2017 (9) TMI 2024 - AT - Income Tax

Denial of Additional depreciation claim - plant and machinery used for a period less than 180 days - Assessee had claimed only 50% of the additional depreciation for which it was eligible, since the new plant and machinery on which such depreciation was claimed was put to use for a period less than 180 days in the previous year but Claim of the assessee for the balance additional depreciation for the impugned assessment year was declined - HELD THAT - Issue in our opinion is squarely covered in favour of the assessee by the judgment of Jurisdictional High Court in the case of CIT vs. T.P. Textiles (P) Ltd 2017 (3) TMI 739 - MADRAS HIGH COURT wherein as held upon a plain reading of the unamended provision, it could not be said that the Assessee could not claim balance depreciation in the A.Y., which follows the A.Y., in which, the machinery had been bought and used, albeit, for less than 180 days . We, are therefore of the opinion that assessee was eligible for claiming balance 10% of the depreciation in the impugned assessment year. AO is directed to allow such claim. Decided in favour of assessee.

Summary

Issues:
- Disallowance of additional depreciation claimed by the assessee

Analysis:
The appeal was filed against an order of the Commissioner of Income Tax (Appeals) concerning the disallowance of additional depreciation claimed by the assessee. The assessee withdrew one ground, leaving ground No.2, which challenged the disallowance of additional depreciation. The assessee had claimed only 50% of the additional depreciation for plant and machinery used for less than 180 days in the previous year. The claim for the balance of additional depreciation for the impugned assessment year was declined by the Assessing Officer. The issue revolved around the interpretation of Section 32(1)(iia) and the relevant provisos regarding the allowance of balance depreciation in the succeeding assessment year. The judgment of the Jurisdictional High Court in the case of CIT vs. T.P. Textiles (P) Ltd was cited, emphasizing that there was no limitation on the assessee claiming the balance depreciation in the succeeding assessment year.

The judgment highlighted the clarificatory amendment brought in by the legislature, removing any ambiguity regarding the allowance of balance depreciation. The amendment provided that the balance 50% of the additional depreciation on new plant or machinery acquired and used for less than 180 days should be allowed in the immediately succeeding previous year. The court emphasized that the amendment was clarificatory and not prospective, aiming to eliminate discrimination in allowing additional depreciation based on the period of use of plant or machinery. The court upheld that the assessee was eligible to claim the balance depreciation in the impugned assessment year. Consequently, the Assessing Officer was directed to allow the claim, leading to the allowance of ground No.2 of the assessee.

In conclusion, the appeal of the assessee was partly allowed, with the judgment clarifying the eligibility of the assessee to claim the balance depreciation as per the relevant provisions and amendments. The decision was pronounced on a specific date in Chennai, marking the resolution of the appeal in favor of the assessee concerning the disallowance of additional depreciation claimed.