THE COMMISSIONER OF INCOME T vs. M/S SUNDARAM FASTENERS LTD

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TCA/471/2017HC Madras20 June 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the assessee is entitled to claim 50% of additional depreciation in the assessment year subsequent to the assessment year of acquisition and installation of plant and machinery, provided the machinery was acquired and put to use in the previous year. The Court found that the Revenue's argument was misconceived and that the plain language of the unamended provision allowed for the claim of balance additional depreciation in the subsequent assessment year. The Court relied on its previous judgments in T.C.A.Nos. 551 of 2013 and 157 of 2017, which had also negatived the Revenue's contention. The ratio decidendi is that the manner of calculation of depreciation cannot impede the claim for balance additional depreciation in the year following the previous year of installation and use. The appeal filed by the Revenue was dismissed.

What were the facts?

The Commissioner of Income Tax, Chennai (Revenue) appealed against the order of the Income Tax Appellate Tribunal (ITAT), Chennai. The appeal concerned M/s. Sundaram Fasteners Ltd. (assessee) and related to the assessment year(s) not explicitly stated but implied to be subsequent to the acquisition and installation of plant and machinery. The core issue was whether the assessee was entitled to claim 50% of additional depreciation in an assessment year subsequent to the year of acquisition and installation. The ITAT had ruled in favour of the assessee, which the Revenue challenged.

What were the issues?

1. Whether the assessee is entitled to claim 50% of additional depreciation in the assessment year subsequent to the assessment year of acquisition and installation of plant and machinery (Question of law, turning on Section 32(1)(iia) of the Income Tax Act, 1961). Assessee's Contention: The judgment does not explicitly record the assessee's arguments. However, it implies that the assessee argued for the right to claim balance additional depreciation in the year following the previous year of installation and use, even if for less than 180 days. Revenue's Contention: The Revenue argued that the assessee was not entitled to claim additional depreciation in a subsequent assessment year. Their argument was based on a reasoning that the court found to be misconceived, and also relied on a Memorandum which the court held only clarified the unamended provision.

Which sections of the Income-tax Act were involved?

Section 32(1)(iia)

AI-generated summary — verify with the full judgment below

TCA.No.471 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 20.06.2022 CORAM THE HONOURABLE MR. JUSTICE R. MAHADEVAN AND THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.471 of 2017 The Commissioner of Income Tax, Chennai. .. Appellant Versus M/s.Sundaram Fasteners Ltd., 98-A, 7th Floor, Dr.RAdhakrishnan Salai, Mylapore, Chennai-600004. .. Respondent Appeal filed under Section 260 (A) of the the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal “D” Bench, Chennai, dated 04.03.2016 in I.T.A.Nos.688/Mds/2015. For Appellant : Mr.J.Narayanaswamy For Respondent : Mr.Subbaraya Aiyar 1/4 https://www.mhc.tn.gov.in/judis TCA.No.471 of 2017 JUDGMENT (Judgment of the court was made by MOHAMMED SHAFFIQ, J.) The short question that arises for consideration is whether the assessee is entitled for 50% of additional depreciation in the assessment year, subsequent to the assessment year of acquisition and installation of plant and machinery. 2. The above question is no longer res integra and stands resolved by this Court on more than one occasion, wherein the argument of the Revenue has been negatived and it was held that it is permissible for the assessee to claim balance depreciation in the assessment year which follows the assessment year in which the machinery was acquired and installed albeit, for less than 180 days. In this regard it may be relevant to refer to the following portion of judgment of this Court in T.C.A.Nos. 551 of 2013 dated 14.03.2017 and 157 of 2017 dated 06.03.2017 which reads as under: " T.C.A.No.551 of 2013 9. The last submission that Mr.Ravi advanced was in fact, predicted on the reasoning given by the Assessing Officer, which, according to us, is misconceived, as the manner of calculation of depreciation, cannot, to our minds, impede the claim of the Assessee for balance additional Depreciation, in the year following the previous year, in which, the said asset is installed and put to use. 2/4 https://www.mhc.tn.gov.in/judis TCA.No.471 of 2017 10. Therefore, for the aforesaid reasons, we find no merit in the submissions advanced by the Revenue. T.C.A.No.157 of 2017: 11.4. We are, clearly, of the view that the Memorandum, which is sought to be relied upon by the Revenue, only clarifies as to how the unamended provision had to be read all along. 11.5. In any event, insofar as the Court is concerned, it has to go by the plain language of the unamended provision, and then, come to a conclusion in the matter. As alluded to above, our view, is that, upon a plain reading of the unamended provision, it could not be said that the Assessee could not claim balance depreciation in the A.Y., which follows the A.Y., in which, the machinery had been bought and used, albeit, for less than 180 days. " 3. Accordingly, the questions of law stand answered against the Revenue and this Tax Case Appeal stands dismissed. No costs. [R.M.D., J.] [M.S.Q., J.] 20.06.2022 Index : Yes/No Speaking/Non-Speaking Order psa To: 1.The Commissioner of Income Tax, Chennai. 2.Income Tax Appellate Tribunal “D” Bench, Chennai. 3/4 https://www.mhc.tn.gov.in/judis TCA.No.471 of 2017 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. psa TCA No.471 of 2017

20.06.2022 4/4 https://www.mhc.tn.gov.in/judis

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