2021 (8) TMI 1341 - HC - Income Tax

Additional depreciation allowed u/s 32(1)(iia) - HELD THAT - It is not in dispute and the fact that the assessee at the first instance availed 50% of additional depreciation allowed u/s 32(1)(iia) - assessee could avail 50% of the allowed depreciation on account of the fact that the equipment for which depreciation was claimed was not used was not used for more than 180 days in the previous year 2006-07. Thus the assessee claimed 10% of permissible 20% depreciation in the previous year 2006-07 and claimed balance 50% i.e. 10% of 20% in the Assessment Year 2007-08. The Tribunal held that there is no restriction in the Income Tax Act that balance of one-time-incentive in the form of additional sum of depreciation cannot be availed in the subsequent year. Assessee refers to and relies on the judgments T P Textiles (P) Ltd. 2017 (3) TMI 739 - MADRAS HIGH COURT and Rittal India (P) Ltd 2016 (1) TMI 81 - KARNATAKA HIGH COURT for sustaining the view taken by the Tribunal. Also argued that the clarificatory amendment made to Section 32(1)(ii) with effect from 01.10.2016 supports the deduction claimed by the assessee. The amendment no doubt was introduced with effect from 01.10.2016 is a clarificatory amendment. The decisions relied on by the assessee are directly on the point and we are in full agreement with the view taken by the Madras and Karnataka High Courts. The propositions stated in the reported judgment applies in all fours. By following the reasons and principles laid down in T P Textiles (P) Ltd. and Rittal India (P) Ltd (supra) question nos.1 and 2 are answered against the Revenue and in favour of the assessee. Disallowing the balance investment of the Appellant in Gujarat Perstop Electronics Ltd. (GPEL) - HELD THAT - The reframed question has bearing on the view expressed by this Court on a similar question stated in the Assessment Year 2002-03 and the judgment is reported in Commissioner of Income-Tax v. Apollo Tyres Ltd. 2019 (12) TMI 375 - KERALA HIGH COURT Point no.3 in the reported judgment deals with these aspects of the matter and by following the judgment in Apollo Tyres Ltd (supra) the question is answered in favour of the assessee and against the Revenue. Deduction u/s 80IA - Whether DG Power Generation Units 1 and II constituted an undertaking under Sec. 80IA - HELD THAT - As a matter of fact that the questions raised in this appeal namely question nos.4 and 5 are similar to the questions raised by the Revenue for the Assessment Year 2002-03 2019 (3) TMI 1549 - KERALA HIGH COURT the appeals filed by the Revenue were dismissed. Our attention has been drawn to the reasoning and conclusion recorded by this Court on similar questions framed in 2019 (3) TMI 1549 - KERALA HIGH COURT - the substantial questions of law raised as question nos.4 and 5 are answered in favour of the assessee and against the Revenue.

Summary

Issues involved:
1. Availing 50% of depreciation unavailed under Section 32(1)(iia) in the previous year.
2. Correctness of the order of Tribunal in setting aside the disallowance of balance investment of the assessee.
3. Availing deduction under Section 80-IA for the DG Power Generation Units.

Issue 1: Availing 50% of depreciation unavailed under Section 32(1)(iia) in the previous year:
The appeal concerned whether the balance 50% of depreciation unavailed under Section 32(1)(iia) in the previous year could be allowed in the subsequent year. The Tribunal held that there is no restriction in the Income Tax Act preventing the balance of additional depreciation from being availed in the subsequent year. The Senior Counsel for the assessee relied on judgments from Madras and Karnataka High Courts to support this view. The clarificatory amendment made to Section 32(1)(ii) with effect from 01.10.2016 was also cited in favor of the assessee. The Court agreed with the Tribunal's interpretation and the decisions of the High Courts, answering the questions against the Revenue and in favor of the assessee.

Issue 2: Correctness of the order of Tribunal in setting aside the disallowance of balance investment of the assessee:
The Court reframed the question to focus on whether the Tribunal was right in setting aside the Assessing Officer's disallowance of the balance investment of the appellant in Gujarat Perstop Electronics Ltd. The Court referred to a previous judgment in a similar matter from the Assessment Year 2002-03 involving the same parties. Following the precedent set in the earlier judgment, the Court answered the reframed question in favor of the assessee and against the Revenue.

Issue 3: Availing deduction under Section 80-IA for the DG Power Generation Units:
The substantial questions of law raised in this appeal were similar to those raised by the Revenue in a previous case for the Assessment Year 2002-03. The Court noted that the appeals filed by the Revenue in the earlier case were dismissed, and the reasoning and conclusion recorded by the Court in that matter were applicable to the present case. By following the previous judgment, the Court answered the substantial questions of law raised regarding the DG Power Generation Units in favor of the assessee and against the Revenue.

In conclusion, the High Court of Kerala upheld the decisions of the Tribunal and previous judgments, ruling in favor of the assessee on all the issues raised in the appeal. The appeal was dismissed with no order as to costs.