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TMI Blog2022 (2) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is entitled to 50% of the additional depreciation u/s 32(1)(iia) for subsequent assessment year ? - HELD THAT:- Hon ble Karnataka High Court in the Rittal India Pvt. Ltd. case [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT ] had given the right to the assessee to claim the remaining unclaimed 50% depreciation in the subsequent assessment year and at that time the proviso to section 32 was also not there but right now with the insertion of such proviso, this right has been statutorily recognized. That as regards, whether such proviso would apply to past periods or not, the judgment of the Hon ble Madras High Court (supra.) which is still operational and it has been held that the said proviso was only clarificatory in nature and would thus apply to pending cases covering past periods also. Thus, Grounds No.6 and 7 raised in appeal by the assessee are allowed. Education cess and secondary and higher education cess paid be allowed as a deduction while computing the total income of the assessee - admission of the additional ground - HELD THAT:- The assessee had correctly placed reliance on the decision of the Hon ble Supreme Court in the case of National Thermal Power Co. Ltd. [ 1996 (12) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or more grounds of appeal at any time before or at the time of hearing." 2. The brief facts of the case are that the assessee is a public limited company engaged in the business of manufacturing and power staring gears and spares thereof for commercial vehicles, passenger buses, multi-activity vehicles, etc. The assessee filed its original return of income on 29-11-2013 declaring total income of ₹ 31,26,44,660/- which was revised on 11-9-2014 declaring total income of ₹ 30,06,23,154/-. Subsequently, the assessee also filed second revised return on 9-12-2014 declaring total income of ₹ 29,71,88,270/-. The AO has completed the assessment u/s 143(3) of the Act on 28-3-2016 determining the total income at ₹ 31,30,34,893/-. While computing the total income, the A.O has considered total income as per first revised return instead of second revised return. The rectification application dt. 5-4-2016 before the A.O is stated to be still pending. During the assessment proceedings, the A.O made the following disallowances/additions. Sr.No. Nature of disallowance/addition Amount (Rs.) 1. Disallowance of expenses u/s 14A of the Act read with Rule 8D of the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the A.O was not satisfied with the correctness of the same. Thereafter, the A.O calculated and added ₹ 25,26,340/- as disallowance u/s 14A of the Act to the total income of the assessee. The learned CIT(A) has discussed this issue at para 5 page 3 onwards in his order. The ld. CIT(A) at para 10 page 15 of his order has finally upheld the order of the A.O as per the reasons contained therein. In principle, he has confirmed the disallowance worked out by the learned A.O u/s 14A, r.w.r. 8D on account of indirect expenditure. However, in para 10.2 of his order, the learned CIT(A) has stated that out of the said suo-moto disallowance u/s 14A offered by the assessee of ₹ 9,39,317/-, an amount of ₹ 97,532/- is pertaining to security transaction tax paid ₹ 8,342/- pertains to Demat charges, thus, totalling to ₹ 1,05,874/-, which according to him, is the direct expenditure attributable for earning exempt income. As regards, balance amount of ₹ 8,33,433/- (i.e. 9,39,317/- - 1,05,874/-), he has stated it is on account of indirect expenditure and the same is to be excluded from the component of disallowance worked out on account of indirect expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d this issue at para 11.1 and has given his findings at page 17 para 11.5, wherein he has given his reasons which are on record while upholding the disallowances made by the A.O. At the time of hearing, the learned counsel for the assessee has submitted that the issue of additional depreciation is decided in favour of the assessee by the judgment of Hon'ble Bombay High Court in the case of Pr. CIT 14 Vs. Godrej Industries Ltd. In I.T.A. No. 511 of 2016 dated 24-11-2018. The question framed by the Hon'ble Bombay High Court in this case was as follows: "Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in holding that the assessee is entitled to 50% of the additional depreciation u/s 32(1)(iia) of the IT Act 1961?" 10. The brief facts before the Hon'ble Bombay High Court were as follows: (i) The assessee firm filed E return of income for A.Y. 2007-08 on 7/11/2007. The assessee declared total income at Rs. NIL as per the normal provisions of the I.T. Act 1961 (for short "the Act") and ₹ 21,86,10,387/- u/s 115JB of the Act. Subsequently, the case was selected for scrutiny and order u/s 143(3) of the Act, was passed by the AO vide ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the previous year and put to use for the purposes of business or profession for a period less than 180 days in the said previous year. 7. In the context of such statutory provisions, the Revenue has raised the question - whether when 50% of the additional depreciation is claimed by the assessee in a particular assessment year, since the acquisition and putting in to use of the assets in the previous year was for less than 180 days, the assessee can claim the remaining depreciation in the subsequent assessment year. Such a question came up for consideration before the Division Bench of Karnataka High Court in CIT & Anor Vs. Ritta1 India Pvt. Ltd. Reported in 380 ITR 423. The court, after referring to the statutory provisions, held and observed in para 8 as under: - "8: The aforesaid two conditions, i.e., the undertaking acquiring new plant and machinery should be a new industrial undertaking, or that it should be claimed in one year, have been done away by substituting clause (iia) with effect from April 1, 2006. The grant of additional depreciation, under the aforesaid provision, is for the benefit of the assessee and with the purpose of encouraging industrialization, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid, we do not find that any interference is called for with the order of the Tribunal, or that any question of law arises in this appeal for determination by this court." After the said judgment of the Karnataka High Court in Rittal India Pvt. Ltd., (supra), legislation has also amended the statutory provisions by adding the third proviso to clause (ii) of sub-section 1 of Section 32 of the Act, which reads as under:- " 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 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." 8. The t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 un-amended provision had to be read all along. 11.5 In any event, in so far as the court is concerned, it has to go by the plain language of the un-amended provision, and then, come to a conclusion in the matter. As allude to above, our view, is that, upon a plain reading of the un-amended provision, it could not be said that the assessee could not claim balance depreciation in the assessment year, which follows the assessment year, in which, the machinery had been bought and used, albeit for less than 180 days." 9. It could be thus, to seen that the Karnataka High Court in Rittal India Pvt. Ltd. (supra) even without the aid of the statutory amendment held that rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pending cases, covering past period also. The matter before the Hon'ble Jurisdictional High Court pertained to assessment year 2007-08 and accordingly, it was covered by the aforesaid judicial findings. 19. That while considering the view taken by these two Hon'ble High Courts in the above referred judgments, it was held by the Hon'ble Jurisdictional High Court that there is no justification in taking any different view and hence, no question of law arose. 20. The aforesaid decision of the Hon'ble Jurisdictional High Court was also referred by the Pune Bench of the Tribunal in the case of Cummins India Limited Vs. DCIT, ITA No.685/PUN/2017 dated 22.11.2019 wherein the Tribunal on the issue has held as follows: "……………..In this judgment of the Hon‟ble Bombay High Court, there is reference made to the decision of the Hon‟ble Karnataka High Court in the case of Commissioner of Income Tax and another Vs. Rittal India Pvt. Ltd., 380 ITR 423 and the decision of the Hon‟ble Madras High Court in the case of in the case of Commissioner of Income Tax Vs. Shri T.P. Textiles Pvt. Ltd., 394 ITR 483 and in both these cases, it has been un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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