ASSISTANT COMMISSIONER OF INCOME TAX LTU CIRCLE 1 , CHENNAI vs. E I D PARRY INDIA LIMITED, CHENNAI

Disallowance of additional depreciation u/s.32(1)(iia): It was submitted by the learned Authorized Representative that the assessee has acquired new machinery and put the same to use for a period of less than 180 days during the relevant Assessment Year. It was a submission that the Assessing Officer has disallowed the assessee's claim of additional depreciation. It was a submission that the assets had been put to use during the relevant assessment year though less than 180 days, the assessee was entitled to the benefit of the 50% of the additional depreciation. The learned Authorized Representative placed reliance on the decision of the Cochin Benches of this Tribunal in the case of Automotive Coaches & Components Limited vs. The Deputy Commissioner of Income Tax reported in dated 12.02.2016.

Is not the finding of the Tribunal bad especially when as per the proviso to Section 32(0)(1) restricts depreciation allowable to 10% in the year in which the 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?

We have elaborately heard the learned senior counsel for the appellant/revenue.

The assessee is a private limited company had filed its return of income for the assessment year 2009-10 on 28-9-2009 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 26-3-2014 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 2009-10 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.

The assessing officer was of the view that the assessee has claimed arrears of depreciation under section 32(1)(rio) 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 2007-08, for which, additional depreciation at 10% was allowed for the assessment year 2008-09. 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/-.

The CIT(A) also followed its own decision in the case of Associated Printers (Madras) (P) Ltd. dated 14-1-2016 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.) Ltd. [2016] 66 taxmann.com 4/380 ITR 423.

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

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 1-4-2016 by Finance Act, 2015.

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. 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. 8. In the light of the aforesaid binding judicial decisions in favour of the assessee, the issue on additional depreciation claimed by the assessee is held to be rightly allowed by the Ld.CIT(A) by passing the impugned order, which we confirm, and therefore, we dismiss the appeal of the Revenue.