ASSISTANT COMMISSIONER OF INCOME TAX 15(2)(2), MUMBAI vs. M/S. PRASOL CHEMICALS LIMITED, MUMBAI

The only dispute in the present appeal is with regard to the allowance of assessee’s claim of additional depreciation.

Brief facts are, in the financial year relevant to the assessment year 2013–14, the assessee had purchased some plant and machineries which were put to use for less than 180 days. Therefore, though, additional depreciation @ 20% was otherwise allowable, however, it was allowed @ 10%. In the impugned assessment year, though in the original return of income, the assessee did not claim the balance 10% of the additional depreciation carried over from assessment year 2013–14, however, the assessee filed a revised return of income claiming the balance 10% of the additional depreciation amounting to ` 68 lakh. In the course of assessment proceedings, when the Assessing Officer called upon the assessee to justify its claim of depreciation pertaining to the preceding assessment year, the assessee submitted that since the additional depreciation under section 32(1)(iia) of the Income Tax Act, 1961 (for short "the Act") is allowable @ 20% but in the assessment year 2013–14, it was allowed @ 10%, the balance 10% of the additional depreciation can be allowed in the impugned assessment year. In support of such contention, assessee relied upon certain judicial precedents. The Assessing Officer, however, did not find merit in the submissions of the assessee and held that the additional depreciation pertaining to the preceding assessment year cannot be allowed in the impugned assessment year. Accordingly, he disallowed the additional

The learned Commissioner (Appeals) after considering the submissions of the assessee in the light of the judicial precedents cited before him, allowed assessee’s claim of additional depreciation.

We have considered rival submissions and perused the material on record. Shri Neil Phillip, the learned Departmental Representative and Shri Y.P, Trivedi, the learned Sr. Counsel for the assessee have agreed before us that the issue in dispute is covered by various case laws. Undisputedly, in the assessment year 2013–14 the assessee had purchased some plant and machinery on which additional depreciation under section 32(1)(iia) of the Act was allowable @ 20%. However, since the assets were put to use for a period of less than 180 days, depreciation was allowed @ 50% of the rate fixed i.e., @ 10%. The balance 10% of the additional depreciation was claimed by the assessee in the impugned assessment year. The issue before us is, whether balance portion of additional deprecation pertaining to the preceding assessment year can be allowed in the impugned assessment year. We find answer to the aforesaid issue in the decisions cited by the learned Sr. Counsel for the assessee. The Tribunal, Mumbai Bench, in M/s. Wellknown Polyesters Ltd. v/s JCIT, ITA no.7015/Mum./2012, dated 17th September 2014, held that if the 4 M/s. Prasol Chemicals Ltd. entire amount of additional depreciation could not be allowed in the assessment year, wherein, the plant and machineries were put to use for less than 180 days, the balance portion of depreciation can be allowed in the subsequent assessment year. The same view has been expressed by the Hon’ble Karnataka High Court in CIT v/s Rittal India Pvt. Ltd., dated 4th January 2016 and by the Hon'ble Madras High Court in CIT v/s T.P. Textiles Pvt. Ltd., Tax Case Appeal no.157/2017, dated 6th March 2017. Respectfully following the ratio laid down in the aforesaid decisions, we uphold the order of the learned Commissioner (Appeals) on this issue. Grounds are dismissed.

In the result, appeal is dismissed. Order pronounced in the open Court on 24.05.2019