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TMI Blog2019 (4) TMI 1432X X X X Extracts X X X X X X X X Extracts X X X X ..... succeeding year i.e A.Y. 2013-14, subject to verification by the AO. On the same analogy what remained to be allowed in immediately preceding assessment year i.e. AY 2011-12 i.e. additional depreciation @10% ( being 50% of stipulated rate of 20%) on the ground that new plant and machinery acquired during AY 2011-12 was put to use for less than 180 days , the remaining claim of depreciation @10% shall be allowed in the year under consideration , subject to verification by the AO. Amendment brought in statute in Section 32 of the 1961 Act by insertion of third proviso to Section 32(1) by Finance Act, 2015 w.e.f. 01.04.2016, wherein it is provided that the assessee will be entitled for claiming rest of the additional depreciation in immediately succeeding year which could not be allowed in the year of acquisition on the ground that the said new plant and machinery was put to use for less than 180 days. The Hon ble Madras High Court in the case of CIT v. T.P.Textiles Private Limited [ 2017 (3) TMI 739 - MADRAS HIGH COURT] has held the said proviso to be clarificatory in nature Respectfully following decision of the tribunal in assessee s own case [ 2018 (2) TMI 1879 - ITAT MU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment in industrial sector and thereby increase the industrial growth. Being a beneficial provision, such benefit cannot be denied arbitrarily by the LAO. 4. The Ld. CIT(A) erred in not adjudicating fresh claim of balance 50% additional depreciation amounting to ₹ 29,92,833/- for plant and Machinery acquired and installed in Assessment year(AY) 2011-12 but used for less than 180 days, despite of CIT(A)'s own order for AY 2011-12, wherein it was held that additional depreciation on assets acquired and used for less than 180 days should be restricted to 50% of rate in the current year and balance shall be allowed to be carried forward and claim in the subsequent year. Thus, thereby Ld. CIT(A) erred in not allowing fresh claim of additional depreciation carried forward of previous years by contradicting his own decision of AY 2011-12. 5. The appellant craves leave to add to alter or otherwise amend the above mentioned ground of appeal. 3. The brief facts of the case are that the assessee is engaged in the business of manufacturing of printed packaging material i.e Hinge Lid Packs, Shells, Cartons, Tucks etc. on paper boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d dismissed by learned CIT(A) keeping in view provisions of Section 32(1)(iia) of the 1961 Act read with second provisio to Section 32(1) of the 1961 Act. The assessee also made claim before learned CIT(A) for allowing additional depreciation of ₹ 29,92,833/- in AY 2012-13 for the new plant and machinery acquired and installed in immediately preceding assessment year viz. AY 2011-12 but was put to use for less than 180 days in the immediately preceding year i.e. AY 2011-12 for which only additional depreciation to the tune of 10% ( 50% of stipulated rate of 20%) stood allowed in AY 2011-12 while the rest of the additional depreciation stood disallowed in AY 2011-12, which also did not found favour with learned CIT(A) and the rest of the aforesaid additional depreciation for AY 2011-12 which was disallowed in AY 2011-12 for putting to use new plant and machinery for less than 180 days was not allowed as deduction in AY 2012-13 as the learned CIT(A) was of the view that said ground did not arise from the assessment order passed by the AO and the appeal of the assessee on this ground also stood dismissed, vide appellate order dated 30.09.2016 passed by learned CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional depreciation u/s 32(1)(iia) of ₹ 20,24,313/- which stood disallowed in the impugned assessment year AY 2012-13 on the ground that new plant and machinery acquired during the year was put to use for less than 180 days, in the succeeding assessment year i.e. AY 2013-14. The assessee submitted that the tribunal in assessee s own case in ITA No. 5403 5404/Mum/2016 for A.Y. 2009-10 and 2011-12 respectively vide common order dated 23.02.2018 has allowed claim of the assessee. 5.4 The ld. D.R. on the other hand fairly did not raise objection to allowability of the claim of aforesaid additional depreciation subject to verification by the AO . 5.5 We have heard rival contentions and perused the material on record including cited orders of the tribunal. We have observed that the assessee is engaged in the business of manufacturing of printed packaging material i.e. Hinge Lid Packs, Shells, Cartons, Tucks etc on paper board. We have observed that the assessee has acquired and installed new plant and machineries during the year under consideration which undisputedly are entitled for additional depreciation under Sec.32(1)(iia) of 20% , but since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... virtue of the Legislature, incorporating in the Statute, the necessary clarificatory amendment. 