2015 (1) TMI 1248 - HC - Income Tax

Additional depreciation u/s. 32(1) (iia) - Tribunal held that additional depreciation allowed u/s. 32(1) (iia) is a onetime benefit to encourage industrialization and the relevant provisions has been construed reasonably and purposive - Held that - Following the judgment of the Division Bench in (The Commissioner of Income Tax and another Vs. M/s. Rittal India Pvt.Ltd. 2016 (1) TMI 81 - KARNATAKA HIGH COURT wherein held additional depreciation allowed under Section 32(i)(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. - Decided in favour of assessee

Summary

Issues:
1. Interpretation of additional depreciation under Section 32(1)(iia) of the Income Tax Act.
2. Allowability of additional depreciation in subsequent years.
3. Dispute regarding the claim of additional depreciation.
4. Applicability of the judgment passed by the Division Bench in a similar case.

Analysis:
1. The appeal raised a substantial question of law regarding the interpretation of additional depreciation under Section 32(1)(iia) of the Income Tax Act. The main contention was whether the additional depreciation is a one-time benefit to encourage industrialization and if it can be carried forward to subsequent years beyond the year of purchase.

2. The appellant, a Private Limited Company, was engaged in the manufacture and sale of various products. The Assessing Officer disallowed additional depreciation claimed under Section 32(1)(iia) in the assessment year 2010-11, stating it was only allowable in the year of purchase. However, the Dispute Resolution Panel allowed the claim for assets installed during a specific period and directed the allowance of additional depreciation. The Tribunal also supported the claim based on its previous decision and the decision of other benches, emphasizing the one-time nature of the benefit to encourage industrialization.

3. The counsel for the appellants argued that the case was directly covered by a judgment of the Division Bench in a similar case involving M/s. Rittal India Pvt. Ltd. The counsel requested the court to dispose of the appeal following the judgment in the mentioned case. The court acknowledged the submission and decided not to interfere with the Tribunal's order, citing the judgment of the Division Bench and finding no need for further consideration or questioning of law in the appeal.

4. Ultimately, the court dismissed the appeal, aligning with the judgment of the Division Bench in a related case and finding no grounds for interference with the Tribunal's decision. The judgment emphasized the one-time nature of additional depreciation under Section 32(1)(iia) as a measure to promote industrialization, thereby upholding the Tribunal's decision in allowing the claim for additional depreciation beyond the year of purchase.