2023 (3) TMI 630 - HC - Income Tax

Additional depreciation - Tribunal justification in allowing the claim of additional depreciation in the subsequent year because as per provisions of Section 32(1)(iia) any new (and not any old) machinery or plant acquired or installed is eligible for additional depreciation - HELD THAT - It cannot be disputed by the revenue that substantial question of law, admitted for consideration in this appeal, has been answered against the revenue. Several decisions have been referred to in this connection, in the case of Principal Commissioner of Income Tax, Central - 1, Kolkata Vs. Ramkrishna Forging Limited 2022 (7) TMI 1312 - CALCUTTA HIGH COURT and in the case of Commissioner of Income Tax, Chennai Vs. Aztec Auto (P.) Ltd. 2020 (9) TMI 541 - MADRAS HIGH COURT - Following the said decision, the substantial question of law has to be answered against the revenue.

Summary

Issues:
1. Appeal against order allowing claim of additional depreciation.
2. Cross-objection regarding jurisdiction under Section 263 of the Income Tax Act.

Analysis:
1. The appeal was filed by the revenue challenging the order of the Income Tax Appellate Tribunal allowing the claim of additional depreciation for the assessment year 2006-07. The main issue was whether the Tribunal was justified in allowing the claim of additional depreciation in the subsequent year based on the provisions of Section 32(1)(iia) of the Income Tax Act, which specifies that only new machinery or plant is eligible for additional depreciation. The Court noted that various decisions, including the case of Principal Commissioner of Income Tax, Central - 1, Kolkata Vs. Ramkrishna Forging Limited, and the High Court of Madras in the case of Commissioner of Income Tax, Chennai Vs. Aztec Auto (P.) Ltd., supported the position taken by the Tribunal. Consequently, the Court held that the substantial question of law had to be answered against the revenue, leading to the dismissal of the appeal.

2. Additionally, the assessee had filed a cross-objection contending that the proceedings initiated by the Principal Commissioner of Income Tax under Section 263 of the Act were without jurisdiction. The Tribunal did not address this issue as it had already ruled in favor of the assessee based on factual and legal grounds. The Court observed that since the Tribunal's decision was in favor of the assessee, the cross-objection had become essentially academic. Therefore, the Court disposed of the cross-objection without the need to address the jurisdictional issue separately. In conclusion, the appeal filed by the revenue was dismissed, the substantial question of law was answered against the revenue, and the cross-objection was disposed of accordingly.