2020 (3) TMI 1432 - AT - Income Tax

Additional depreciation deduction qua the fixed assets not put to use in the relevant previous year but in earlier assessment years only - HELD THAT - We find no merit in Revenue s foregoing argument in light of hon ble Madras high court s decision in M/s Brakes India Limited 2017 (4) TMI 511 - MADRAS HIGH COURT has already reversed tribunal s coordinate bench s order 2016 (8) TMI 745 - ITAT CHENNAI accepting the Revenue s stand. Their lordships held that not only the impugned depreciation relief is admissible in case of fixed assets installed and put to use in the relevant previous year but also qua those which already form part of the corresponding block of assets and installed in earlier assessment years. We thus rely hon ble high court s reasoning mutatis mutandis and accept the assessee s additional depreciation claim on merits. AO is directed to delete the impugned disallowance. - Decided in favour of assessee.

Summary

Issues:
- Validity of rectification proceedings under section 154 of the Income Tax Act, 1961
- Additional depreciation disallowance under section 32(1)(iia) for assessment years 2009-10 & 2010-11

Validity of Rectification Proceedings:
The appeals before the Appellate Tribunal ITAT RANCHI pertained to assessment years 2009-10 & 2010-11 challenging the rectification proceedings under sections 154/143(3)/144C(3) of the Income Tax Act, 1961. The legal ground challenged the validity of the rectification proceedings initiated by the lower authorities, contending that no apparent error existed in the assessments. The counsel argued against the impugned rectification proceedings, specifically focusing on the additional depreciation disallowance under section 32(1)(iia) amounting to Rs.57,97,020/- and Rs.1,38,57,189/- for the respective assessment years. The Revenue's argument was based on the claim that the additional depreciation was sought for fixed assets not utilized in the relevant previous year but in earlier assessment years. However, citing a decision by the Madras High Court in M/s Brakes India Limited vs. DCIT, the Tribunal ruled in favor of the assessee, allowing the additional depreciation claim on merits and directing the Assessing Officer to delete the disallowance.

Additional Depreciation Disallowance:
The crux of the issue revolved around the admissibility of additional depreciation claimed by the assessee for fixed assets installed and put to use in the relevant previous year, as well as those already part of the block of assets and installed in earlier assessment years. The Tribunal relied on the Madras High Court's decision in M/s Brakes India Limited vs. DCIT, which reversed the Tribunal's order and upheld the assessee's claim for additional depreciation. The Tribunal found no merit in the Revenue's argument, referencing a previous decision involving a similar relief denial to a taxpayer. Consequently, the Tribunal accepted the assessee's additional depreciation claim on merits and directed the Assessing Officer to delete the disallowance. The appeals of the two assesses were allowed on merits based on the above analysis.

In conclusion, the Appellate Tribunal ITAT RANCHI ruled in favor of the assessee on the issues of validity of rectification proceedings and additional depreciation disallowance for the assessment years 2009-10 & 2010-11. The Tribunal relied on legal precedents and held that the additional depreciation claimed by the assessee was admissible, directing the Assessing Officer to delete the disallowance.