2016 (5) TMI 639 - AT - Income Tax

Claim of additional depreciation - Machines were acquired during the previous financial year but put to use during the current financial year - Held that - The facts brought on record shows that the plant and machinery does not a new plant and machinery acquired in the assessment year under consideration. The first requirement for claiming additional depreciation is that it should be a new plant and machinery. The machinery was new only when it is first put to use. When it is already installed in earlier assessment year, it was no more new machinery or plant. Once it was not a new machinery or plant, the additional depreciation u/s.32(1)(iia) cannot be allowed. The additional depreciation itself is only for a new machinery or plant. The intention of the legislature was to give such additional depreciation in the year in which assets were put to use and not for any succeeding assessment year. There is nothing in the statute, which allows such claim of additional depreciation in succeeding year on machinery, though it was acquired in earlier year. That cannot be any presumption that unless a claim is specifically denied, it has to be allowed. In our opinion, each assessment year is separate and independent assessment year. The provisions of the section 32 of the Act do not provide for postponement or carry forward of the residual additional depreciation, if any, in subsequent assessment years. Further, it is to be noted that when an allowance, which is ordinarily not available under normal commercial principles of accounting, is made specifically allowable, through enactment for certain specific provisions of the Act, it is also a requirement that there should be similar specific provisions, which shows its applicability every year, unless the context strongly calls for such an interpretation. Being so, we are not in agreement with the order of the Ld.CIT(A) in granting additional depreciation, though the plant and machinery was not new in the assessment year under consideration. Thus in the present case, this plant and machinery already capitalized in the earlier assessment years and also appeared in the block of assets. In our opinion, the assessee is not entitled to additional depreciation u/s.32(1)(iia) of the Act on the machineries acquired not in the Financial year 2010-11 relevant to the assessment year 2011-12. - Decided against assessee

Summary

Issues:
- Allowance of additional depreciation in a revised return filed beyond the due date
- Eligibility for additional depreciation on plant and machinery acquired and installed after a specific date
- Interpretation of statutory provisions regarding additional depreciation on new plant and machinery
- Application of Tribunal decisions and circulars in determining eligibility for additional depreciation

Issue 1: Allowance of additional depreciation in a revised return filed beyond the due date
The case involved an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) regarding the allowance of additional depreciation claimed by the assessee in a revised return filed after the due date. The Revenue contended that the revised return filed belatedly could not be considered, as the claim for additional depreciation was based on plant and machinery acquired earlier and not in the relevant assessment year. The Tribunal disagreed with the Revenue, citing a CBDT Circular and a Chennai Bench decision, stating that if the claim is lawful, it should be allowed by the Assessing Officer, even if filed belatedly.

Issue 2: Eligibility for additional depreciation on plant and machinery acquired and installed after a specific date
The main issue revolved around the eligibility of the assessee for additional depreciation under Section 32(1)(iia) of the Income Tax Act. The Tribunal found that the machinery for which additional depreciation was claimed was not acquired in the relevant assessment year but earlier. The section stipulates granting additional depreciation on new plant and machinery acquired and installed after a specific date. As the machinery was not new in the assessment year under consideration, the Tribunal held that additional depreciation could not be allowed, emphasizing that each assessment year is separate. The Tribunal referred to various decisions to support its conclusion.

Issue 3: Interpretation of statutory provisions regarding additional depreciation on new plant and machinery
The Tribunal analyzed the statutory provisions under Section 32(1)(iia) concerning additional depreciation on new plant and machinery. It emphasized that the intention of the legislature was to provide additional depreciation in the year assets were put to use and not in succeeding assessment years. The Tribunal highlighted that the additional depreciation is only for new machinery or plant and cannot be claimed for assets acquired in earlier years. It concluded that the assessee was not entitled to additional depreciation as the machinery was not new in the relevant assessment year.

Issue 4: Application of Tribunal decisions and circulars in determining eligibility for additional depreciation
In making its decision, the Tribunal considered various Tribunal decisions and circulars to determine the eligibility of the assessee for additional depreciation. It referenced specific cases and circulars to support its reasoning, ultimately concluding that the assessee was not entitled to additional depreciation on the machineries acquired in a year other than the relevant assessment year. The Tribunal partially allowed the Revenue's appeal based on these findings.

This detailed analysis of the judgment provides insights into the issues surrounding the allowance of additional depreciation on plant and machinery acquired by the assessee and the interpretation of relevant statutory provisions and precedents in reaching the final decision.