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TMI Blog2015 (9) TMI 1632X X X X Extracts X X X X X X X X Extracts X X X X ..... al depreciation in the preceding year, we reverse the order of CIT(A) and direct the Assessing Officer to allow depreciation @ 10% of the cost of machinery as additional depreciation on plant & machinery purchased by the assessee in the preceding year. - Decided in favour of assessee. - ITA No.2222/PN/2013 - - - Dated:- 23-9-2015 - Ms. Sushma Chowla And Shri R.K. Panda, JJ. Appellant by : Shri Sushant S Phadnis Respondent by : Shri Dheeraj Kumar Jain ORDER Sushma Chowla, This appeal filed by the Revenue is against the order of CIT(A), Kolhapur, dated 11.10.2013 relating to assessment year 2009-10 passed under section 154 of the Income-tax Act, 1961. 2. The Revenue has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the CIT(A), has erred in deleting the disallowance made of ₹ 24,54,934/- on account of claim of additional depreciation u/s. 32(1)(iia) of the I.T.Act. 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in treating that the issue of claim of additional depreciation u/s.32(1)(iia) of the I.T.Act, 1961 is not covered by provisions of section 154 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the new machinery was installed and such additional depreciation was also available to the assessee in the succeeding years till the WDV of the machinery became nil. As per the assessee, section provided that where the new machinery was installed after 31.03.2005, then additional depreciation under section 32(1)(iia) of the Act was available to the assessee in furtherance to the normal depreciation and the same was not allowable only for the year of installation. The assessee stated that the additional depreciation was allowed not only for one year but also for successive assessment years and hence, the same was allowable on the WDV. The Assessing Officer rejecting the explanation of the assessee, held that the additional depreciation is allowable only @ 20% on the cost of the machinery in the year the same was purchased. Since the assessee had claimed excess depreciation, the mistake being apparent from record, was rectified under the provisions of section 154 of the Act and the additional depreciation @ 20% was denied to the assessee. 5. In appeal, the contention of the assessee was that since the issue was debatable issue, the same could not be rectified under section 154 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried out by the authorities. Further, reliance was placed on the ratio laid down in CIT Vs. Peirce Leslie Co. Ltd. (1997) 227 ITR 759 (Mad) and Addl. CIT v. India Tin Industries (P) Ltd. ( 1987) 166 ITR 454 (Karn). 8. The learned Authorized Representative for the assessee in reply, pointed out that the issue of allowability of deduction under section 32(1)(iia) of the Act in the subsequent years to the year of purchase of plant machinery, was a debatable issue. In this regard, the learned Authorized Representative for the assessee placed reliance on the ratio laid down in Dy. CIT v. Cosmo Films Ltd. (2012) 13 ITR 340 (Delhi)(Trib.) and in Asst. Commissioner of Income Tax V. SIL Investment Ltd. (2012) 73 DTR 233 (Del.)(Trib.). The learned Authorized Representative for the assessee pointed out that where the plant machinery has been acquired by the assessee in period less than 180 days, then under the provisions of section 32(1)(iia) of the Act, the assessee was entitled to claim of additional depreciation @ 10% and the balance additional depreciation @ 10% was allowable to the assessee in the succeeding years i.e. the additional depreciation being allowed @ 20%. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generation and distribution of power. It is further provided under the said clause that no deduction shall be allowed in respect of any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person or any machinery or plant installed in any office premises or any residential accommodation. Further, no such deduction of additional depreciation is allowable against any office appliances or road transport vehicles or any plant machinery, the whole cost of which was allowed as deduction, in computing income chargeable under the head Profits Gains of the business of any previous year. The requirement of the section is that new plant or machinery, which has not been used by any other person, and which has not been installed in any office or residential premises, is to be acquired or installed after 31st day of March, 2005, by the assessee, which is engaged in the business of manufacture or production of article or thing. The assessee before us is engaged in the manufacture of C.I. castings and had acquired the machinery during the period 01.04.2005 to 31.03.2008. The assessee in the return of income had claimed depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery was available to the assessee as additional depreciation in the first year and balance claim of additional depreciation to the extent of 10% was to be allowed in the next succeeding year. The learned Authorized Representative for the assessee also submitted that the claim made by the assessee at ₹ 24,54,934/- @ 20% on cost of machinery was to be restricted to 10% on cost of machinery, which is to be allowed as additional depreciation under section 32(1)(iia) of the Act. In view of the provisions of law, wherein additional depreciation is allowable to the assessee to the extent of 20% on the cost of plant machinery and where the assessee has purchased an asset in the preceding year and has been allowed only 10% of the cost of asset as additional depreciation, the correct position of law is that balance 10% of additional depreciation is to be allowed to the assessee. Where the Assessing Officer failed to apply the correct provisions of law, the assessment order passed by the Assessing Officer is amenable to rectification under section 154 of the Act. In view thereof, we uphold the invoking of provisions of section 154 of the Act against the assessee. Further, in v ..... 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