2018 (12) TMI 1075 - AT - Income Tax

Additional depreciation claimed on machinery purchased on/or after 01.04.2005 - acquisition for a period less than 180 days - Held that - As held that in case the plant & machinery is held in the year of acquisition for a period less than 180 days, then balance 10% of cost of asset to be allowed as additional depreciation, is to be allowed in the succeeding year. We hold that the assessee is entitled to claim the aforesaid benefit. However, from the perusal of record, the relevant details of purchase of asset from year to year are not available. Accordingly, we direct AO to verify the claim of assessee in this regard. So, in case the asset was purchased in assessment year 2008-09 and was used for less than 180 days, then balance additional depreciation of 10% is to be allowed in assessment year 2009-10 and similar position is to be followed in assessment years 2010-11 and 2011-12. The Assessing Officer shall verify this position and allow the claim of additional depreciation as directed by us in the paras hereinabove. The ground of appeal raised by assessee is thus, allowed for statistical purposes.

Summary

Issues involved:
Claim of additional depreciation on machinery purchased on or after 01.04.2005.

Detailed Analysis:

Issue 1: Claim of additional depreciation on machinery purchased on or after 01.04.2005
The appeals filed by the assessee were against the consolidated order of CIT(A)-1, Kolhapur, related to assessment years 2009-10 to 2011-12. The issue raised was against the claim of additional depreciation on machinery purchased on or after 01.04.2005. The assessee, a Co-operative society engaged in processing milk and milk products, claimed additional depreciation on machinery purchased after 31.03.2005. The Assessing Officer denied the claim, stating that the machinery purchased in the relevant year was of a lesser value. The CIT(A) upheld the denial, citing the second proviso to section 32(1)(ii) of the Income-tax Act, 1961. The Tribunal referred to a similar case where it was held that if machinery is held for less than 180 days in the year of acquisition, the balance 10% of the asset's cost should be allowed as additional depreciation in the succeeding year. The Tribunal directed the Assessing Officer to verify the claim and allow additional depreciation accordingly for the relevant assessment years.

Conclusion:
The Tribunal allowed the appeals of the assessee for statistical purposes, directing the Assessing Officer to verify and allow the additional depreciation claim based on the purchase and usage of machinery in the respective assessment years.