2022 (1) TMI 1463 - HC - Income Tax

Additional depreciation u/s 32(1)(iia) read with proviso (B) - denial of claim as proviso (B) to Section 32(1)(iia) bars deduction under the said Section to another plant and machinery installed in any office premises or any residential accommodation including accommodation in the nature of a guest house - Tribunal held that installation of new plant and machinery in sales outlet/retail office would fall under Clause B of proviso to Section 32(1)(iia) of the Act and agreed with the submission made by the revenue - HELD THAT - The substantial question of law which has been raised for our consideration has in fact been answered in favour of the revenue by the Tribunal and the present exercise which is sought to be done before us is purely academic. Learned Standing Counsel pointed out that in paragraph 2.6 of the impugned order passed by the Tribunal there is a reference to the written down value and that aspect is what the revenue has raised before this Court in this appeal as pointed out earlier. The legal issue which has been raised before us has been decided in favour of the revenue and it has been held that the assessee is not entitled for deduction as their case would fall under Clause B of proviso to Section 32(1)(iia) of the Act. Therefore, the substantial question of law framed before us is not required to be answered in this appeal as it has been decided in favour of the revenue by the Tribunal themselves.

Summary

Issues:
1. Whether additional depreciation under Section 32(1)(iia) is allowable to the assessee despite proviso (B) barring deduction for plant and machinery installed in certain premises?

Detailed Analysis:
The appeal by the revenue under Section 260A of the Income Tax Act, 1961 was directed against the order passed by the Income Tax Appellate Tribunal in ITA No. 2413/Kol/2013 for the assessment year 2009-2010. The substantial question of law raised was whether the Tribunal was justified in holding that additional depreciation under Section 32(1)(iia) is allowable to the assessee despite proviso (B) restricting deduction for plant and machinery installed in specific premises. The assessing officer initially rejected the claim of additional depreciation by the assessee for plant and machinery installed during the assessment year. The Commissioner of Income Tax (Appeals) also dismissed the appeal, stating that additional depreciation is only available when plant and machinery are not installed in certain premises as per Section 32(1)(iia) of the Act. The Tribunal agreed with the revenue's submission that the installation of new plant and machinery in a sales outlet falls under the proviso to Section 32(1)(iia) and held in favor of the revenue. The Court noted that the legal issue had been decided in favor of the revenue by the Tribunal, making the current exercise before the Court academic. The appeal was disposed of on the grounds that the substantial question of law had already been answered in favor of the revenue by the Tribunal.

In conclusion, the Court's decision was based on the interpretation of Section 32(1)(iia) of the Income Tax Act regarding the allowance of additional depreciation for plant and machinery. The Court upheld the Tribunal's decision that the assessee was not entitled to the deduction due to the specific provisions outlined in proviso (B) of the Act. The Court emphasized that the legal issue had already been settled in favor of the revenue by the Tribunal, making further consideration unnecessary. The Court disposed of the appeal accordingly, affirming the Tribunal's decision on the matter.