9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (4) TMI 511 - HC - Income TaxAdditional depreciation carried forward - whether balance additional depreciation could be carried forward to the year, following the previous year, in which, additional depreciation was claimed? - Held that - The Division Bench in M.M.Forgings case 2011 (1) TMI 203 - MADRAS HIGH COURT the said case was not concerned with the issue, with which, we are faced, that is, the right to carry forward the balance additional depreciation. Therefore, the judgment is completely distinguishable. The second submission of Mr.Ravi, that Circular no.8 of 2002 dated 27.08.2002 and Circular no.281 dated 29.11.1979, have not been taken note of, in our judgment rendered in Commissioner of Income Tax, Madurai Vs. M/s.Shri T.P.Textiles Private Limited 2017 (3) TMI 739 - MADRAS HIGH COURT , according to us, will not impact, either the reasoning or the conclusion reached by us, in the said matter. It is pertinent to note that the Circular no.281 dated 29.11.1979, pre-dates the insertion of the relevant provision, i.e., second clause to Section 32 (1) (iia). The said clause (iia), admittedly, was inserted by virtue of the Finance (No.2) Act, 2002, with effect from 01.04.2003.In so far as the second Circular is concerned, i.e, Circular no.8 of 2002 dated 27.08.2002, in our view, in no way, helps the case of the Revenue. The Circular does not dwell on the point which we are confronted with.In any case, according to us, the Circulars are not binding on the Court, though, they may be binding on the Revenue. See CIT V. Hero Cycles Pvt. Ltd., (1997 (8) TMI 6 - SUPREME Court ) . The last submission that Mr.Ravi advanced, was, in fact, predicated on the reasoning given by the Assessing Officer, which, according to us, is misconceived, as the manner of calculation of depreciation, cannot, to our minds, impede the claim of the Assessee for balance additional depreciation, in the year following the previous year, in which, the said asset is installed and put to use. - Decided against revenue
Issues Involved:
1. Rejection of Assessee's claim to carry forward additional depreciation in the year subsequent to the previous year in which the asset was installed and put to use. Issue-wise Detailed Analysis: 1. Rejection of Assessee's Claim to Carry Forward Additional Depreciation: The Assessee filed an appeal under Section 260A of the Income Tax Act, 1961, challenging the judgment and order of the Income Tax Appellate Tribunal (ITAT) dated 06.01.2012. The core issue is whether the Assessee can carry forward additional depreciation to the subsequent year when the asset was installed and used for less than 180 days in the previous year. The Tribunal had allowed the Assessee's appeal based on its own judgment in the case of Fresh & Honest Cafe Ltd. v. DCIT, which relied on the Karnataka High Court's judgment in CIT v. Rittal India (P.) Ltd. The Tribunal considered whether the assessment order was erroneous or prejudicial to the interest of the Revenue under Section 263 of the Act. Relevant Provisions and Judicial Interpretations: Section 32(1) of the Act deals with depreciation on tangible and intangible assets. Clause (iia) of Section 32(1) allows for additional depreciation of 20% on new machinery or plant acquired and installed after 31st March 2005. The proviso restricts the claim to 50% if the asset is used for less than 180 days in the previous year. The Karnataka High Court in CIT v. Rittal India (P.) Ltd. interpreted this provision, emphasizing that the additional depreciation aims to encourage industrialization. The Court concluded that the balance 50% of additional depreciation could be claimed in the succeeding assessment year, as the proviso does not restrict this allowance. Court's Observations and Agreement: The Court agreed with the Karnataka High Court's interpretation, stating that the provisions are meant to incentivize new and expanding industries. The plain language of Section 32(1)(iia) and its proviso supports the claim for the balance 10% additional depreciation in the succeeding year. The Court noted that the amendment effective from 01.04.2016 clarified this interpretation, removing any ambiguity. The amendment allowed the balance 50% of additional depreciation in the immediately succeeding previous year. Revenue's Additional Submissions: The Revenue argued that the Court did not consider the judgment in M.M. Forgings Limited v. Additional Commissioner of Income Tax, and the Circulars issued by the Central Board of Direct Taxes (CBDT). The Court found these arguments untenable, distinguishing the M.M. Forgings case as it did not address the issue of carrying forward additional depreciation. The Circulars were either outdated or irrelevant to the specific issue. Conclusion: The Court found no merit in the Revenue's submissions, stating that the manner of calculating depreciation does not impede the Assessee's claim for balance additional depreciation. The appeal was allowed, and the Tribunal's judgment was set aside, with no order as to costs.
|
