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TMI Blog2016 (5) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... events with the common and sole objective of setting up new coke production plant by the assessee company, as the installation of new machinery and plant which started in financial year 2004-05 got completed after 31-3-2005 with the commencement of commercial production starting in financial year 2005-06 i.e. post 31-03- 2005 with the plant becoming operational. Thus, in our considered view, the assessee company is entitled for claim of additional depreciation u/s 32(1)(iia) of the Act during the assessment year 2006-07. - Decided in favour of assessee - I.T.A. No. 7530/Mum/2011 - - - Dated:- 30-3-2016 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Revenue : Shri Ganesh Bare (Sr.DR) For The Assessee : Shri Rushabh Mehta PER RAMIT KOCHAR, Accountant Member This appeal, filed by the Revenue, being ITA No. 7530/Mum/2011, is directed against the order dated 29-08-2011 passed by learned Commissioner of Income Tax (Appeals)- 17, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2006-07. 2. The grounds raised by the Revenue in the memo of appeal filed with the Tribunal read as under:- On the facts and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ac Chemicals Pvt. Ltd. v. ACIT (ITA No. 4127/Ahd./2007). The CIT(A) after considering the submissions of the assessee company and findings of the A.O. observed that the Ahmedabad Bench of the Tribunal in the case of Kadillac Chemicals Pvt. Ltd. (supra) observed as under:- We noted that as per the provisions of this section the assessee has to acquire and install the plant and machinery after 31.3.2002. If the plant and machinery are acquired and installed after 31.3.2002, the assessee will be entitled for the additional depreciation subject to the fulfillment of the conditions regarding the substantial expansion in the installed capacity. Since the words used are acquired and installed , therefore, both the conditions must be satisfied for the claim of additional depreciation. The machineries must have been acquired as well as installed. The machinery can be said to have been acquired and installed after 31.3.2002 if the machinery is installed after 31.3.2002. There is no dispute so far as the machinery worth ₹ 98,67,031/ are concerned. The machinery has been purchased by the assessee after 31.3.2002 and installed after 31.3.2002. The machinery of ₹ 75,44,577/- th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The ld. counsel for the assessee company, on the other hand, submitted that the Finance Bill 2005 clearly stipulates that section 32(1)(iia) of the Act is amended in order to encourage investment , the initial depreciation on new machinery and plant was proposed to increase to 20% , from the existing level of 15%. Thus, There was already provision in the Act for granting additional depreciation and amended provision brought to encourage new investment, the initial depreciation on new machinery and plant was proposed to be increased to 20 per cent from the existing level of 15 percent and consequently the initial depreciation will be available to all new plant and machineries except those referred to in the proviso to clause (iia) of section 32 of the Act. The requirement of creating a minimum increase of 10% in installed capacity for availing the initial depreciation was proposed to be eliminated. The ld. Counsel also submitted that the new plant and machineries were purchased prior to 31-03-2005 as also after 31-03-2005 for which details such as audited accounts, copies of ledger accounts are placed in the paper book filed with the Tribunal to substantiate the same. It is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or in the business of generation or generation or distribution of power, rather than in the manner which may frustrate the object . Reference can be drawn to the following observations of Hon ble Supreme Court in the case of Bajaj Tempo Limited v. CIT (1992) 196 ITR 188(SC) : The provision in a taxing statute granting incentives for promoting growth and development should be construed liberally; since the provision for promoting economic growth has to be interpreted liberally , restrictions on it too has to be construed so as to advance the objective of the provisions and not to frustrate it. The words used u/s 32(1)(iia) of the Act are acquired and installed after 31st day of March 2005. The assessee company did purchased new machineries and plant prior to 31-03-2005 as well after 31-03-2005 for the coke production plant being set up by the assessee company but the installation of the entire new plant and machineries as an integrated activity for setting up industrial project for coke production plant which started in financial year 2004-05 were completed after 31-03-2005 and commercial production of the new coke production plant being set up by the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of LAM