. 5. The learned CIT erred in directing the AO to initiate penalty under section 271(l)(c) of the Act mechanically, without giving any opportunity to the appellant to make any submission. The act of the CIT in giving such direction to initiate penalty is ultra-vires and bad in law, in excess of the powers conferred under the Act. Relief Sought: Your appellant prays that the order of the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and therefore the claim of the assessee was disallowed Therefore, he noted that as per section 32AC of the Act, the deduction under this section can be claimed by an assessee, 'where the assesses being a company, engaged in the business of manufacture and production of any article or thing, acquires and installs new assets being plant machinery after 31 day of March 2013 but before the 1st day of April 2015. That in the case of assessee, the evidence of acquisition and installation of new assets being plant machinery is not submitted by the assessee. That as the assessee company had failed to prove the acquisition and installation of machinery and its capitalization during F.Y.2013-14, the claim of the assessee is not acceptable. That omission treat as income has resulted in under assessment of income of ₹ 18,56,46,466/- and short Levy of tax of Rs. ₹ 6,31,01,234/-.Hence, he held that the prima facie, he is satisfaction that the order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of revenue. A notice u/s. 263 dated 13.02.2018 was issued to the assessee. Assessee gave following response, which was reproduced by lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construed so as to advance the objective of the provision and not to frustrate it. While interpreting the various provisions, the Court must not adopt a hyper technical approach and to apply cut-and-dry formula. A pragmatic approach should be adopted so that the object of the introduction/insertion of a particular provision could be achieved. The object of provisions of taxing statute being to promote the setting of the new units and to increase the production of goods such provision has to be interpreted liberally so that the object can be achieved, as held by Supreme Court in the case of Commissioner Trade Tax vs. DSM Group of Industries, reported in 2005 UPTC page 121. Similar views have been expressed in the following Supreme Court decisions: Kamlapat v. CIT (73 ITR 702) (SC); CIT v. Strawboard Manufacturing Co. Ltd. (177 ITR 431)(SC) at page 434, and CIT v. South Arcot District Co-operative Marketing Society Ltd. (176 ITR 117) (SC) at page 119. The Company has to also submit that section 32AC is a beneficial provision and accordingly, where two views possible on reading of the said section, the view beneficial to the taxpayer should be adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been claimed, the Company hereby provides details of new assets which was purchased before 1st April 2013 and those purchased after 1st April 2013: Units Total addition on which investment allowance under section 32AC has been claimed New assets with invoice date before 1 st April 2013 New assets with invoice date after 1st April 2013 TMS/TAPS 3,32,14,322 25,55,261 3,06,59,061 RAPS 7,77,42,3724 70,91,45,478 6,82,78,246 KAPS 1,61,75,734 2,06,620 1,59,69,114 MAPS 21,74,56,216 - 21,74,56,216 NAPS 10,20,77,248 6,77,20,136 3,43,57,112 KAIGA 9,12,95,865 1,05,63,890 8,07,31,975 Total 1,23,76,43,109 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, Ld. DR supported the order of the Ld.CIT. He made submissions as under:- 2.1 Assessee has not placed on record any material/document to demonstrate that the AO has enquired about deduction claimed by the assessee u/s 32AC as per computation of income placed on record by the Assessee on Page 2 of the Paper Book ( APB for short). 2.2 Details submitted on APB from Page 20 to Page 75 are details of addition to fixed assets, as per Annexure V(A) Clause 18, which were put to use during the financial year 2013-14 or commissioned during the year. 2.3 Whether the asset is put to use during the year is of no consequence for the purpose of deduction u/s 32AC where only condition required to be fulfilled is acquisition and installation of new asset after 31.03.13 but before 01.04.2015. No details have been submitted for Calculation of Investment Allowance u/s 32AC . 2.4 Details submitted by the assessee before the AO are as per Index on Pages 15 16 and Pages IS 19 of the APB. * At APB Page 16 of the Paper Book, assessee is stated to have placed on record, Calculation of Investment Allowance u/s 32AC . The details of addition to assets are stated to be pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 3.2 Depreciation is allowed when the asset is used for the purpose of business and profession , which is not a condition precedent for claiming deduction u/s 32AC. Section 32AC provides for an incentive in the form of investment allowance and deduction is allowed u/s 32AC if a company invests in plant a machinery in a previous year as provided u/s 32AC. It is for this reason that the section is placed after 32A 32AB. 3.3 Therefore, no adverse can be drawn on this account that CIT has allowed depreciation to the assessee as the condition for eligibility u/s32(l)(iia) and section 32ACare entirely different. 