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TMI Blog2022 (8) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... t particular year on account of period of usages. Such restrictions cannot divest the statutory right. Law does not prohibit that balance 50% will not be allowed in succeeding year. The extra depreciation allowable u/s 32(l)(iia) in an extra incentive which has been earned and calculated in the year of acquisition but restricted for that year to 50% on account of usage. The so earned incentive must be made available in the subsequent year. The overall deduction of depreciation u/s 32 shall definitely not exceed the total cost of plant and machinery. In CIT vs. Rittal India (P) Ltd [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT] held that 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. CIT(A) has followed the decisions (supra) in coming to the conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in AY 2014-15 of Rs. 1,46,75,508/- is not allowable at all as per existing provisions of law. He therefore made the impugned disallowance. 4. The assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the impugned disallowance of additional depreciation by observing as under:- 5.2. Examination of the issue and decision: 5.2.1 I have perused the assessment order as well as written and oral arguments put forward by the AR of the appellant company during the instant proceeding. I 'ave also gone through case laws relied upon by the appellant. 5.2.2 The AO in the assessment order stated that there is no provision in the Act and nor Section 32(i)(iia) of the Act provides for claiming the balance additional Depreciation in second year of installation of machinery. 5.2.3 In terms of the facts of the matter, the appellant company has purchased certain machinery in the FY 2013-14 in the last half of the year. Since the plant and machinery was installed and used for less than 180 days, the appellant claimed additional depreciation at the rate of 10% instead of 20% in immediately preceding assessment year. In the instant FY relevant to the captioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is allowable in next succeeding year. This has now been statutorily recognized by insertion of a further proviso by the Finance Act, 2015 w.e.f. 01.04.2016. The Ld. AR submitted that the said amendment is clarificatory in nature. As regards the additional depreciation the Ld. AR relying on the decision of Delhi Tribunal in Cosmo Films Ltd. (supra) submitted that where the plant and machinery entitled to additional depreciation is acquired during the second half of the year, the assessee is entitled to only 50% during the year and balance is allowable in next year. He also placed reliance on the decision of Madras High Court in CIT vs. Shri T.P. Textiles (P.) Ltd.(2017) 394 ITR 483 (Mad). 7. We have carefully considered the rival submissions, perused the legal position involved and the material available in the records. The issue for consideration in this case is whether additional depreciation if claimed @ 10% in one year, being the plant and machinery installed and put to use for the purposes of business for a period of less than 180 days, the balance 10% of the additional depreciation can be claimed in the succeeding year or not. It is undisputed legal position that additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the units. The proviso to section 32(l)(iia) restricts the benefit in respect of following Provided that no deduction shall be allowed in respect of- (A) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or (B) any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guesh house; or (C) any office appliances or road transport vehicles; or (D) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head ' Profits and gains of business or profession of any one previous year; Thus, this incentive in the form of additional sum of depreciation available to any plant or machinery which has been used either within India or outside India by any other person or such machinery and plant are installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house or any office appliances or road transport vehicles, or any machiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sage. The so earned incentive must be made available in the subsequent year. The overall deduction of depreciation u/s 32 shall definitely not exceed the total cost of plant and machinery. 7.2 In CIT vs. Rittal India (P) Ltd. (2016) 380 ITR 423 (Kar) the facts were that the assessee, an existing industrial undertaking acquired and installed new plant and machinery after 01.10.2006 and before 31.03.2007. As new machinery was put to use for business purposes for period of less than 180 days in AY 2007-08, the assessee claimed 50% of additional 20% depreciation (i.e. 10% additional depreciation) under section 32(1)(iia) in AY 2007-08and allowance of balance 10% depreciation in AY 2008-09. The Ld. AO allowed claim of allowance of 10% depreciation under section 32(1)(iia) in AY 2007-08 but disallowed balance 10% depreciation in AY 2008-09. On these facts, the Hon ble Karnataka High Court 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 01.04.2006. Prior to that, a proviso to the said Clause was there, which provided for the benefit to be given only to a new industrial undertakin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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