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TMI Blog2016 (12) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... eted liberally so as to benefit the assessee. Karnataka High Court also found that the intention of the legislation is to allow the additional benefit. The Karnataka High Court opined that the proviso would not restrain the assessee from claiming the balance of the benefit of additional depreciation in the subsequent assessment year. In view of the above, this tribunal is of the considered opinion that the assessee is entitled for remaining 10% of the depreciation during the year under consideration - Decided in favour of assessee Disallowance of lease rent paid - Held that:- As decided in assessee's own case for the A.Y. 2010-11& 2011-12 if as per the agreement, the lessor of the asset retains ownership of the asset and gives the asset to the assessee for use then the lease rent paid is allowable as deduction from the computation of income of the assessee. If according to the lease agreement, the ownership of the asset is transferred to the lessee, then in that case, the lease instalment comprising of the cost of the asset has to be capitalized by the assessee and on that the assessee is entitled to depreciation and the interest portion of the instalment is allowable deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he balance Depreciation to be allowed in succeeding year. 3. Aggrieved by the order of the Assessing Officer, the assessee went on appeal before the ld. CIT(A) and the ld. CIT(A) confirmed the addition made by the Assessing Officer against which the assessee is in appeal before this Tribunal. 4. The ld. AR submitted that the assessee claimed balance additional depreciation during the year under consideration. The ld counsel further clarified that the plant and machinery were installed in the second half of the earlier year and claimed 50% of the additional depreciation, hence, the assessee claimed 50% of additional depreciation during the year under consideration. In other words according to the Ld. Counsel, since the machinery was used for less than 180 days in the earlier A.Y., the assessee claimed 50% depreciation and the balance was claimed during the year under consideration. Hence the Ld. Counsel argued that the assessee is entitled for the additional depreciation during the year under consideration. Further the A.R argued that the additional depreciation being incentive provision, should be interpreted liberally as held by the Hon ble Apex court and the Karnatka High c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any office premises or any residential accommodation, including accommodation in the nature of a guest-house; or (C) Any office appliances or road transport vehicles; or (D) Any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head Profits and gains of business or profession of any one previous year. 10. We have also carefully gone through the Second Proviso to section 32(1)(ii) of the Act, which reads as follows: Provided further that where an asset referred to clause (i) or clause (ii) or clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purpose of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this subsection in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) or clause (iia) as the case may be. 11. A bare reading of this section 32(1)(iia) clearly says that in case a new machinery or pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year. The Delhi Bench of this Tribunal after considering the provisions of section 32(1)(iia) and proviso to section 321)(ii) of the Act found that when there is no restriction in the Act to deny the benefit of balance 50%, the assessee is entitled for the balance additional depreciation in the subsequent assessment year. In fact, the Delhi Bench of this Tribunal has observed as follows at pages 641 and 642 of the ITD: Thus, the intention was not to deny the benefit to the assessees who have acquired or installed new machinery or plant. The second proviso to section 32(1)(ii) restricts the allowances only to 50% where the assets have been acquired and put to use for a period less than 180 days in the year of acquisition. This restriction is only on the basis of period of use. There I no restriction that balance of one time incentive in the form of additional sum of depreciation shall not be available in the subsequent year. Section 32(2) provides for a carry forward set up of unabsorbed depreciation. This additional benefit in the form of additional allowance u/s 32(1)(iia) is one time benefit to encourage the industrialization and in view of the decision of Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year. Therefore, obviously, the balance 50 per cent of the deduction is to be allowed in the current year, i.e. asst. yr. 2006-07. The learned CIT(A) has merely directed the verification of the contentions of the assessee and to allow the balance additional depreciation after such factual verification. Accordingly, finding no merit therein, ground No.3 raised by the Department is rejected. 14. A similar view was taken by Mumbai Bench of this Tribunal in MITC Rolling Mills (P.) Ltd. ( supra ). In view of the above decisions of the co-ordinate benches of this Tribunal on identical set of facts this Tribunal is of the considered opinion that the balance 50% of the depreciation has to be allowed in the subsequent year, therefore, the orders of the lower authorities on this issue are set side and the assessing officer is directed to allow the claim of balance 50% additional depreciation in the year under consideration. 6. We have also carefully gone through the judgment of the Hon'ble Karnataka High Court in the case of CIT vs Rittal India Pvt. Ltd. 380 ITR 423. Hon'ble Karnataka High Court after extracting the provisions of section 32(1)(iia) of the Act ,found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional deduction can be availed in the subsequent assessment year, otherwise the very purpose of insertion of Clause (iia) would be defeated because it provides for 20% deduction which shall be allowed. 10. It has been consistently held by this Court, as well as the Apex Court, that beneficial legislation, as in the present case, should be given liberal interpretation so as to benefit the assessee. In this case, the intention of the legislation is absolutely clear, that the assessee shall be allowed certain additional benefit, which was restricted by the proviso to only half of the same being granted in one assessment year, if certain condition was not fulfilled. But, that, in our considered view, would not restrain the assessee from claiming the balance of the benefit in the subsequent assessment year. The Tribunal, in our view, has rightly held, that additional depreciation allowed under Section 32(1)(iia) of the Act is a one time benefit to encourage industrialization, and the provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting additional allowance. We are in full agreement with such observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the gross amount of lease rent paid i.e ₹ 19,46,333/- as deduction. The above method of deduction has been necessitated in view of Accounting Standard-19 issued by the Institute of Chartered Accountants of India. The lease payments should be apportioned between the finance charges and the reduction of the outstanding liability for income-tax purposes. The entire lease payment was claimed as deduction since the assets taken on lease were not capitalized for the purpose of Income-tax Act, 1961 and also depreciation has not been claimed. Therefore, the ld. AR contended that the assessee has rightly claimed the deduction of lease payment. The ld. AR placed reliance on the decision of the Co-ordinate Bench of this Tribunal in assessee s own case in I.T.A.No. 2245/Mds/2012, dated 2.7.2013 for assessment year 2008-09. The Co-ordinate Bench has set aside the issue to the Assessing Officer by observing as under: 16. We have considered the rival submissions, perused the orders of the lower authorities and materials available on record. In the instant case, the undisputed facts are that the assessee debited ₹ 3,98,733/- as lease rent in its books of account. In the computatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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