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TMI Blog2016 (5) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... situation and put the assessee in a vulnerable situation wherein even after making investments in new plant and machineries, the assessee is deprived of additional depreciation. The eligibility for the claim of depreciation should be considered from the date of the installation of the plant and machineries, and the word “acquired” has to be considered in the light of “ownership” of the asset. There remains no doubt that the assessee is very much entitled for the claim of additional depreciation. - Decided in favour of assessee. - ITA. No: 143/AHD/2013 - - - Dated:- 5-4-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER For The Appellant : Shri Sanjay R. Shah, AR For The Respondent : Shri Nar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was acquired before 31.03.2005 but was installed after that date, therefore the assessee has failed to fulfill the twin condition and accordingly not entitled for additional depreciation. 5. Assessee was asked to justify its claim of additional depreciation. In its reply, the assessee stated that the machineries received were damaged and, therefore, had to be returned/replaced by the vendor which took sometime and, therefore, the installation took place after 31.03.2005. It was strongly contended that the claim of additional depreciation cannot be denied. 6. However, the claim of the assessee did not find favour with the A.O who was of the opinion that since the assessee has failed to fulfill the twin condition of Section 32(1)(iia) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation on new machinery and plant Under the existing provisions contained in sub-section (1) of section 32 of the Income-tax Act, deduction is allowed in respect of depreciation on assets owned wholly or partly by the assessee and used for the purposes of the business or profession at the rates prescribed under the Income-tax Rules, 1962. With a view to give a boost to the manufacturing sector, it is proposed to allow a deduction of a further sum equal to fifteen per cent of the actual cost of such machinery or plant acquired and installed after 31st day of March, 2002- (i) in the case of a new industrial undertaking in the previous year in which it begins to manufacture or produce any article or thing; or (ii) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n per cent to twenty percent. It is further proposed to omit the conditions relating to industrial undertaking being new or substantial expansion mentioned in the first proviso to the aforesaid clause (iia) and also to omit the requirements of furnishing details of machinery or plant and report of an accountant mentioned in the third proviso of that clause (iia). This amendment will take effect from 1st April, 2006 and will, accordingly, apply in relation to assessment year 2006-07 and subsequent years. 13. Thus, it can be seen that not only the rate of additional depreciation was increased from 15% to 20% but also the rigidity of conditions pertaining to the increase in the installed capacity and for furnishing details of machinery an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the plant and machineries, and the word acquired has to be considered in the light of ownership of the asset. 17. The observations of the Hon ble High Court of Calcutta in the case of Surama Tubes Pvt. Ltd. 201 ITR 124 needs Special mention and which read as under:- 4. It will be evident that what is relevant and material is the year of acquisition in the case of ships or aircraft and the year of installation in the case of machinery or plant. If the installation of a plant is spread over more than a year, the relevant year for the grant of allowance would be the year in which the installation is completed. As in the case of investment allowance, so also in the case of additional depreciation, the material date is the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er one more example. In the case of Large Petro Chemicals Industries which requires huse plant and machineries for the manufacturing process, there may be a situation when hundreds of machineries are acquired in financial year and the installation process crosses another financial year because of the humongous task of installing such machineries. In such a situation, can the assessee be denied the claim of additional depreciation merely because the acquisition and installation have taken place in two different financial years? In our considered opinion, the sine qua non for the claim of depreciation should be the date of installation when it can be said that the plant and machineries are ready for use. Acquisition can at best be related to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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