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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: Shri P.M. Jagtap & Shri Siddhartha Nautiyal
आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This is an appeal filed by the assessee against the order of the ld. Principal Commissioner of Income Tax Vadodara-1 vide order dated 26/03/2019 passed for the assessment year 2014-15.
The brief facts of the case are that in the assessment u/s. 143(3) of the Income tax Act was finalized on 08/12/2016 in which the assessee company
I.T.A No. 912/Ahd/2019 A.Y. 2014-15 Page No. 2 Dakshin Gujarat Vij Company Ltd. vs. Pr. CIT
had claimed and was allowed depreciation of Rs.3,22,03,28,149/- on plant and machinery which included additional depreciation of Rs. 81,44,86,959/- for the additions made to plant & machineries.
The Ld. Pr. CIT initiated proceedings u/s 263 of the Act against the assessment order passed u/s. 143(3) of the Act, as being erroneous and prejudicial to the interest of revenue on the ground that the claim of additional depreciation of Rs.81,44,86,959/- was incorrectly allowed to the assessee company by the Ld. Assessing Officer in the assessment proceedings, since the assessee is engaged only in distribution of electricity and additional depreciation is allowable to companies engaged in business of either ‘generation’ of power or 'generation and distribution' of power.
The assessee challenged the same, but Ld. Pr. CIT held that the assessment order was erroneous and prejudicial to the interests of the Revenue and set aside the same for fresh adjudication after giving due opportunity to the assessee. The Ld. Pr. CIT observed as under while passing the order passed u/s 263 of the Act order:
"On verification of records, it is seen that during the year under consideration, you have claimed additional depreciation of Rs.81.44,86,959/-and the same was allowed during the assessment proceedings. ….. Since, the assessee company is engaged only in distribution of electricity and additional depreciation is allowable to companies engaged in business of either generation of power or 'generation
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and distribution' of power. So, the claim of additional depreciation allowed to assessee was not correct as assessee did not qualify to claim deduction for additional depreciation u/s 32(l)(iia) of the I -T Act and accordingly, additional depreciation of Rs.81,44,86,959/- allowed during assessment is required to be disallowed and added to the total income. …………. 4.2 Therefore, it can be seen that assessee engaged in the business of distribution of power (only) became entitled to claim additional depreciation u/s. 32(l)(iia) of the Act after Finance Act, 2016 with effect from the 1st day of April, 2017. Before Finance Act, 2016, provision of Section 32(l)(iia) was governed by Finance Act, 2012 which was effective from the 1st day of April, 2013, Had the intent of the legislature was to give the benefit of additional depreciation to assesses engaged in the distribution of power during the A.Y. 2014-15 then the amendment in Section 32(l)(iia) of the Income tax Act vide Finance Act, 2016 would have been made effective retrospectively. However, it is explicitly stated in Section 13 of the Finance Act -2016 that amendment in Section 32(l)(iia) shall be effective from the 1st day of April, 2017.
Before us, the Ld. Counsel for the assessee acquiesced that the issue is directly covered against the assessee by the decision in assessee’s own case in the case of Dakshin Gujarat Vij Co. Ltd v. Pr. CIT in ITA No. 1527/Ahd/2019 vide order dated 30/03/2022 for AY 2015-16. Accordingly, the Ld. Counsel for the assessee has conceded the case for the captioned
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year in light of the above decision. In the said above order, in respect of the claim of additional depreciation on plant and machinery, we have made the following observations, directly relevant to the issue before us: “It is manifest from the provision of Section 32(1)(iia) as amended by the Finance Act, 2012 with effect from 1st April 2013 that additional depreciation was allowed in respect of cost of new plant or machinery acquired and installed by certain assessees engaged in the business of generation or generation and distribution of power and the assessees engaged only in the business of distribution of power/electricity, like the assessee in the present case, was not allowed the benefit given under Section 32(1)(iia) of the Act. As per the provision of Section 32(1)(iia), as amended by Finance Act, 2012 with effect from 1st April 2013 which is applicable to the year under consideration, i.e. AY 2015-16, the assessee- company engaged only in the business of distribution of electricity thus was not entitled to claim additional depreciation of 20% in respect of the cost of new plant or machinery acquired and installed by it and this position is not even disputed by the learned Counsel for the assessee at the time of hearing before us. He, however, has relied on the amendment again made in Section 32(1)(iia) by the Finance Act, 2016 with effect from 1st April 2017 whereby the benefit of additional depreciation of 20% in respect of cost of new plant or machinery acquired and installed is also extended even to the assessees who are engaged only in the business of distribution of electricity. He has contended that this amendment is made in Section 32(1)(iia) in order to rationalize the incentive for power sector and the same, therefore, is required to be
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given retrospective effect. In support of this contention, he has relied on various judicial pronouncements.
……………
Having regard to the language used while making the amendment to the provisions of Section 32(1)(iia) by the Finance Act, 2016 which is plain, clear and unambiguous and keeping in view the legislative intention behind the said amendment as explained in the relevant memorandum to extend the benefit of additional depreciation in respect of the cost of new plant or machinery acquired and installed even by the assessees engaged only in the business of distribution of electricity/power from a certain date, i.e. 1st April 2017, we are of the view that the same cannot be treated as declaratory/curative in nature so as to give retrospective effect to it as sought to be contended by the learned Counsel for the assessee. The said amendment made effective by the legislature clearly from 1st April 2017; thus is applicable in relation to Assessment year 2017-18 and subsequent Assessment Years; and the same, therefore, cannot be applied to the year under consideration, i.e. AY 2015-16, to allow the assessee additional depreciation under Section 32(1)(iia) of the Act. The assessment order passed under Section 143(3) of the Act allowing the said claim of the assessee thus was erroneous as well as prejudicial to the interest of the Revenue; and, the learned PCIT, in our opinion, was fully justified in revising the same by his impugned order passed under Section 263 of the Act. We, therefore, uphold the
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said order of the learned PCIT and dismiss this appeal of the assessee.
In view of the above Ruling, as aptly conceded by Ld. Counsel for the assessee, since the issue has been decided against the assessee in his own case for AY 2015-16, in the result, the appeal of the assessee is dismissed.
In the result, the appeal of the assessee is dismissed
Order pronounced in the open court on 27-04-2022
Sd/- Sd/- (P.M. JAGTAP) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad : Dated 27/04/2022 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद