9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 1130 - AT - Income TaxClaim of balance additional depreciation on the assets which were put to use in earlier year - Number of days asset put to use - whether machinery is put to use for less than 180 days ? - Scope of amended provision of section 32(1) - HELD THAT - As decided in M/S RITTAL INDIA PVT. LTD. (NO. 1) 2016 (1) TMI 81 - KARNATAKA HIGH COURT only 50% of the allowable depreciation i.e. sum equal to 10% of the actual cost of the plant and machinery is allowed because of the fact that the machinery is put to use for less than 180 days in that financial year, this would necessarily mean that the balance 10% additional depreciation can be availed in the subsequent assessment year, otherwise the very purpose of insertion of Clause (iia) would be defeated - beneficial legislation should be given liberal interpretation and that since the additional depreciation is a one-time benefit to encourage industrialization and therefore, the beneficial provision has to be construed reasonably, liberally and purposively to make it meaningful while granting additional allowance. Even in the Explanatory Notes to the Provisions of the Finance Act 2 issued by the CBDT, in Para 13.2 of the said Notes, it has been mentioned that the aforesaid amendment of providing balance of additional depreciation in the immediately succeeding year has been brought to remove discrimination in the manner of allowing additional depreciation on plant or machinery used for less than 180 days in the preceding year. The very objective of insertion of a new proviso to section 32(1) is that to remove discrimination and therefore it can be safely said that the same is just a curative amendment. Even there is no provision u/s. 32(1) prohibiting the balance additional depreciation in the succeeding year. - Decided against revenue.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Allowance of balance additional depreciation on assets used in the earlier year. Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The appeal filed by the Revenue was delayed by 18 days. A separate application for condonation of the delay was submitted, citing specific reasons for the delay. After considering the reasons provided, the Tribunal decided to condone the delay, allowing the appeal to be heard on its merits. 2. Allowance of Balance Additional Depreciation on Assets Used in the Earlier Year: The primary issue in this appeal was whether the assessee was entitled to claim balance additional depreciation on plant and machinery that was put to use for less than 180 days in the preceding financial year. Brief Facts: The assessee, engaged in manufacturing ball bearings and rubber products, acquired and installed certain plant and machinery during the financial year 2013-14, relevant to the assessment year 2014-15. As per section 32(1)(iia) of the Income Tax Act, the assessee was entitled to additional depreciation at 20% of the actual cost of the machinery. However, since the machinery was used for less than 180 days during the financial year, the assessee claimed 50% of the additional depreciation (i.e., 10%). The assessee claimed the remaining 10% additional depreciation in the next financial year (2014-15, relevant to A.Y 2015-16). The Assessing Officer disallowed this claim, stating that there was no provision under the Act for allowing balance additional depreciation in the subsequent year. CIT(A) Decision: The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who allowed the claim, noting that the issue was covered by the ITAT's decision in the assessee's own case for the Assessment Year 2013-14 and by the CIT(A)-2, Kolkata's decision for the assessment year 2014-15. The CIT(A) allowed the balance additional depreciation on plant and machinery claimed by the assessee. Tribunal's Analysis: The Tribunal referenced its own earlier decision in the assessee's case for the assessment year 2013-14, where it had allowed the claim for balance additional depreciation. The Tribunal also cited the Hon'ble Karnataka High Court's decision in CIT vs. Rittal (India) Ltd., which held that the balance 10% additional depreciation could be claimed in the subsequent assessment year. The High Court emphasized that the language of section 32(1)(iia) clearly provided for a total 20% additional depreciation, and the proviso allowing only 10% for assets used for less than 180 days did not restrict the balance 10% from being claimed in the next year. Conclusion: The Tribunal concluded that the beneficial provisions of section 32(1)(iia) should be interpreted liberally to allow the balance additional depreciation in the subsequent year. It dismissed the Revenue's appeal, upholding the CIT(A)'s decision to allow the balance additional depreciation. Result: The appeal of the Revenue was dismissed, and the assessee's claim for balance additional depreciation was upheld.
|