coke in April 2005 when the said new plant became operational and acquisition of said machineries and plant cannot be seen and visualized in itemized manner as unless these new plant and machineries are integrated together they will not achieve the desired results. The assessee company has finally installed the entire new plant and machineries in April 2005 i.e. after 31-3-2005 and assessee company is entitled to the benefit u/s 32(1)(iia) of the Act for claiming additional depreciation in the impugned assessment year because what is relevant is that new machineries and plant which were acquired before 31-03-2005 and also post 31-03-2005 were all purchased as an integrated activity connected with the common and sole objective directed towards activity of the assessee company to set up new coke production plant which become operational in financial year 2005-06 with completion of installation of these new plant and machineries in April 2005 when all these machineries and plant were put to use after installation with start of commencement of commercial production of LAM coke in April 2005 when the new coke production plant become operational and their acquisition which conclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t amounting to ₹ 83,55,387/- during the assessment year 2006-07. Our view is fortified by the decision of Ahmedabad Bench of the Tribunal in the case of Kadillac Chemicals Pvt. Ltd. (supra) which observed as under:- We noted that as per the provisions of this section the assessee has to acquire and install the plant and machinery after 31.3.2002. If the plant and machinery are acquired and installed after 31.3.2002, the assessee will be entitled for the additional depreciation subject to the fulfillment of the conditions regarding the substantial expansion in the installed capacity. Since the words used are acquired and installed , therefore, both the conditions must be satisfied for the claim of additional depreciation. The machineries must have been acquired as well as installed. The machinery can be said to have been acquired and installed after 31.3.2002 if the machinery is installed after 31.3.2002. There is no dispute so far as the machinery worth ₹ 98,67,031/ are concerned. The machinery has been purchased by the assessee after 31.3.2002 and installed after 31.3.2002. The machinery of ₹ 75,44,577/- though purchased by the assessee before 31.3.2002 bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbled in a manner that it could be used to manufacture, it cannot be held that it had been installed. Mere purchasing or shifting it to factory premises is not enough. Assessee had claimed AD @10%,as the P M had worked for a period less than one year.It is a common phenomenon that in big projects,installation of machinery takes very long time because of the sheer volume of the work to be carried out.If an assessee is not successful in installing P M in one year and carries forward the installation work in subsequent year/years it cannot be denied any benefit on the ground that it had acquired the P M in earlier year.The intent of the legislature was to attract investment,so in our opinion the section can be termed as benevolent provision.In the case under consideration production started from 01.01.2006.Before that fabrication and completion of P M was going on.Treatment given by the assessee in the books of accounts to the P M was in accordance with the Accounting Standards (AS)and the AO/FAA has not denied the fact that the assessee was following AS.Therefore,in our opinion,assessee was entitled to claim AD @of 10%.Reversing the order of the FAA,we decide the effective ground o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r April 1, 1976. For the reasons aforesaid, we answer the first question in this reference in the affirmative and in favour of the assessee. The ld DR on the other hand has relied upon the decision of Delhi Benches of the Tribunal in the case of International Cars and Motors Limited (supra) which was delivered on 21-12-2012 but in our considered view , the later decision of jurisdictional Tribunal Benches of Mumbai in the case of Euro Pratik Ispat Private Limited(supra) delivered on 02-04-2014 , in our respectful submission , is to be preferred based on our detailed discussions and reasoning keeping in view the peculiar facts and circumstances in the case of the assessee company which has been detailed by us in preceding para s. Thus, in our considered view, the assessee company is entitled for claim of additional depreciation u/s 32(1)(iia) of the Act amounting to ₹ 83,55,387/- during assessment year 2006-07 which we allow and we do not find any infirmity in the orders dated 29-08-2011 passed by the CIT(A) and we uphold the same. We order accordingly. 11. In the result, the appeal filed by the Revenue in ITA No. 7530/Mum/2011 for the assessment year 2006-07 is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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