9911796707
TMI Blog2022 (8) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... in the immediate preceding AY. The Ld. AO required the assessee to justify why additional depreciation @10% in AY 2015-16 has been claimed when the new plant and machinery was neither purchased nor installed during the year. The assessee replied vide letter dated 11.12.2017 saying that during the year, the assessee has claimed balance additional depreciation of Rs. 1,46,75,508/- @ 10% on plant and machinery installed during the last Financial Year ("FY") 2013-14 between 1st October, 2013 to 31st March, 2014. Because during the previous year, the assessee has claimed only 50% of the additional depreciation, the assessee has claimed the balance additional depreciation of 10% during the current year. The assessee relied on the following decisions:- (i) DCIT vs. Cosmo Films Ltd. 13 ITR (T) 340 (Delhi) (ii)ACIT vs. SIL Investment Ltd. (2012) 54 SOT 54 (Delhi) (iii)MITC Rolling Mills P Ltd. vs. ACIT ITA No. 2789/MUM/2012 3. The explanation of the assessee was not acceptable to the Ld. AO. According to him, before amendment from 1st April, 2016 the claim of the assessee on additional depreciation on plant and machinery purchased in AY 2014-15 of Rs. 1,46,75,508/- is not allowable a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to the balance additional depreciation of machinery installed in preceding year is allowed. Addition amounting to Rs. 1,46,75,508/- on account of disallowance of additional depreciation is deleted. The ground of appeal is allowed." 5. Aggrieved, the Revenue is in appeal before the Tribunal. Ground No. 1 and 1a) relate thereto. 6. The Ld. DR submitted that the Ld. CIT(A) erred in allowing carry forward of additional depreciation. There cannot be any carried forward additional depreciation to be allowed in subsequent year. The second proviso to section 32(1)(ii) of the Income Tax Act, 1961 (the "Act") restricts such allowances. The Ld. AR refuted the above submission of the Ld. DR and submitted that second proviso to section 32(1) provides that where in a previous year an asset is acquired and put to use for the purposes of business or profession for less than 180 days, depreciation thereon shall be allowed at 50% of the depreciation allowable according to the percentage prescribed in respect of the block of assets comprising such asset. As regards the balance amount, the same is allowable in next succeeding year. This has now been statutorily recognized by insertion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industrial sector. This clause was intended to give impetus to new investment in setting up a new industrial unit or for expanding the installed capacity of existing units by at least 25%. Thereafter these provisions were amended by the Finance (No. 2) Act of 2004 w.e.f. 1.4.2005 and provided that in the case of any machinery or plant which has been acquired after the 31st day of March, 2005 by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to 15% of actual cost of such machinery or plant shall be allowed as deduction under clause (ii) of section 32(1). This additional allowance u/s 32(l)(iia) is made available as certain percentage of actual cost of new machinery and plant acquired and installed. This provision has been directed towards encouraging industrialization by allowing additional benefit to the setting up new industrial undertakings making or for expansion of the industrial undertaking by way of making more investment in capital goods, Thus, these are incentives aimed to boost new investments in setting up and expanding the units. The proviso to section 32(l)(iia) restricts the benefit in respect of following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of these provisions can be reasonably and liberally held that the assessee deserves to get the benefit in full when there is no restriction in the statute to deny the benefit of balance on 50% when the new plant and machinery were acquired and use for less than 180 days. One time benefit extended to assessee has been earned in the year of acquisition of new plant and machinery. It has been calculated @ 15% but restricted to 50% only on account of usage of these plant & machinery in the year of acquisition. In section 32(l)(iia), the expression used is "shall be allowed". Thus, the assessee had earned the benefit as soon as he had purchased the new plant and machinery in full but it is restricted to 50% in that particular year on account of period of 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(l)(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 depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
