SRINATH METAL (P) LTD(MERGED WITH M/S.DEVASHREE ISPAT PVT.LTD.),KOLKATA vs. DCIT, KOLKATA

The sole issue involved in this appeal is relating to the action of the Assessing Officer in restricting the grant of additional depreciation @ 10% as against the claimed depreciation @ 20%.

The brief facts of the case are that the assessee’s original assessment was completed u/s 143(3) of the Act vide order dated 18.03.2015. The Assessing Officer observed that the assessee was engaged in the business of manufacturing of billets and also earned income from lease rent. It was observed that the assessee company had given its factory including its plant and machinery on lease w.e.f. 14.10.2009 and earned lease rental income. The said lease rental income has offered as business income by the assessee. The assessee company claimed and was allowed deprecition of Rs.6,14,51,167 which included additional depreication of Rs.2,54,56,826/-. The additional depreciation was calculated @ 20% on cost of new plant and machinery. However, the Assessing Officer observed that since the factory was given on lease w.e.f. 14.10.2009, the expenses on account of electricity was accordingly reduced proportionately and an amount of Rs.58,41,183/- out of total claimed electricity expenses of Rs.1,17,71975/- was disallowed. Thereafter, the ld. CIT-3, Kolkata exercised his revision jurisdiction u/s 263 of the Act and observed that since the new plant and machinery was utilised from 13.06.2009 to 13.10.2009 i.e. for less than 180 days, so the assessee company was entitled to get additional depreciation @ 10% instead of 20%. He, therefore, held the assessment order as erroneous and prejudicial to the interest of revenue and remanded the matter back to the file of the Assessing Officer. Thereafter, the Assessing Officer passed a fresh assessment order dated 13.07.2015 and restricted the additional depreciation @ 10%.

The assessee, thereafter, filed a rectification application u/s 154 of the Act stating therein that there was a wrong observation of the fact that the machinery was used for less than 180 days. It was submitted

Assessment year: 2010-11 Srinath Metal Pvt. Ltd (merged with M/s Devashree Ispat Pvt. Ltd.) that w.e.f. 14.10.2009, the factory and machinery was given on lease and the lease rental was offered as business income. That the machinery and factory were used even after 14.10.2009. That the Assessing Officer has already allowed the normal admissible depreciation without any reduction and accordingly there was no question of disallowance on additional depreciation. However, the said rectification application of the assessee was dismissed by the Assessing Officer.

Being aggrieved, the assessee preferred appeal before the CIT(A) but could not succeed.

Before us, the ld. counsel has referred to the assessment records and has submitted that the fact was on the file that w.e.f. 14.10.2009, the assessee had given the factory and machinery on lease rent and the lease rent has also been assessed as business income of the assessee. He has also submitted that even the normal admissible depreciation has also been awarded to the assessee on the plant and machinery and that there was no question of reduction in the admissible additional depreciation.

The ld. DR could not rebut the aforesaid factual position.

In view of this, we do not find justification on the part of lower authorities in reducing the admissible additional depreciation when the assessee has already been granted the normal depreciation without any reduction and it has also been noted by the Assessing Officer that w.e.f. 14.10.2009, the plant and machinery was given on lease and the same was used by the lessee and the lease rental income has also been accepted as business income of the assessee. We, accordingly, direct the Assessing Officer to allow the admissible additional depreciation @ 20%.

In the result, the appeal of the assessee stands allowed. Kolkata, the 11th December, 2023. Sd/- Sd/- [डॉ�टर मनीष बोरड /Dr. Manish Borad] [संजय गग� /Sanjay Garg] लेखा सद�य /Accountant Member �या�यक सद�य /Judicial Member Dated: 11.12.2023. RS Copy of the order forwarded to: 1 Srinath Metal Pvt. Ltd (merged with M/s Devashree Ispat Pvt. Ltd.) 2. DCIT, Circle-1(1), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR),