2021 (3) TMI 16 - AT - Income Tax

Additional depreciation u/s 32(1)(iia) - lower authorities have disallowed assessee s additional depreciation claimed for sole reason that relevant assets had been put to use in earlier year(s) than in the relevant previous year - HELD THAT - We find no merit in Revenue s stand since hon ble Madras high court in Brakes India Ltd.. vs. ACIT 2017 (4) TMI 511 - MADRAS HIGH COURT has accepted such additional depreciation claimed on the assets already put to use. The instant depreciation allowance is directed to be deleted. Assessee s appeal is allowed.

Summary

Issues:
1. Disallowance of additional depreciation claimed by the assessee.

Analysis:
The appellant claimed additional depreciation under Section 32(1)(iia) of the Income Tax Act, 1961 for the assessment year 2016-17. The appellant contended that the unexpired portion of the additional depreciation from the previous year should be allowed in the current year. The Assessing Officer disallowed the claim, stating that the unexpired portion of additional depreciation can only be carried forward from the assessment year 2016-17. However, the appellant argued that 50% of the unabsorbed additional depreciation from the previous year was rightly brought forward and claimed in the current year. The appellate authorities upheld the disallowance, citing the provisions of Section 32(1)(iia) which allow carrying forward unexpired additional depreciation only from the assessment year 2016-17.

The appellant further relied on judicial precedents such as Century Enka Ltd and Cosmo Films Ltd to support their claim for the additional depreciation. The appellant emphasized that they were eligible for the additional depreciation on assets put to use for less than 180 days in the previous year, and the remaining additional depreciation should be allowed as per the provisions of Section 32(1)(iia). The appellant argued that the Finance Act, 2015 allowed for the carry forward of unexpired additional depreciation from the previous year, and therefore, the disallowance was unwarranted.

In a detailed analysis, it was found that the lower authorities had disallowed the additional depreciation claimed by the assessee based on the assets being put to use in earlier years than the relevant previous year. However, referring to the judgment in Brakes India Ltd. vs. ACIT, it was established that such additional depreciation claimed on assets already put to use was acceptable. Consequently, the disallowance of the depreciation claim was deemed unjustified, and the appellant's appeal was allowed.

In conclusion, the appellate tribunal ruled in favor of the assessee, allowing the claim for additional depreciation under Section 32(1)(iia) for the assessment year 2016-17. The order was pronounced on 23rd February 2021, overturning the disallowance made by the lower authorities and providing relief to the appellant.