10.3 The amendment brought in the relevant proviso obtaining in Section 32, reads as follows: .... 32. (1) Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business for a period of less than one hundred and eighty days in that previous year, and the deduction under this sub-section in respect of such asset is restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (iia)for that previous year, then, the deduction for the balance fifty per cent of the amount calculated at the percentage prescribed for such asset under clause (iia) shall be allowed under this sub-section in the immediately succeeding previous year in respect of such asset: . (Emphasis is ours) 11. We may only indicate that during the course of the arguments, our attention was drawn to the Memorandum Explaining the provisions in Financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l is, accordingly, dismissed. The Mumbai-tribunal in assessee s own case for A.Y. 2009-10 and 2011-12 in ITA Nos. 5403 and 5402/Mum/2016 , vide common order dated 23.02.2018 has decided this issue in favour of the assessee wherein tribunal followed the decision of Hon ble Madras High Court in the case of CIT v. Shri T.P.Textiles Private Limited (2017) 394 ITR 483(Mad.) and also order of the Mumbai-tribunal in the case of Rashtriya Chemicals and Fertilizers Limited v. CIT in ITA no. 5160/Mum/2014 dated 29.06.2016 to hold in favour of the assessee, by holding as under : 7. We have heard the rival submissions and perused the orders of the authorities below and the decisions relied upon. The AO while completing the assessment disallowed 50% of additional depreciation which was claimed by the assessee during the current assessment year on the plant and machinery which was installed in the preceding assessment year and was put to use after 30th September whereby it has been used for less than 180 days. According to the AO the additional depreciation is allowable only in the year of installation and put to use the machinery and since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provided further that where an asset referred to in 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 purposes 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: Provided also Explanation 1 to Explanation 5 (iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing or generation or generation and distribution of power, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii). Provided ...... (Emphasis is ours) 8. Pertinently, the Karnataka High Court, in a decision rendered in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wable, if the new plant and machinery so acquired is put to use for less than 180 days in a financial year. However, if nowhere restricts that the balance 10% would not be allowed to be claimed by the assessee in the next assessment year. 9. The language used in Clause (iia) of the said Section clearly provides that a further sum equal to 20% of the actual cost of such machinery or plant shall be allowed as deduction under Clause (ii) . The word shall used in the said Clause is very significant. The benefit which is to be granted is 20% additional depreciation. By virtue of the proviso referred to above, only 10% can be claimed in one year, if plant and machinery is put to use for less than 180 days in the said financial year. This would necessarily mean that the balance 10% additional 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..... 9. We are in respectful agreement with the view taken by the Division Bench of the Karnataka High Court, passed in CIT V. Rittal India (P.) Ltd. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year of acquisition and installation of such plant and machinery, shall be allowed in the immediately succeeding previous year. This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years. 11.2. A perusal of the extract of the Memorandum relied upon would show that the legislature recognised the fact that the manner in which the Revenue chose to interpret the provision, as it stood prior to its amendment would lead to discrimination, in respect of plant and machinery, which was used for less than 180 days, as against that, which was used for 180 days or more. 11.3. In our opinion, as indicated above, the amendment is clarificatory in nature and not prospective, as is sought to be contended by the Revenue. The Memorandum cannot be read in the manner, in which, the Revenue has sought to read it, which is, that the amendment brought in would apply only prospectively. 11.4. We are, clearly, of the view that the Memorandum, which is sought to be relied upon by the Revenue, only clarifies as to how the unamended provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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