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Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: Shri S.S. GODARA & Shri L.P. SAHU
IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A’ Bench, Hyderabad (Through Video Conferencing) Before Shri S.S. GODARA, Judicial Member AND Shri L.P. SAHU, Accountant Member ITA No.831/Hyd/2019 Assessment Year: 2016-17 Andhra Pradesh Granite Vs. ACIT, Circle 1(1) (Midwest) Private Limited Hyderabad Hyderabad [PAN: AAGCA3570N] (Appellant) (Respondent) Assessee by: Sri M.V. Joshi, Adv. Revenue by: Sri Sunil Kumar Pandey, DR Date of hearing: 02/02/2021 Date of pronouncement: 23/02/2021 ORDER PER BENCH This assessee’s appeal is directed against the Commissioner of Income Tax (Appeals)–1 [‘CIT(A)’ for short], Hyderabad’s order dated 25.04.2019 in case no. 10243/2018-19/DCIT, Cir.1(1)/Hyd/CIT(A)-1/Hyd/2019-20 for A.Y. 2016-17 passed in proceedings u/s 143(3) of the Income Tax Act, 1961 [ ‘the Act’ for short].
Heard both parties. Case file perused.
ITA No 831/Hyd/19 AY 2016-17 Andhra Pradesh Granite (Midwest) Private Limited, Hyd.
The assessee has raised the following substantive grounds in the instant appeal. 1. The Ld.CIT(A) Commissioner of Income Tax (Appeals) erred both on facts and in law by dismissing the appeal. (General Ground ) 2. The Ld. CIT (A) ought to have appreciated the fact that the assessee has rightly claimed the additional depreciation u/s 32(1)(iia) of the IT Act, 1961 amounting to Rs. 37,99,846/- in the year under reference. (Tax effect: Rs. 11,74,152/-) 3. The Ld CIT(A) erred in holding that the assessee is not eligible for availing additional depreciation vide third proviso to Section 32 (i)(iia) on the reason that unexpired portion of additional depreciation can only be carried forward from A Y 2016-17 to subsequent years and not earlier years. (T/E : Rs.11,74,152/-) 4. The Ld CIT (A) ought to have appreciated the provisions of Section 32(i) (iia) which states that where the assessee is engaged in the business of manufacture or production, any new plant and machinery purchased or installed after 31st day of March 2005, an additional depreciation equivalent to 20% is allowed in addition to the regular rate of depreciation on such plant and machinery and that therefore the 50% of the balance unavailed additional depreciation of Rs. 37,99,846/ - has to be allowed this year. (Legal ground). 5. The Ld CIT (A) erred in not properly appreciating the Second proviso to section 32(1) (ii) which states that 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 180 days in the previous year, the deduction shall be restricted to 50% of amount calculated at a percentage prescribed in sec 32(i) (iia) of the Act. (Legal Ground) 6. The Ld. CIT (A) ought to have appreciated that the assessee is eligible to claim the balance unexpired portion of the additional depreciation by virtue of second proviso of section 32(i)(iia). (tax effect: Rs.11,74,152/-). 7. The Ld. CIT (A) ought to have appreciated the fact that the assessee has availed 20% additional depreciation (vide amendment inserted in Finance Bill 2005), not 35% additional depreciation (vide amendment inserted in Finance Bill
ITA No 831/Hyd/19 AY 2016-17 Andhra Pradesh Granite (Midwest) Private Limited, Hyd. 2015) and thus is eligible to claim the 50% of the 20% additional depreciation vide second proviso to section 32(i)(iia). 8. The Ld CIT (A) has erred in not appreciating that the depreciation amounting to Rs.37,99,846/- which is 50% of the eligible 20% additional depreciation (brought forward from the AY 2014-15) which can be claimed in FY 2015-16 relevant to the year under reference. 9. The Ld. CIT (A) ought to have appreciated the fact that the AO passed order u/s 143(3), without giving reasonable opportunity of being heard to the appellant. The appellant may add, alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.”
2.1. Both the learned representatives took us to the detailed discussion on additional depreciation issue raised herein as under:
“2. Aggrieved with the above. the appellant filed an appeal with the following grounds of appeal: “1. Disallowance of additional depreciation Rs.37.99.846/- The learned assessing officer erred in adding back to the total income an amount of Rs.37. 99,846/ - representing brought forward additional depreciation on the ground that the claim of unexpired portion of the additional depreciation u/s.32(1)(iia) can be carried forward only from the A Y 2016-1 7 i. e., the unexpired portion of the additional depreciation for the AY 2016-17 can be carried forward and claimed in succeeding AY 2017-18. The appellant submits that the amendment in the Finance Act, 2015 relevant to Asst Year 2016-17 which is effective from 01.04.2016 in which Third Proviso to section 32(1)(ii) was inserted which says that and new additions to plant and machinery referred to section 32 (1 )(ii) and eligible for additional depreciation u/ s. 32 (1 )(iia) of the Income Tax Act, 1961, the additions made which are put to use for less than 180 days, 50% of such depreciation would be allowed in the succeeding Asst Year. The appellant further submits that it is eligible for additional depreciation u/ s.32(1)(iia) of the IT Act, 1961 in respect of additional depreciation in respect of addition made in the preceding year to the previous year as only 50% of the additional depreciation was claimed on the Assets pu.t to use for less than 180 days in the earlier previous year and the remaining additional depreciation
ITA No 831/Hyd/19 AY 2016-17 Andhra Pradesh Granite (Midwest) Private Limited, Hyd. @10% of additions made amounting to Rs.37,99,846/ - was claimed and allowable u/s.32(1)(iia) of the IT Act, 1961. The above stand is supported by the decisions given in the following cases: _ Century Enka Ltd Vs. Deputy Commissioner of Income Tax (ITAT KOLKATA) reported in 58 taxmann.com 318 _ Deputy Commissioner of Income Tax, circle-3(1), New Delhi Vs. Cosmo Films Ltd. Reported in 24 taxmann.com 189 (ITAT Delhi) Accordingly, the appellant submits that the brought forward additional depreciation can be allowed in the A Y 2016-1 7. Accordingly, the appellant submits that the brought forward additional depreciation of Rs.37,99,846/ - allowed. The appellant prays for relief. For these and other grounds that may be urged at the time of hearing, the appellant prays that the disallowances and additions made be deleted.”
