THE COMMISSIONER OF INCOME T vs. M/S. DEVI POLYMERS PRIVATE L

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TCA/1011/2015HC Madras25 March 2021Bench: Hon`ble Mr Justice M.DURAISWAMY7 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the questions of law were squarely covered by the ratio laid down in its own previous judgment in Commissioner of Income Tax, Chennai v. Aztec Auto (P.) Ltd. [2020] 119 taxmann.com 215 (Madras). This judgment, in turn, relied on the Division Bench decision in Brakes India Ltd. v. Dy. CIT, which was upheld by the Supreme Court through the dismissal of the Revenue's Special Leave Petition. Consequently, the High Court found that the law was settled in favor of the assessee regarding the entitlement to additional depreciation, including the balance benefit in a subsequent year if the asset was used for less than 180 days in the earlier year. The High Court decided the questions of law against the Revenue and in favor of the assessee. The Tax Case Appeal was dismissed. No costs were awarded.

What were the facts?

The Revenue (Commissioner of Income Tax, Chennai) appealed against an order of the Income Tax Appellate Tribunal (ITAT), Madras Bench, dated April 9, 2014, concerning Assessment Year 2007-2008. The appeal was admitted on substantial questions of law. The assessee is M/s. Devi Polymers Private Ltd. The core of the dispute revolves around the assessee's entitlement to additional depreciation on plant and machinery. The ITAT had ruled in favor of the assessee, which the Revenue challenged before the High Court. The High Court's decision was based on prior judgments of the same court and the Supreme Court.

What were the issues?

1. Whether, on the facts and circumstances, the ITAT was correct in holding that the assessee is entitled to additional depreciation under Section 32(1)(iia) of the Income Tax Act, 1961, on plant and machinery purchased and used in an earlier year? (Question of law) 2. Whether, on the facts and circumstances, the ITAT was correct in holding that the assets were put to use for less than 180 days in the earlier year and hence entitled to the balance benefit in the subsequent year? (Question of mixed law and fact) Assessee's Contention: The assessee argued that the questions of law were already decided by a Division Bench of the High Court in the case of Commissioner of Income Tax, Chennai v. Aztec Auto (P.) Ltd. [2020] 119 taxmann.com 215 (Madras), which followed earlier decisions in Brakes India Ltd. v. Dy. CIT and CIT v. Shri T.P. Textiles (P.) Ltd., and that the Supreme Court had dismissed the Revenue's SLP in the Brakes India Ltd. case, making the decision final. Revenue's Contention: The Revenue pointed out that the proviso to Section 32(1) regarding the claim for the balance 50% of the amount as deduction was inserted with effect from April 1, 2016, by the Finance Act, 2015. However, the High Court noted that the effect of this insertion might not bear on the present issue.

Which sections of the Income-tax Act were involved?

Section 32(1)(iia),Section 32(1)

AI-generated summary — verify with the full judgment below

T.C.A.No. 1011 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 25.03.2021 CORAM: THE HON'BLE MR. JUSTICE M.DURAISWAMY AND THE HON'BLE MRS.JUSTICE T.V.THAMILSELVI T.C.A.No. 1011 of 2015 The Commissioner of Income Tax, Chennai. ... Appellant v. M/s. Devi Polymers Private Ltd., TNK House, No.48, Anna Salai, Chennai - 600 002. PAN AAACD 1779 J

... Respondent Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras, "C" Bench, dated 09.04.2014 in I.T.A.No.165/Mds/2014 for the Assessment Year 2007-2008. For Appellant : Mr.T. Ravikumar Senior Standing Counsel For Respondent : Mr. R. Venkat Narayanan Page 1/7 https://www.mhc.tn.gov.in/judis/ T.C.A.No. 1011 of 2015 JUDGMENT (Judgment was delivered by M. DURAISWAMY, J.) Challenging the order passed in I.T.A.No.165/Mds/2014 in respect of the Assessment Year 2007-2008 on the file of the Income Tax Appellate Tribunal, Chennai,"C" Bench, (for brevity, the Tribunal), the Revenue has filed the above appeal.

2.

The above appeal was admitted on the following substantial questions of law: “ (i) Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee is entitled or additional depreciation under section 32(1)(iia) on the plant and machinery purchased and used in earlier year?

