THE COMMISSIONER OF INCOME TAX vs. M/S. KITEX GARMENTS LTD.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 5TH DAY OF AUGUST 2021 / 14TH SRAVANA, 1943 ITA NO. 138 OF 2014 AGAINST THE ORDER IN ITA 75/2012 OF I.T.A.TRIBUNAL,COCHIN BENCH, ERNAKULAM APPELLANT/S: THE COMMISSIONER OF INCOME TAX-1 COCHIN. BY ADVS. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/S: M/S. KITEX GARMENTS LTD. 91,PATTIMATTOM,KIZHAKKAMBALAM. CHOORAKODU, ERANAKUALM - 683562 BY ADVS. SRI.ANIL D. NAIR SRI.JOSE JOSEPH CHEMPLAYIL SMT.C.S.SULEKHA BEEVI SRI.R.SREEJITH KUM.SOUMYA PRAKASH THIS INCOME TAX APPEAL HAVING COME UP FOR HEARING ON 05.08.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

I.T.A. No.138/2014 -2- J U D G M E N T S.V.Bhatti, J. Heard learned Standing Counsel Mr. Jose Joseph and learned Counsel Mr. Anil D. Nair for parties. 2. The Commissioner of Income Tax/Revenue is the appellant. M/s.Kitex Garments Ltd/Assessee is the respondent. The subject appeal is at the instance of Revenue from the order of Income Tax Appellate Tribunal (for short ‘the Tribunal') Cochin Bench in ITA No.75/Coch/2012 dated 31.12.2013. The controversies canvassed in the appeal relate to the Assessment Year 2008-09. 3. The appeal deals with the controversy on availing 50% of depreciation unavailed under Section 32(1)(iia) in the previous year ending on 31.03.2008, whether could be allowed

I.T.A. No.138/2014 -3- in the subsequent year or not. Substantial questions raised read as follows: “1. Whether, on the facts and in the circumstances of the case and on an interpretation of Sec. 32(1)(iia) read with the second proviso the Tribunal is right in law in holding that "the balance 50% of the depreciation has to be allowed in the subsequent year" and is not the above finding against law and perverse? 2. Whether, on the Tribunal is right in law in holding that "the second proviso to section 32(1)(ii) is to mean that 10% should be allowed in the year in which the machinery is acquired and installed and the balance 10% has to be impliedly allowed in the subsequent year" and is not the above interpretation and approach against law and the intention of the legislature?” 4.1 The circumstances leading to the disagreement between he Revenue and the assessee are not in dispute and the fact that the assessee at the first instance availed 50% of additional depreciation allowed under Section32(1)(iia) of the Act. The assessee could avail 50% of allowed depreciation on account of the fact that the equipment for which depreciation

I.T.A. No.138/2014 -4- was claimed was not used for more than 180 days in the previous year 2007-08. Thus, the assessee claimed 10% of permissible 20% depreciation in the previous year 2007-08 and claimed balance 50%, i.e., 10% of 20%, in the Assessment Year 2008-09. The Tribunal held that there is no restriction in the Income Tax Act from availing balance of one-time-incentive in the form of additional sum of depreciation in the subsequent year. 4.2 Learned Senior Counsel appearing for the assessee refers to and relies on the judgments in Commissioner of Income- tax, Madurai v. T P Textiles (P) Ltd.1 and Commissioner of Income-tax, Bangalore v. Rittal India (P) Ltd2 for sustaining the view taken by the Tribunal. It is also argued that the clarificatory amendment made to Section 32(1)(ii) with effect from 01.10.2016 also supports the deduction claimed by the assessee. The 1 (2017) 79 taxmann.com 411 (Madras) 2 (2016) 66 taxmann.com 4 (Karnataka)

I.T.A. No.138/2014 -5- amendment, no doubt, was introduced with effect from 01.10.2016, is a clarificatory amendment. The decisions relied on by the assessee are directly on the point and we are in full agreement with the view taken by the Madras and Karnataka High Courts. The proposition sated in the reported judgment applies in all fours. By following the reasons and principles laid down in T P Textiles (P) Ltd. and Rittal India (P) Ltd (supra), substantial questions are answered against the Revenue and in favour of the assessee. No order as to costs. Sd/- S.V.BHATTI JUDGE Sd/- BECHU KURIAN THOMAS JUDGE jjj

I.T.A. No.138/2014 -6- APPENDIX OF ITA 138/2014 PETITIONER ANNEXURE ANNEXURE A COPY OF THE ASSESSMENT ORDER U/S.143(3) DT. 21/12/2010 PASSED BY THE ASSESSING OFFICER FOR AY 2008-09. ANNEXURE B COPY OF THE CIT(A)'S ORDER NO.ITA-85/R-1/E/CIT(A)- II/10-11 DATED 20.12.2011 ANNEXURE C COPY OF THE ITAT, COCHIN BENCH'S ORDER ITA NO.75/COCH/2012 DATED 31-12-2013.