2014 (4) TMI 1082 - AT - Income Tax

Benefit of additional depreciation - Held that - The additional depreciation on new Plant & Machinery u/s.32(iia) has been allowed with a view to give boost to the manufacturing sector. Benefit of such additional depreciation is in addition to the normal depreciation which is allowed to all the assessees. However, the benefit of additional depreciation is given subject to certain conditions. The Delhi Bench of the Tribunal in the case of DCIT Vs. Cosmo Films Ltd., (2012 (9) TMI 281 - ITAT DELHI) and ACIT Vs. Sil Investment Ltd., (2012 (6) TMI 83 - ITAT DELHI ) has allowed the claim of assessee for 50% of additional depreciation u/s.32(i)(iia) in respect of new Plant & Machinery installed at the new eligible industrial undertaking where Plant & Machinery were put to use for less than 180 days in the year of installation and the assessee had claimed only 50% of the additional depreciation and the balance amount was claimed in the next year. On the other hand, Chennai Bench of the Tribunal in the case of DCIT Vs. Brakes India Ltd., (2012 (3) TMI 31 - ITAT, CHENNAI) and M/s.CRI Pumps (P) Ltd., Vs. ACIT (2013 (12) TMI 1357 - ITAT CHENNAI) has taken a contrary view. The Hon ble Supreme Court of India in the case of CIT Vs. Vegetable Products Ltd., reported as ( 1973 (1) TMI 1 - SUPREME Court ) has held that where two views are available, the view in favour of the assessee has to be taken. Accordingly, following the view taken by the Delhi Bench in the case of DCIT Vs. Cosmo Films Ltd., (supra) and ACIT Vs. Sil Investment Ltd., (supra), we allow this ground of appeal of the assessee. The Assessing Officer is directed to grant benefit of additional depreciation to the assessee to the extent not claimed by the assessee in the earlier AY. - Decided in favour of assessee.

Summary

Issues involved:
Delay in filing appeal, Disallowance of additional depreciation, Interpretation of provisions regarding additional depreciation u/s.32(iia)

Delay in filing appeal:
The appeal was filed with a delay of five days, and the assessee submitted an affidavit citing reasons for the delay. The tribunal examined the contents of the affidavit and found the explanation for the delay satisfactory. Consequently, the delay was condoned, and the appeal was admitted to be heard on merits.

Disallowance of additional depreciation:
The assessee, engaged in manufacturing, filed its return of income for AY 2007-08 declaring total income. The Assessing Officer disallowed additional depreciation u/s.14A in scrutiny assessment and revised the order u/s.154 to disallow additional depreciation of 10% on the ground that it is allowable only in the year when the new Plant & Machinery is first put to use. The CIT(Appeals) dismissed the appeal following a previous tribunal decision. The assessee contended that the remaining 50% of the depreciation should be claimed in the current AY based on tribunal decisions allowing such claims in similar cases.

Interpretation of provisions regarding additional depreciation u/s.32(iia):
The tribunal considered conflicting decisions by different benches regarding the allowance of additional depreciation on new Plant & Machinery u/s.32(iia). The Delhi Bench allowed the claim for 50% of additional depreciation in cases where the asset was put to use for less than 180 days in the year of installation, with the balance claimed in the next year. In contrast, the Chennai Bench took a contrary view. Citing the principle that when two views are available, the one favoring the assessee should be taken, the tribunal allowed the appeal, directing the Assessing Officer to grant the benefit of additional depreciation to the extent not claimed in the earlier AY.

This judgment highlights the importance of timely filing appeals, the interpretation of provisions related to additional depreciation, and the significance of judicial decisions in resolving conflicting views on tax matters.