TMI Blog2023 (2) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance of claim of additional depreciation - disallowance made on the ground that additional depreciation under Section 32(1)(iia) of the Act can only be claimed in the first year of use of the new machinery and the additional depreciation cannot be taken in the subsequent year - ITAT deleted the disallowance - HELD THAT:- ITAT in the Impugned Judgment has correctly allowed the claim of additional depreciation of the respondent made in the subsequent year by relying on the judgment of M/s. Brakes India Limited [ 2017 (4) TMI 511 - MADRAS HIGH COURT ] to hold that the additional depreciation amount, claimed by Respondent in the subsequent year of first usage of new machinery, cannot be disallowed by the assessing officer -. As in Rittal India Pvt. Ltd. case [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT ] wherein the High Court held in favour of the assessee that additional depreciation can be availed even in the subsequent year to the first year when the machinery was put to use. additional depreciation, in terms of Section 32 (1) (iia), can be availed in subsequent assessment year to the assessment year in which the machinery was first put to use. See Shri T.P. Textiles Privat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SR/2016-17 and Appeal No. 45/JSR/2016-17, who vide its order dated 15.09.2017 (A.Y. 2009- 10) and 12.09.2017 (A.Y. 2010-11) respectively, confirmed the addition. Being aggrieved, the Assessee challenged both the orders before the learned ITAT which was numbered as ITA No. 310/Ran/2017 for the AY 2009-2010 and ITA No. 312/Ran/2017 for A.Y 2010-11. The Learned ITAT in its said order has allowed the Respondent s claim of additional depreciation and has deleted the disallowance of the additional depreciation for the assessment orders of AY 2009-10 and 2010 11, respectively after relying on the judgment of the Madras High Court passed in the case of M/s Brakes India Limited versus DCIT reported in 2017 SCC online Mad 14645. This Court vide its order dated 15.06.2022 has admitted the present appeals on following substantial questions of law: (i) Whether the learned ITAT was justified in deleting the disallowance of claim of additional depreciation during the relevant assessment years by relying upon the judgment passed by the Hon ble Madras High Court in M/s Brakes India Limited v. DCIT; (ii) Whether the present appeals fall under the exception clause of Circular No. 3 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he second question of law is concerned; he contended that both these appeals are maintainable as it comes under the exception clause engraved in the same Circular which has fixed the monetary limit for filing appeal and he placed reliance on an audit objection made for the relevant assessment years in the case of respondent-Assessee. The said audit objection states that additional depreciation is available only in the year in which the new plant and machineries have first been put to use. 7. At this stage, it is pertinent to mention that the same audit objection report at its second page states that the department (Income Tax) has taken a stand that there is no such provisions in the Income Tax that additional depreciation can be availed in the first year only and reiterated that it can be availed in the subsequent year also. Thus, it is very clear from the audit objection itself that the Income Tax department was not in agreement with the audit objection and the department was aware that additional depreciation can be availed also in the subsequent years. 8. Mr. Rahul Lamba, learned counsel for the Respondent-Assessee contended that so far as the first question of law is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at paragraph 10(c) it has been specifically provided that any appeal even below monetary limit can be entertained provided the audit objection has been accepted by the revenue. However, even after opportunities given to the learned standing counsel for revenue, he was unable to produce a single chit of paper to show that audit objection has been accepted by the revenue. Thus, since the tax effect in both the cases, the monetary limit is much below the ceiling as prescribed in the Circular No. 3/2018; both these appeals are not maintainable and deserves to be quashed in limine. 10. So far as first question of law is concerned; it appears that the relevant additional depreciation amount, claimed by the respondent in the year subsequent to the first year in which such new machine was put to use, was allowable to respondent in terms of Section 32 (1) (iia) of the I.T. Act. The relevant extract of Section 32(1)(iia), applicable during the relevant AY 2009 -10 and AY 2010 -2011, is reproduced herein below for ready reference :- 32. (1) In respect of depreciation of - . (iia) in the case of any new machinery or plant (other than ships and aircraft), which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of the Assesse 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 per cent, of the 20 per cent, 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 per cent, would not be allowed to be claimed by the Assesse 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 per cent, of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) . The word shall used in the said clause is very significant. The benefit which is to be granted is 20 per cent, additional depreciation. By virtue of the proviso referred to above, only 10 per cent, can be claimed in one year, if plant and machinery is put to use for less than 180 days in the said financial year. This would necessarily mean that the balance 10 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned, it has to go by the plain language of the unamended provision, and then, come to a conclusion in the matter. As alluded to above, our view, is that, upon a plain reading of the unamended provision, it could not be said that the Assessee could not claim balance depreciation in the A.Y., which follows the A.Y., in which, the machinery had been bought and used, albeit, for less than 180 days. Later on, the Madras High Court dealt with the same issue in its another judgment passed in the case of Brakes India Limited versus DCIT reported in 2017 SCC online Mad 14645. In the said case, the Court was adjudicating the appeal filed by the Assessee and the relevant issue before the Court was whether balance additional depreciation could be carried forward to the year, following the previous year, in which, additional depreciation was claimed. After relying on the aforesaid judgments, the Madras High Court decided the issue in favour of the Assessee and allowed the appeal thereby approving that additional depreciation could be carried forward and claimed in the subsequent year. The relevant extract of the judgment in the case of Brakes India Limited (supra) is reproduced here ..... X X X X Extracts X X X X X X X X Extracts X X X X
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