9911796707
TMI Blog2022 (4) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of the Act vide order dated 17.11.2017, the total income of the assessee was determined by the Assessing Officer at Rs. 1,73,17,97,724/-; and, after allowing the set off of unabsorbed depreciation loss to that extent, the total assessed income of the assessee was determined at Rs. Nil. The records of the said assessment came to be examined by the concerned PCIT and on such examination, he was of the view that the assessment made by the Assessing Officer under Section 143(3) of the Act vide order dated 17.11.2017 suffered from the following error which was prejudicial to the interest of the Revenue:- "On verification of records, it is seen that during the year under consideration, you have claimed additional depreciation of Rs. 58,57,95,373/- and the same was allowed during the assessment proceedings. The assessee company is engaged in the distribution of electricity. As per section 32(1)(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 assesses engaged in the business of manufacture or production of any article or thing or in the business of generation or generation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d State Electricity Boards (SEBs). As a result of restructuring almost all the States formed different combination of entities for generation, transmission and distribution. The Govt. of Gujarat also enacted the Gujarat Electricity Industry (Reorganization and Regulation) Act, 2003 to demerge into seven companies i.e., one Generation Company, one Transmission Company and four Distribution Companies and one with the residual functions. It can be seen that it is only the organization, set-up decided by the States to have separate utilities. With the above facts, if the provisions of Section 32(1)(iia) of the IT Act relating to additional depreciation are interpreted merely on the basis of wordings used therein, it will lead to the conclusion that only the States of Tamil Nadu, Punjab and HP will be eligible for the additional depreciation as only these three States have (Generation + Distribution) Companies. This obviously must not be the intention of the Legislature to provide the benefit only to these states and to deprive the other states from the benefits....." 4. The learned PCIT did not find the explanation offered by the assessee in the matter to be acceptable. He noted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal. 6. Learned Counsel for the assessee submitted that the claim of additional depreciation under Section 32(1)(iia) of the Act was earlier available only to the manufacturing concerns and in order to further encourage investment in power sector; the amendment was made in Section 32(1)(iia) by the Finance Act, 2012 with effect from 1st April 2013 by inserting words "generation or generation and distribution of power". He contended that the legislative intention behind the said amendment was to extend the benefit to the power sector and although the said benefit was initially not given to the assessees engaged only in the business of distribution of power, Section 32(1)(iia) of the Act was again amended by Finance Act, 2016 making the assessee engaged only in the business of distribution of power eligible to claim additional depreciation. He contended that even though the said amendment by the Finance Act, 2016 is made with effect from 1st April 2017, keeping in view the legislative intention behind making the said amendment, it has to be treated as retrospective in nature. He invited our attention to the Memorandum explaining the legislative intention behind the said amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remove the ambiguity was required to be held as retrospective in nature. 9. The learned Counsel for the assessee contended that the claim of the assessee for additional depreciation under Section 32(1)(iia) was correctly allowed by the Assessing Officer by taking into consideration the relevant provisions of Section 32(1)(iia) of the Act as amended from time to time and there being no error in the order of the Assessing Officer passed under Section 143(3) allowing the said claim as alleged by the learned PCIT, the impugned order passed by him revising the said order is liable to be cancelled being not tenable in law or in the facts of the case. 10. The learned DR, on the other hand, strongly supported the impugned order passed by learned PCIT under Section 263 of the Act. He contended that the assessee, in the present case, is engaged only in the business of distribution of power and it was, therefore, not entitled to claim additional depreciation as per the provisions of Section 32(1)(iia) of the Act as applicable to the year under consideration, i.e. AY 2015-16. He contended that, as per the relevant provisions of Section 32(1)(iia) applicable to the year under consideration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Section 32(1)(iia) as applicable to the year under consideration, i.e. AY 2015-16. He accordingly set aside the assessment order passed by the Assessing Officer under Section 143(3) of the Act by exercising his powers under Section 263 of the Act and directed the Assessing Officer to make the assessment afresh. The relevant provision of Section 32(1)(iia) of the Act as relied upon by the learned PCIT to arrive at his conclusion as amended by Finance Act, 2012 with effect from 1st day of April 2013 read as under:- ".......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 41 [or in the business of 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)....." 12. It is manifest from the provision of Section 32(1)(iia) as amended by the Finance Act, 2012 with effect from 1st April 2013 that additional depreciation was allowed in respect of cost of new plant or mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. In our considered opinion, the amendment made by Finance Act, 2016 to the provisions of Section 32(1)(iia) of the Act, going by legislative intention behind making the said amendment as explained in the relevant memorandum, cannot be said to be curative in nature and therefore, the decision of Hon'ble Supreme Court in the case of CIT Vs. Calcutta Export Company (supra) has also no application in the present case as in the said case the relevant amendment made by Finance Act, 2010 to provisions of Section 40(a)(ia) being curative in nature was given retrospective operation with effect from AY 2005-06 by the Hon'ble Supreme Court. Likewise, the decision of Hon'ble Supreme Court in the case of CIT Vs. Alom Extrusion Ltd (supra), cited by the learned Counsel for the assessee will not be of any help to the assessee as the second proviso to Section 43B was deleted by the Finance Act 2003 to bring about uniformity in the first proviso to Section 14B and the same being curative in nature, it was held by Hon'ble Supreme Court that it would operational with effect from 01.04.1988. Moreover, it is not a case where the purpose of amendment made to provision of Section 32(1)(iia) by the by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclared purpose of the statute, or if it would involve any absurdity, repugnancy or inconsistency, the grammatical sense must then be modified, extended or abridged so as to avoid such inconvenience, but no further. It was held that the elementary rule is that the words used in a section must be given their plain grammatical meaning. In another case of IPCA Laboratory Ltd Vs. DCIT (supra), relied upon by the learned CIT(A) in his impugned order, it was held by Hon'ble Supreme Court that when there is no ambiguity in the provisions of the statute, provisions cannot be interpreted to confer benefit on assessee. In his impugned order, learned CIT(A) has also relied on the decision of Hon'ble Supreme Court in the case of Prakash Nath Khanna & Anr Vs. CIT (supra), wherein it was held that the first and primary rule of construction is that the intention of the legislation must be found in the words used by the legislature itself and the Court cannot read anything into a statutory provision which is plain and unambiguous. 17. As regards the contention of the learned Counsel for the assessee that if the provisions of Section 32(1)(iia) of the Act as amended from time to time are interpret ..... X X X X Extracts X X X X X X X X Extracts X X X X
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