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TMI Blog2017 (2) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... sions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting the additional allowance. We are in full agreement with such observations made by the Tribunal.”. We hold that the assessee was entitled to claim 10% additional depreciation during the year under appeal. Reversing the order of the FAA, we decide the second ground of appeal in favour of the assessee. - ITA No. 6783-84/Mum/2014 - - - Dated:- 10-2-2017 - Shri Rajendra, A.M. and Sanjay Garg,J.M. Revenue by: Shri Rajesh Kumar Yadav Assessee by: Shri Anuj Kisnadwala Order u/s.254(1)of the Income-tax Act,1961(Act) Per Rajendra,AM: Challenging the orders dated 12/08/2014 of CIT (A)-14,Mumbai the assessee has filed appeals for the above-mentioned two AY.s.Assessee-company is engaged in the business of manufacturing speciality chemicals and bulk drugs. As the issues involved in both the years are common, so,we are passing a common order.The details of dates of filing of returns,returned incomes, assessment comes etc.can be summarised as under: AY. ROI filed on Returned income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empt income earned by the assessee during the year, that for the purpose of disallowance only those investments were to be considered from which exempt income had been received, that no disallowance could be made if the investment was in subsidy/group company, that the AO had not recorded dissatisfaction before invoking the provisions of section 14 A read with Rule 8D of the Rules, that funds available with the assessee for the year under appeal amounted to ₹ 1, 41, 09, 15, 920/-and that assessee had made investment of ₹ 21.37crores, that it had earned exempt income of ₹ 50,944/-. He relied upon the cases of Reliance Utilities Ltd(313ITR340),HDFC Bank Ltd.(366 ITR 505) Joint Investments(372 ITR 694)ACB India(374 ITR 108) Cheminvest Ltd. (378 ITR 33).The Departmental Representative (DR) supported the order of the FAA. 2.3. We have heard the rival submissions and perused the material before us. We find that during the year under consideration the assessee had claimed exemption of ₹ 50,944/-u/s.10 (34) of the Act, that it had made a disallowance of ₹ 2 lakhs on its own, that the AO made a disallowance of ₹ 7.46 lakhs and ₹ 82, 210/-on acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal depreciation was mandatorily required to be allowed, that the provisions of section 32 (1) (iia) did not stipulate that the additional depreciation had to be allowed only in the first year of claim, that the proviso to section 32 (1) did not take away the balance claim even if the assets were put to use for less than 180 days,that it was an incentive provision and had to be interpreted liberally. 3.2. After considering the submission of the assessee and the assessment order, the FAA held that the assessee had claimed 50% of the additional depreciation in the previous year, that clause (ii a)to section 32 (1) was inserted by the Finance Act, 2002 w.e.f.01/04/2003, that it was introduced as an incentive for fresh investment in the industrial sector, that additional depreciation could be claimed only in the year of acquisition and not in later years, that the second proviso to section 32 (1) (iia) puts restriction on claiming additional depreciation in the later years, that the concept of actual cost was relevant only in the year of acquisition of assets, that the additional depreciation had to be computed with reference to the actual cost, that the concept of actual cost wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial questions of law : (i) Whether the Tribunal is correct in extending the benefit of section 32(1)(iia) of the Act to the next AY. when the Income tax Act does not provide for such carryover, thereby violating the legal principles of 'casus omissus' which states that the courts cannot compensate for what the Legislature has omitted to enact ? (ii) Whether the Tribunal was correct in holding that additional depreciation allowed u/s.32(1)(iia) is a one-time benefit to encourage industrialisation and the relevant provisions has been construed reasonably and purposive without appreciating that the additional depreciation is allowed in the year of purchase and if in the year of purchase the assessee is eligible only for 50 per cent depreciation,the balance 50 per cent.cannot be carried forward for the subsequent year on the claim cannot be allowed in any other year ? The Hon ble Court after referring to the provisions of section 32(1) dealt with the Clause (iia)of the section and held as under: 7. Clause (iia) of section 32(1) of the Act, as it now stands, was substituted by the Finance Act, 2005, applicable with effect from April 1, 2006. Prior t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 AY.. The Tribunal, in our view, has rightly held, that additional depreciation allowed u/s.32(1)(iia) of the Act is a one-time benefit to encourage industrialisation, and the provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting the additional allowance. We are in full agreement with such observations made by the Tribunal. 3.4.1. Respectfully,following the above judgment, we hold that the assessee was entitled to claim 10% additional depreciation during the year under appeal.Reversing the order of the FAA,we decide the second ground of appeal in favour of the assessee. ITA/6783/Mum/2014- AY.2011-12 4. First ground of appeal is about disallowance of ₹ 32.61 lakhs and ₹ 10.66 lakhs under the heads interest expenditure and administrative expenses as per the provisions of section 14 A read with Rule 8D of the Rules.Considering the facts -that the exempt income earned by the assessee for the year under considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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