THE COMMISSIONER OF INCOME T vs. AZTEC AUTO PVT LTD

T.C.A.No.267 of 2020 IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 07.09.2020 Coram THE HONOURABLE Mr. JUSTICE T.S.SIVAGNANAM AND THE HONOURABLE Mrs. JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.267 of 2020 The Commissioner of Income Tax Chennai .. Appellant Vs. M/s Aztec Auto Pvt., Ltd., 88, Sidco Industrial Estate, Ambattur, Chennai - 600 098 ..Respondent Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961, is directed against the Order passed by the Income Tax Appellate Tribunal “C” Bench in I.T.A No.2751/Mds/2016 dated 21.02.2016 for the assessment year 2009-2010 For Appellant

: Mr.T.Ravikumar

Senior Standing Counsel 1/9 http://www.judis.nic.in T.C.A.No.267 of 2020 J U D G M E N T [Judgment of the Court was delivered by T.S.SIVAGNANAM, J.] Heard Mr.T.Ravikumar, learned senior counsel for the appellant / revenue. 2. This appeal filed by the revenue under Section 260-A of the Income Tax Act, 1961 ['the Act' for brevity] is directed against the order passed by the ITAT, 'C' Bench in I.T.A.No.2751/Mds/2016 dated 21.02.2016 for the assessment year 2009-2010. 3. The appellant / revenue has filed the following substantial questions of law for consideration: '1. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is eligible to carry forward the unabsorbed additional depreciation as per the provisions of Section 32(1)(iia)? 2. Is not the finding of the Tribunal bad especially when as per the proviso to Section 32(a)(ii) restricts depreciation allowable to 10% in the year in which the 2/9 http://www.judis.nic.in T.C.A.No.267 of 2020 assets was acquired and installed and in the present case the assets was acquired in the 2nd half of the financial year 2007-08 and there being no provisions under the Act permitting the balance to be carry forwarded to be allowed in the succeeding year?' 4. We have elaborately heard the learned senior counsel for the appellant / revenue. 5. The assessee is a private limited company had filed its return of income for the assessment year 2009-2010 on 28.09.2009 admitting a income of Rs.71,83,530/- The assessee's case was selected for scrutiny and the income returned was accepted, subsequently, the case was re-opened under Section 147 of the Act by issuance of notice under Section 148 of the Act on 26.03.2014 on the ground that the asset which was purchased and put to use in the previous year for less than 180 days only 10% depreciation was claimed and assessee has claimed the additional depreciation for the assessment year 2009-2010 and therefore, there was reason to believe that excess depreciation in respect of additional depreciation of Rs.4,33,414/- has escaped assessment warranting reopening. 3/9 http://www.judis.nic.in T.C.A.No.267 of 2020 6. The assessing officer was of the view that the assessee has claimed arrears of depreciation under Section 32(1)(iia) amounting to Rs.4,33,414/- in respect of the asset under the head 'Plant and Machinery' acquired in the 2nd half of the financial year 2007-2008, for which, additional depreciation at 10% was allowed for the assessment year 2008-2009. Further, the assessing officer was of the view that there was no provision under the Act permitting balance depreciation to be allowed in the succeeding year. The explanation offered by the assessee did not find favour with the assessing officer and accordingly, he disallowed the claim and added the same to the total income of the assessee under the head income or professional and established at the total income of Rs.76,16,945/- 7. The assessee preferred an appeal before the Commissioner of Income Tax [Appeals]-I CIT(A), Chennai, who by order dated 14.07.2016 allowed the appeal. In doing so, followed the decision of M/s Addison & Company Vs. DCIT in I.T.A.No.2198/Mds/2015 dated 04.03.2016. In this order, the Tribunal noted the decision in the case of 4/9 http://www.judis.nic.in T.C.A.No.267 of 2020 DCIT Vs. Brakes India Limited in I.T.A.No.1609/Mds/2010 dated 06.01.2012, which was decided against the assessee. However, the CIT(A) took note of the decision above mentioned and observed that those were rendered after considering the decisions in Brakes India and M/s CRI Pumps Pvt., Ltd., Vs.ACIT and it was held that additional depreciation to the extent not claimed by the assessee in the earlier year ought to be allowed. 8. The CIT(A) also followed its own decision in the case of Associated Printers (Madras) Pvt., Ltd., dated 14.01.2016 and accordingly, the appeal was allowed. The revenue carried the matter by way of appeal to the Tribunal. The Tribunal by the impugned order dismissed the appeal filed by the Revenue taking note of decision of High Court of Karnataka in CIT V. Rittal India (P.) Limited reported in 380 ITR 423. 9. As rightly pointed out by Mr.T.Ravikumar, learned senior standing counsel for the appellant, the Tribunal erred in holding that there was no Judgment in any other High Court, which is in favour of the 5/9 http://www.judis.nic.in T.C.A.No.267 of 2020 Department. Without noting the fact that there were several decisions, one of which, the decision of the Division Bench of this Court in M.M.Forgings Vs. ACIT, Company Range-IV, Chennai reported in [2012] 349 ITR 673 [Madras]. Iy appears that the said decision was not brought to the notice of the Tribunal, which choose to follow the decision of High Court of Karnataka. Though the decision of the jurisdictional High Court in the case of M.M.Forgings Limited, was available which was in favour of the revenue and against the assessee. 10. Be that as it may, the decision of the Tribunal in the case of Brakes India Ltd., dated 06.01.2012 was appealed against before the Division Bench of this Court in T.C.A.No.551 of 2013 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 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 Commissioner of Income Tax, Madurai Vs. M/s Shri T.P. Textiles Private Limited in TCA 6/9 http://www.judis.nic.in T.C.A.No.267 of 2020 No.157 of 2017 dated 06.03.2017, which was decided in favour of the assessee and in which decision, the decision in the case of Rittal India Ltd., 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 deduction was provided for inserting the proviso under Section 32(1) and such insertion was with effect from 01.04.2016 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 2009-2010, the law which has been settled by the Division Bench of this Court is the case of Brakes India, 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 24.09.2018. Thus, the decision of the Division Bench in the case of Brakes India having been approved by the Hon'ble Supreme Court, we are bound by the said decision and accordingly, following the same. 7/9 http://www.judis.nic.in T.C.A.No.267 of 2020 For the above reasons, the appeal filed by the Revenue is dismissed and the substantial question of law is answered against the Revenue. No costs. (T.S.S.J.) (V.B.S.J.) 07.09.2020 Index :Yes / No Internet :Yes / No Speaking Judgment / Non Speaking Judgment ssd To The Income Tax Appellate Tribunal “C” Bench 8/9 http://www.judis.nic.in T.C.A.No.267 of 2020 T.S.SIVAGNANAM,J., AND V.BHAVANI SUBBAROYAN, J., ssd T.C.A.No.267 of 2020 07.09.2020 9/9 http://www.judis.nic.in