2016 (12) TMI 1830 - AT - Income Tax

Carry forward of additional depreciation - Additional depreciation of 10% on plant and machinery as purchased and put to use in the previous year u/s 32(1)(iia) - HELD THAT - In so far as claim of carry forward of additional depreciation to the extent it could not be allowed in earlier year due to use lesser than 180 days no doubt there are decisions of Co-ordinate Bench which are for and against the assessee. In our opinion the issue is no more res integra due to the judgment in the case of Rittal India Pvt. Ltd 2016 (1) TMI 81 - KARNATAKA HIGH COURT . 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. 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 industrialisation and the provisions related to it have to be construed reasonably liberally and purposively to make the provision meaningful while granting the additional allowance. - Decided against revenue.

Summary

Issues:
Appeal against Commissioner of Income Tax (Appeals) orders dated 14.07.2016 regarding additional depreciation claim under section 32(1)(iia) of the Income Tax Act, 1961 for assessment years 2009-2010 and 2012-2013.

Analysis:
1. The appellant claimed additional depreciation of 10% on plant and machinery used for less than 180 days in the preceding assessment year. The claim for carried forward additional depreciation was disallowed by the Assessing Officer. The appellant relied on decisions of Co-ordinate Benches supporting the claim.

2. The ld. Commissioner of Income Tax (Appeals) noted contradictory decisions but directed the Assessing Officer to allow the claim based on decisions favoring the appellant. The Departmental Representative challenged this decision, arguing that the Act did not allow carry forward of unabsorbed additional depreciation.

3. The Authorized Representative supported the Commissioner's decision, citing relevant case law, including the judgment of the Karnataka High Court. The Tribunal analyzed the issue and referred to the Karnataka High Court judgment which clarified the interpretation of section 32(1)(iia) of the Act.

4. The Tribunal held that the balance 10% depreciation can be claimed in the subsequent assessment year to fulfill the purpose of encouraging industrialization. The Tribunal emphasized the liberal interpretation of beneficial legislation to benefit the assessee. No High Court judgments favored the Department's view, leading to the dismissal of the Revenue's appeals for both assessment years.

This detailed analysis of the judgment highlights the legal arguments, interpretations of relevant provisions, and the application of case law to resolve the issues related to the claim of additional depreciation under section 32(1)(iia) of the Income Tax Act, 1961.