TMI Blog2022 (8) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... o 31/03/2005 provided the installation of such assets is after 31/03/2005. Since the wordings used in section 32(1)(iia) and 32AC are similar whether the ratio of decisions rendered in the context of 32(1)(iia) is applicable for 32AC is a debatable issue where contrary views can be taken. In assessee s case while interpreting the wordings acquires and installs in section 32AC, the AO has taken one view in allowing the deduction based on the submissions of the assessee of various judicial pronouncements rendered in the context of 32(1)(iia); whereas the CIT is not in agreement with the view based on the plain reading of section 32AC. The decision of the AO to allow deduction u/s.32AC cannot be stated as unsustainable in law as he has taken a possible view based on application of mind. The CIT has not brought any material on record to show that the view taken is contrary to law. In the light of these discussions and placing reliance on the decision of Hon ble Supreme Court cited supra, we are of the considered view that the CIT is not justified in setting aside the order of the AO. Accordingly the directions of the PCIT are quashed. Appeal by the assessee is allowed. - IT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itially passed the draft assessment order incorporating the TP adjustment along with certain additions in the corporate tax front against which the assessee filed its objections before the DRP. In pursuance of the directions of the DRP, the AO passed the final assessment order u/s. 143(3) r.w.s. 144C of the Act dated 14.2.2018. 3. The CIT issued a show cause notice to the assessee with respect to the claim made by the assessee u/s. 32AC of the Act in respect of investment made in the new plant machinery amounting to Rs.40,91,35,945. The said amount was arrived at 15% of new assets installed during the AY 2014-15 amounting to Rs.272,75,72,962. Out of the total deduction claimed by the assessee, a sum of Rs.25,88,07,773 is a deduction pertaining to new assets for RS.172,53,85,157 which were acquired prior to 1.4.2013 and installed during the AY 2014-15. The CIT stated that, deduction u/s. 32AC of the Act was not allowable on addition to plant machinery purchased prior to 1.4.2013 as the provisions of the section requires that new asset should not only be installed during the FY 2013-14, but the same should also be acquired during the FY 2013-14 as the words used in the section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Tribunal was dealing with the issue of allowability of balance additional depreciation u/s 32(1)(iia) in the second year in respect of assets acquired and installed in latter half of the first year of acquisition. While on this, we wish to submit that Sec 32(1)(iia) grants additional depreciation in respect of assets acquired and installed during the relevant previous year. Having regard to the language contained therein, in that case, the AO denied additional depreciation in the second year on the ground that the assets are not acquired and installed during the current year. In this context, the Hon'ble Tribunal after considering the provisions of section 32(1)(iia) of the Act allowed the claim of the assessee in the second year, despite the fact that in the literal sense, the assets were not acquired and installed during that year. In rendering the above decision, the Hon'ble Delhi Tribunal relied on the decision of the Hon'ble Supreme Court's in Bajaj Tempo Ltd. v. CIT (1992) 1961TR 188 (SC) wherein the Supreme Court observed that incentive provisions have to be construed reasonably, liberally and purposive to make the provision meaningful while granting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and installed in section 32(1)(iia) and therefore the decisions rendered in the context of section 32(1)(iia) would be applicable for deduction u/s.32AC also. The AO after considering the various judicial pronouncements has allowed the deduction u/s. 32AC of the Act. The contention of the CIT that the decisions rendered for allowability of additional depreciation u/s. 32(1)(iia) is not applicable to 35AC is a debatable issue and that when two views are possible, the action of the CIT to revise the order u/s. 263 is not tenable. In this regard, the assessee relied on the decision of the Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 109 Taxman 66 (SC). 6. The CIT rejected the contentions of the assessee by stating that 4.5 So even if the contention of the assessee that the words 'acquired and installed' as used in Section 32(1)(iia) of the Act and the words 'acquires and installs' as appearing in the Section 32AC of the Act are required to be interpreted in a similar manner is accepted, only one interpretation could be there i.e. the assets needed to be both acquired and installed in FY 2013-14 to be eligible for deduction in AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood Papers, referred to therein -represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee -- assuming that the said principle is good and sound does not apply to the construction of an exception or an exempting provision, they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State.... 4.8 So in view of the above binding decision of the Hon'ble Supreme Court, the provision giving a benefit to the assessee needs to be interpreted strictly and in case of doubt the benefit would go to the revenue. The above decision of the SC was also considered by jurisdictional ITAT in the case of Parswanath Padmarajaiah Jain v. Assistant Commissioner of Income-tax, Circle-1(1)(1), Bengaluru[2019] 102 taxmann.com 92 (Bengaluru Trib) and the ITAT had dismissed the appeal of the assessee. 7. Aggrieved by the order of the CIT, the assessee is in appeal before the Tribunal. 8. During the course of hearing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the CIT. 10. We have considered the rival submissions and perused the material on record. We notice that the assessee has made submissions before the AO stating that deduction u/s.32AC is allowable even for assets acquired prior to 01.04.2013 but installed during the financial year 2013-14 would be eligible for deduction by relying on various decisions rendered in the context of 32(1)(iia). Though there is no specific mention in AO s order regarding the submissions made and basis of allowing the deduction, the facts of the case is that the assessee did make the submissions and the AO has taken the view that the assessee is eligible for deduction u/s.32AC. Section 32AC is a new provision inserted by the Finance Act 2013 and there is no direct judicial precedence to interpret the words used in the section acquires and installs . There are plethora of decisions that for the purpose of 32(1)(iia), the additional depreciation is allowable even for assets acquired prior to 31/03/2005 provided the installation of such assets is after 31/03/2005. Since the wordings used in section 32(1)(iia) and 32AC are similar whether the ratio of decisions rendered in the context of 32(1)(i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
