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TMI Blog2023 (6) TMI 769X X X X Extracts X X X X X X X X Extracts X X X X ..... eal on this issue without appreciating the decision of the Hon'ble Supreme Court in the case of Madras Refineries Ltd. Wherein, on the same issue, the Hon'ble Supreme Court has allowed the SLP (Civil) No(s), 7000/2005 filed by the Revenue? 2. Whether on the facts and in the circumstances of the case and in law, the Ld CIT (A) had erred in allowing additional depreciation Rs. 200,80,07,557/- @ 10% (50% of applicable rate of 20%), since the plant and machinery was acquired and was put to use for less than 180 days in assessment year 2013-14, however, as per second proviso of section 32(1) of the Income Tax Act, 1961, additional depreciation is allowable only in the year in which new plant and machinery is acquired and put to use. 3. The appellant prays that the order of the CIT (A) on the above grounds 'be set aside and that of the Assessing Officer be restored. 4. The appellant craves leave to amend, or alter any grounds or add a new ground, which may be necessary." 3. The issue arising in ground no.1, raised in Revenue's appeal, is pertaining to the deletion of addition of Rs. 2,43,98,882, on account of community development expenses. 4. The brief facts of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure incurred on community development was to further power generation business and was wholly and exclusively incurred in order to facilitate the business of the assessee to run in a smooth manner and to assist the employees of the assessee company. In this regard, it is the plea of the assessee that it incurred certain expenditures directly and some amount for community development was incurred through a charitable organisation, namely, GMR Varalakshmi Foundation. During the assessment proceedings, the assessee furnished the following details of the community development expenses incurred by the assessee, during the year under consideration:- Sl. No. Particulars Amount in Rupees A Community Development expenses 1. Ganesh Caterers 50,000 2. GMR Varalakshmi Foundation 5,187,619 3. Gopal Borwells 126,340 4. Govind Sitaram Warghane 98,100 5. Help Age India 1,325,000 6. Kiran Enterprises 453,393 7. Krishna Constructions 42,490 8. Ravi Shankar 3,000 9. Shamla Films 30,000 10. Vidarbha Travel 160,088 11. Vishal Nanaji Parkhi 7,200 12. Vitthal Rukmai Devasthan 214,063 13. Cbec- A/C Service Tax 32,822 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard, it is pertinent to note that vide Finance (No.2) Act, 2014, w.e.f. 01/04/2015, Explanation-2 was inserted in section 37(1) of the Act, whereby expenses incurred on the activities relating to corporate social responsibility are specifically excluded from the purview of section 37(1) of the Act. Since the year under consideration is the assessment year 2014-15, therefore, the aforesaid amendment is not applicable to the present case. The learned CIT(A), vide impugned order, placed reliance upon various judicial pronouncements, as noted from pages 3-7 of the impugned order, wherein it has been held that expenditure incurred on community development/CSR are allowable under section 37(1) of the Act. Further, it cannot be disputed that the expenditure incurred on environment health and safety, as stated above, are relevant considering the business in which the assessee is engaged, i.e. development and implementation of coal-based thermal power project. Therefore, in view of the above, once the expenditure has been accepted to be for the community development, and environment health & safety expenses, the same cannot be held to be not incurred wholly and exclusively for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 32(1)(iia)), since the plant and machinery were put to use for less than 180 days. In the year under consideration, the assessee claimed the balance 10% of additional depreciation on the amount. We find that in CIT v/s Rittal India (P) Ltd, [2016] 380 ITR 423 (Karn.), the following substantial questions of law came up for consideration before the Hon'ble Karnataka High Court:- "i. Whether the Tribunal is correct in extending the benefit of Section 32(1)(iia) of the Act to the next assessment year when the income tax Act does not provide for such carryover, thereby violating the legal principles of "cassus omissus" which states that the courts cannot compensate for what the legislature has omitted to enact? ii. Whether the Tribunal was correct in holding that additional depreciation allowed u/s.32(1)(iia) is a one time benefit to encourage industrialization and the relevant provisions has been construed reasonably and purposive without appreciating that the additional depreciation is allowed in the year of purchase and if in the year of purchase the assessee is eligible only for 50% depreciation, the balance 50% cannot be carried forward for the subsequent year on the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. This would necessarily mean that the balance 10% additional deduction can be availed in the subsequent assessment year, otherwise the very purpose of insertion of Clause (iia) would be defeated because it provides for 20% deduction which shall be allowed. 10. It has been consistently held by this Court, as well as the Apex Court, that beneficial legislation, as in the present case, should be given liberal interpretation so as to benefit the assessee. In this case, the intention of the legislation is absolutely clear, that the assessee shall be allowed certain additional benefit, which was restricted by the proviso to only half of the same being granted in one assessment year, if certain condition was not fulfilled. But, that, in our considered view, would not restrain the assessee from claiming the balance of the benefit in the subsequent assessment year. The Tribunal, in our view, has rightly held, that additional depreciation allowed under Section 32(1)(iia) of the Act is a one time benefit to encourage industrialization, and the provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting additional ..... X X X X Extracts X X X X X X X X Extracts X X X X
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