2020 (9) TMI 541 - HC - Income Tax

Eligibility of carry forward the unabsorbed additional depreciation as per the provisions of Section 32(1)(iia) - as assets was acquired in the 2nd half of the financial year 2007-08 and there being no provisions under the Act permitting the balance to be carry forwarded to be allowed in the succeeding year? - HELD THAT - The effect of the insertion of the proviso in the year 2016, may not have a bearing on the present issue, as during the relevant assessment year 2009-2010, the law which has been settled by the Division Bench of this Court is the case of Brakes India 2017 (4) TMI 511 - MADRAS HIGH COURT , against the said decision, the revenue preferred an appeal before the Hon'ble Supreme Court which was dismissed by an order. Thus, the decision of the Division Bench in the case of Brakes India having been approved by the Hon'ble Supreme Court, we are bound by the said decision and accordingly, following the same. For the above reasons, the appeal filed by the Revenue is dismissed and the substantial question of law is answered against the Revenue.

Issues:
1. Eligibility to carry forward unabsorbed additional depreciation under Section 32(1)(iia).
2. Interpretation of provisions restricting depreciation and allowing balance to be carried forward.
3. Consideration of decisions in similar cases and their impact on the present case.
4. Effect of proviso under Section 32(1) inserted in 2016 on the present issue.

Eligibility to Carry Forward Unabsorbed Additional Depreciation:
The appellant/revenue challenged the order of the ITAT regarding the eligibility of the assessee to carry forward unabsorbed additional depreciation under Section 32(1)(iia) for the assessment year 2009-2010. The assessing officer disallowed the claim of additional depreciation, leading to an increase in the total income of the assessee. However, the CIT(A) allowed the appeal, citing relevant case laws and decisions. The Tribunal also dismissed the appeal filed by the Revenue, referencing a decision of the High Court of Karnataka. The Tribunal's decision was based on the premise that additional depreciation not claimed in earlier years should be allowed. The Tribunal's ruling was upheld, emphasizing the need to consider previous judgments favoring the assessee.

Interpretation of Provisions Restricting Depreciation and Allowing Balance to be Carried Forward:
The assessing officer contended that there was no provision in the Act to allow the balance depreciation to be carried forward to the succeeding year. This argument was central to the dispute over the eligibility of the assessee to claim additional depreciation for the asset acquired in the 2nd half of the financial year 2007-2008. The CIT(A) and the Tribunal, however, held in favor of the assessee, allowing the claim based on the interpretation of relevant provisions and precedents. The Tribunal's decision was influenced by the judgment of the High Court of Karnataka, which supported the assessee's position regarding the carry forward of unabsorbed additional depreciation.

Consideration of Decisions in Similar Cases:
The CIT(A) considered various decisions, including those of M/s Addison & Company and Brakes India Limited, to support the allowance of additional depreciation not claimed in earlier years. The Tribunal also referenced a decision of the High Court of Karnataka in CIT V. Rittal India (P.) Limited while dismissing the Revenue's appeal. The Tribunal's reliance on previous judgments and the lack of a favorable judgment for the Revenue in other High Courts were highlighted during the proceedings.

Effect of Proviso under Section 32(1) Inserted in 2016:
The insertion of the proviso under Section 32(1) in 2016, allowing the deduction of the balance amount, was discussed. However, the Court determined that this amendment did not impact the present issue concerning the assessment year 2009-2010. The Court emphasized the binding nature of the decision of the Division Bench in the case of Brakes India, which had been approved by the Supreme Court. Consequently, the Court dismissed the Revenue's appeal and answered the substantial question of law against the Revenue, citing the precedence set by the Brakes India case.

This detailed analysis of the judgment provides insights into the legal intricacies surrounding the eligibility to carry forward unabsorbed additional depreciation, the interpretation of relevant provisions, the impact of previous decisions, and the effect of subsequent amendments on the case at hand.

← Previous Next →