2016 (8) TMI 366 - AT - Income Tax

Validity of order passed u/s 263 - whether the assessee was entitled or benefit of additional depreciation in the impugned order @30% u/s 32(1)(iia) - Held that - As decided in the case of CIT vs Rittal India Pvt Ltd 2015 (1) TMI 1248 - KARNATAKA HIGH COURT that beneficial legislation, should be given liberal interpretation so as to benefit the assessee. In this case, the intention of the legislation is absolutely clear, that the assessee shall be allowed cel1ain 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. The Tribunal, has rightly held, that additional depreciation allowed under Section 32(1)(iia) of the Act is a one time benefit to encourage industrialization, and the provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting additional allowance. We are in full agreement with such observations made by the Tribunal. Thus the view adopted by the ld.CIT is contrary to law and facts. The Assessing Officer had rightly allowed the benefit of additional depreciation in the year under consideration. Under these circumstances, the order passed by the ld.CIT is hereby quashed. - Decided in favour of assessee

Summary

Issues:
- Validity of order passed u/s 263 regarding additional depreciation benefit under section 32(1)(iia).

Analysis:
- The appeal challenged the order passed by the Commissioner of Income-tax (LTU), Mumbai under section 263 revising the original assessment order for A.Y. 2010-11 regarding the entitlement to additional depreciation benefit under section 32(1)(iia).
- The primary issue raised was whether the assessee was entitled to the benefit of additional depreciation at 30% under section 32(1)(iia) for new plant & machinery acquired and put to use in the relevant assessment year.
- The Commissioner observed that since no new plant & machinery was acquired during the impugned assessment year, the additional depreciation claimed could not be allowed. The assessee argued that as the new plant & machinery acquired in the previous year was used for less than 180 days, only half of the additional depreciation was claimed, with the balance to be claimed in the subsequent year.
- The assessee cited various judgments, including the one by the Hon'ble Karnataka High Court, supporting the carryover of the balance of additional depreciation to the next assessment year.
- The Tribunal analyzed the provisions of section 32(1)(iia) and noted that the legislative intent was to encourage industrialization by providing additional depreciation benefits. The Tribunal agreed with the interpretation that the balance of the additional depreciation could be claimed in the subsequent assessment year.
- The Tribunal concluded that the order passed by the Commissioner was contrary to law and facts, and upheld the Assessing Officer's decision to allow the benefit of additional depreciation for the year under consideration.
- Consequently, the Tribunal quashed the order passed by the Commissioner and allowed the appeal filed by the assessee.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, relevant case laws cited, interpretation of statutory provisions, and the final decision rendered by the Tribunal.