3.4 The difference can further be appreciated by comparing the Provisions of Section 32AC with the Provisions of Section 32A. 3.5 A plain reading of the Provisions of Section 32A. would show that 'acquisition , 'installation and 'put to use' are three different / independent events or prerequisites for claiming deduction u/s 32A For claiming deduction u/s 32A, the 'acquisition' of Plant Machinery is not a prerequisite, though it may be a prerequisite for claiming deduction u/s 32A on Ship Aircraft, For Plant M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d even 10 to 15 years earlier and installed after 01.03.2013 would become eligible for deduction u/s 32AC. 3.13 Section 32AC provides for an incentive in the form of investment allowance and deduction u/s 32AC is allowed if a company invests in plant a machinery in a previous year as provided u/s 32AC. It can be corroborated from clause 11 of the Finance (No.2) Bill, 2014. [Page 3 4 of Department's Paper-Book ( DPB for short)] ASSESSEE PLEA (II) * Installation of Plant Machinery not in dispute 4.1 It may be submitted in this regard that the CIT in Para 4.2 has clearly observed that the evidence of acquisition and installation of new assets being plant machinery is not submitted by the assessee. 4.2 The assessee has filed additional evidence before the Hon'ble Tribunal, in support of assembly, erection and commissioning of LR -11350 Liebherr Crawler Crane at RAPP-7 8 Site by M/s Liebherr. * On page APB Page 88, it is stated that first load was tested on March, 2013 * The Report of Examination of Lifting Machines on APB Page 91 clearly states that the crane was tested on 07.03.2013 at the site as RAPP-7 8 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged in the business of manufacture or production of any article or thing, acquires and installs new asset after the 31st day of March, 2013 but before the 1st day of April, 2015 and the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees, then, there shall be allowed a deduction,- ( a ) for the assessment year commencing on the 1st day of April, 2014, of a sum equal to fifteen per cent of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2014, if the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees; and ( b ) for the assessment year commencing on the 1st day of April, 2015, of a sum equal to fifteen per cent of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2015, as reduced by the amount of deduction allowed, if any, under clause ( a ). (1A) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new assets and the amount of actual cost of such new assets acquired during any prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) any vehicle; or ( v ) any plant or machinery, the whole of the actual cost of which is allowed as deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head Profits and gains of business or profession of any previous year. Notes to clause to amend section 32AC read as under:- Clause 14 of the Bill seeks to amend section 32AC of the Income-tax Act relating to investment in new plant or machinery. Sub-section (1A) of the aforesaid section, inter alia, allows a deduction of a sum equal to fifteen per cent, of the actual cost of new machinery or plant (other than ship or aircrafts), acquired and installed by an assessee being a company engaged in the business of manufacture or production of any article or thing during any financial year, exceeds twenty-five crore rupees, if the acquisition and installation is made during the same financial year. It is proposed to amend the said sub-section so as to provide that the deduction under the said sub-section shall be allowed if the assets are installed on or before the 31st March, 2017. It is further proposed to insert a new proviso in the said subsection so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year. 12. Further, we note that the assessee has provided the details of computation of depreciation including that u.s 32AC to the AO. The grievance of the Ld.CIT, which is echoed by CIT-DR before us is that the AO has not obtained the details of assets acquired earlier, which has been installed during the year. As in the Ld.CIT s view the assets acquired prior to the financial year are not eligible for depreciation u.s 32AC. 13. Our aforesaid adjudication and examination of the provisions of section 32AC, the amendment thereto and the application of mischief rule amply demonstrate that the, view, that assets acquired earlier but installed during the year are eligible for depreciation under this section cannot be said to be a legally unsustainable view. 14. Now, we refer to the provisions of section 263 of the Act, which read as under:- 263. (1) The [ Principal Chief Commissioner or Chief Commissioner or Principal Commissioner ] or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests ..... X X X X Extracts X X X X X X X X Extracts X X X X
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