(ii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in holding that the assets were put to use only for less than 180 days in the earlier Page 2/7 https://www.mhc.tn.gov.in/judis/ T.C.A.No. 1011 of 2015 year and hence, entitled to balance benefit in the subsequent year?" 3. Mr. R. Venkat Narayanan, learned counsel appearing for the respondent-assessee submitted that the questions of law involved in the present appeal were already decided by the the Hon'ble Division Bench of this court in Supreme Court in the Judgment reported in [2020] 119 taxmann.com 215 (Madras) [Commissioner of Income Tax, Chennai v. Aztec Auto (P.) Ltd] wherein the Hon'ble Division Bench held as follows: " 10. Be that as it may, the decision of the Tribunal in the case of Brakes India Ltd. v. Dy. CIT [T.C. A.No.551 of 2013, dated 14-3-2017], was appealed against before the Division Bench of this Court in and the Division Bench noted the decision in Rittal India Limited as well as M.M. Forgings and ultimately, allowed the appeal filed by the assessee. In doing so, the Division Bench of this Court distinguished the decision in the case of M.M. Forgings Ltd. (supra) by observing that the said case was not concerned with the issue with regard to right to carry forward the balance additional depreciation and followed the decision in the case of CIT v. Shri T.P. Textiles (P.) Ltd. [2017] 79 Page 3/7 https://www.mhc.tn.gov.in/judis/ T.C.A.No. 1011 of 2015 taxmann.com 411/246 Taxman 324/394 ITR 483 (Mad.),which was decided in favour of the assessee and in which decision, the decision in the case of Rittal India (P.) Ltd.(supra), was also referred to. 11. The learned senior counsel for the revenue also pointed out that so far as the claim of balance 50% of the amount as in deduction was provided for inserting the proviso under section 32(1) and such insertion was with effect from 1-4-2016 by Finance Act, 2015. 12. In our considered view, the effect of the insertion of the proviso in the year 2016, may not have a bearring on the present issue, as during the relevant assessment year 2009-10, the law which has been settled by the Division Bench of this Court is the case of Brakes India Ltd. (supra), against the said decision, the revenue preferred an appeal before the Hon'ble Supreme Court in S.L.P. (C) No. 033755/2017 which was dismissed by an order dated 24-9- 2018. Thus, the decision of the Division Bench in the case of Brakes India Ltd. (supra) having been approved by the Hon'ble Supreme Court, we are bound by the said decision and accordingly, following the same. ..."

Page 4/7 https://www.mhc.tn.gov.in/judis/ T.C.A.No. 1011 of 2015 4. On a reading of the above Judgment, it is clear that the Division Bench of this Court after taking into consideration the case of Brakes India Ltd. v. Dy. CIT [T.C. A.No.551 of 2013, dated 14.3.2017] and the case of CIT v. Shri T.P. Textiles (P.) Ltd. [2017] 79 taxmann.com 411/246 Taxman 324/394 ITR 483 (Mad.) decided the questions of law in favour of the assessee. 5. It is also brought to the notice of this court in the case of Brakes India Ltd., the Revenue preferred an appeal before the Hon'ble Supreme Court in S.L.P. (C) No. 033755/2017 and the Hon'ble Supreme Court also dismissed the Special Leave Petition by order dated 24.09.2018. Therefore, the decision of the Hon'ble Division Bench in the case of Brakes India Ltd. has become final. 6. In these circumstances, we are of the considered view that the ratio laid down by the Hon'ble Division Bench of this court in the Judgment reported in the Judgment reported in [2020] 119 taxmann.com 215 (Madras) [cited supra] squarely Page 5/7 https://www.mhc.tn.gov.in/judis/ T.C.A.No. 1011 of 2015 applies to the facts and circumstances of the present case. 7. Following the ratio laid down in the Judgments reported in [2020] 119 taxmann.com 215 (Madras) [cited supra] the questions of law are decided against the Revenue and in favour of the respondent- assessee. The Tax Case Appeal is liable to be dismissed. Accordingly, the same is dismissed. No costs.

[M.D., J.] [T.V.T.S., J.] 25.03.2021

Index : Yes/No Internet : Yes Rj

To The Income Tax Appellate Tribunal, Chennai, ''C'' Bench Page 6/7 https://www.mhc.tn.gov.in/judis/ T.C.A.No. 1011 of 2015 M. DURAISWAMY, J. and T.V. THAMILSELVI, J. Rj T.C.A.No. 1011 of 2015 25.03.2021 Page 7/7 https://www.mhc.tn.gov.in/judis/

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