The case was taken up for hearings and accordingly hearing notices were issued. In response to the notices, Mr. P.V.Gopal Krishna, AR and Sri R.K.Nageswar Rao, AR of the appellant appeared and filed submissions and the case was discussed. 4. Only ground is with regard to the disallowance of Rs.37,99,846/- towards additional depreciation u/ s.32(1)(iia). 4.1 During the assessment proceedings, the Assessing Officer observed as under: "the assessee made a claim of bought forward additional depreciation of Rs.37,99,846 on mining equipment along with normal depreciation. Since the claim for additional depreciation is not found to be valid, the assessee was asked to show cause as to why the same should not be disallowed. In response, the assessee merely reproduced the relevant provisions of the Act and insisted on making correct claim. The submissions of the assessee are not acceptable. The Finance Act, 2015 inserted provision w.e.f. 01.04.2016. It is therefore apparent that the claim of unexpired portion of the additional depreciation u/ s.32(1)(iia) can be carried forward only from the AY 2016-17. In other words, the unexpired portion of the additional depreciation for the A Y 2016-1 7 can be carried forward and claimed in succeeding A Y 201 7-18. In the present case, therefore no claim of carry forward additional depreciation relevant to the A Y 2015-16 is admissible. Hence the Assessing Officer made disallowance of Rs. 3 7,99,846/ - towards additional depreciation claimed. 4.2 During the course of appeal proceedings, with regard to the above ground, the appellant submits as under: "It is eligible for additional depreciation u/ s.32(1)(iia), in respect of additional depreciation in respect of addition made in the preceding year to the PYs only 50% of additional depreciation was claimed on the Assets put to use for less than 180 days in the earlier previous year and the remaining additional depreciation
ITA No 831/Hyd/19 AY 2016-17 Andhra Pradesh Granite (Midwest) Private Limited, Hyd. @10% of additions made amounting to Rs.37,99,846/- was claimed and allowable u/ s.32(1)(iia). In the FY 2015-16, the appellant claimed an additional depreciation of Rs.1,27,90,245/ - on Plant and Machinery and Mining Equipment. The appellant has brought forward an additional depreciation of Rs.38,00,739/- from the AY 2015-16 which is 50% of eligible depreciation which was claimed as additional depreciation in A Y 2016-1 7. The appellant further submits that 50% of unabsorbed additional depreciation of Rs.38,00,739/- in AY 2015-16 was rightly brought forward and claimed in A Y 2016-1 7 as the unabsorbed portion of additional depreciation can be claimed. 4.3 I have carefully considered the facts of the case, assessment order and the submissions of the appellant. As per Section 32(1)(iia), the unexpired portion of the additional depreciation can be carried forward only from the AY 2016-17. Hence, I am in agreement with the action of the Assessing officer and the disallowance made on additional depreciation is sustained.”
2.2. Suffice to say, it has come on record that learned lower authorities have disallowed assessee’s additional depreciation claimed for sole reason that relevant assets had been put to use in earlier year(s) than in the relevant previous year. We find no merit in Revenue’s stand since hon’ble Madras high court in Brakes India Ltd.. vs. ACIT in CTA No. 55/2017 dated 14.3.2017 has accepted such additional depreciation claimed on the assets already put to use. The instant depreciation allowance is directed to be deleted. This assessee’s appeal is allowed. Order pronounced in the Open Court on 23rd February, 2021.
Sd/- Sd/- (L.P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, dated 23rd February, 2021. *Gmv
ITA No 831/Hyd/19 AY 2016-17 Andhra Pradesh Granite (Midwest) Private Limited, Hyd.
Copy to: 1 M/s Andhra Pradesh Granite (Midwest) Private Limited, C/o P. Murali & Company, Chartered Accountants, 6-3-655/2/3, Somajiguda, Hyderabad 500 082, Telangana. 2 ACIT, Circle 1(1) Hyderabad /ACIT, Range 1, Hyderabad 3 CIT (A)-1 Hyderabad 4 Pr. CIT-1 , Hyderabad 5 The DR, ITAT Hyderabad 6 Guard File