DCIT 10(2), MUMBAI vs. GODREJ INDUSTRIES LTD, MUMBAI

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ITA 6438/MUM/2013Status: DisposedITAT Mumbai01 June 2016AY 2007-085 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee is entitled to the full benefit of additional depreciation as per Section 32(1)(iia) of the Act. The restriction to 50% for the first year due to usage period does not divert the statutory right to claim the remaining depreciation in subsequent years.

What were the facts?

The Revenue appealed an order allowing the assessee to carry forward 50% of its additional depreciation claim. The Assessing Officer had restricted the additional depreciation due to the plant and machinery being put to use for less than 180 days.

What were the issues?

Whether the assessee is entitled to carry forward the unutilized portion of additional depreciation when the asset was put to use for less than 180 days in the first year.

Which sections of the Income-tax Act were involved?

Section 32(1)(iia),Section 115JB,Section 143(3),Section 263

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCHES “G”, MUMBAI

Before: Shri Joginder Singh, & Shri N.K. Billaiya

For Appellant: Ms. Sonalee Godbole
For Respondent: Shri Ajit Kumar Srivastava
Hearing: 26/05/2015

आदेश / O R D E R Per Joginder Singh (Judicial Member)

1.

The Revenue is aggrieved by the impugned order dated 5th August 2013, of the learned first appellate authority, Mumbai,

2 M/s. Godrej Industries Ltd. directing the Assessing Officer to allow the assessee to carry forward balance 50% of its claim of additional depreciation and allow it in the subsequent year, which is out of scope of the Income Tax Act, 1961 (hereinafter “the Act”).

2.

During the hearing of this appeal, Shri Ajit Kumar Srivastava, learned CIT-DR, advanced his arguments which are identical to the ground raised by submitting that the learned Commissioner of Income Tax (Appeals) while granting direction to the Assessing Officer ignored the provisions of the Act. The addition so made by the Assessing Officer was defended. On the other hand, Ms. Sonalee Godbole, learned Counsel for the assessee defended the conclusion arrived at in the impugned order by submitting that the case is covered in favour of the assessee by the decision of the learned Commissioner of Income Tax (Appeals) itself for the assessment year 2009-10, which has been reproduced at Page-2 onwards of the impugned order.

3.

We have considered the rival submissions and perused the material available on record. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsels, if kept in juxtaposition and analyzed, we note that the assessee declared total income as “nil” as per the normal provisions of the Act and total income at Rs.21,86,10,388, u/s 115JB of the Act. The assessee company was assessed on 21st December 2009, u/s 143(3) of the Act, computing the total loss of Rs.29,83,16,673, as per the normal provision and total income of Rs.26,34,32,387, u/s 115JB of the Act. The assessee claimed

3 M/s. Godrej Industries Ltd. additional depreciation u/s 32(1)(iia) of the Act. The learned Commissioner invoking revisional jurisdiction u/s 263 of the Act, directed the Assessing Officer not to allow carry forward of unclaimed depreciation pursuant to the direction disallowed the additional depreciation and restricted to 10% on the ground that the plant and machinery was put to use after 30th September 2006. Thus, the period is less than 180 days. Therefore, only restricted rate shall be applicable. On appeal, before the learned Commissioner of Income Tax (Appeals), by following the decision for the assessment year 2009-10, the issue was decided in favour of the assessee. The Revenue is aggrieved and is in appeal before this Tribunal. We find that the provisions of section 32(1)(iia) of the Act, was introduced vide Finance Act, 2002 (effective from the assessment year 2003-04) with a view to give boost to the manufacturing sector, therefore, it was proposed to allow additional depreciation of a sum equal to 15% (over and above normal depreciation) of the actual cost of such plant and machinery acquired and installed after 31st March 2002. This was sort of incentive to the assessee to invest and acquire plant and machinery to expand the manufacturing capacity. The Finance Act, 2005, further amended section 32, to increase the rate of additional depreciation to 20% on new plant and machinery and dispensed with the condition of additional depreciation which to be allowed only to a new industrial undertaking. The provision was explained by CBDT, Circular no.8 of 2002. The Delhi Bench of the Tribunal in DCIT v/s Cosmo Films Ltd. (ITA no.2831/Del./2007), held that in section 32(1)(iia) of the Act, the expression used is “shall be allowed”. Thus, the assessee company earned the benefit as soon as it has purchased new plant and machinery in full but restricted to 4 M/s. Godrej Industries Ltd. 50% in that particular year on account of period of usages. Such restrictions cannot divert the statutory right of the assessee. Identical ratio was laid down in ACIT v/s SIL Investment Ltd., 54 SOT (Del.) 54, which was duly followed by the Mumbai Bench of the Tribunal in MITC Rolling Mills Pvt. Ltd. v/s ACIT, (ITA no.2789/Mum./2013), order dated 13th May 2013. Thus, the assessee is entitled to depreciation in the subsequent year, if the entire depreciation is not allowed in the first year of installation. The ratio laid down in ITO v/s M/s. Aswani Industries (ITA no.140/Ahd./2013) order dated 31st May 2013, further supports the claim of the assessee. The ratio laid down in Apollo Tyres Ltd. v/s ACIT, (2014) 45 taxman.com 337 (Cochin)(Trib.) further supports the case of the assessee. If the ratio laid down in the aforesaid cases is kept juxtaposition with the facts before us, we are of the view that the assessee is entitled for 50% of the additional depreciation and there is no restriction to claim the additional depreciation, if otherwise available, to the assessee. We find no infirmity in the conclusion drawn by the learned Commissioner of Income Tax (Appeals). It is affirmed.

Finally, the appeal of the Revenue is dismissed.

This order was pronounced in the open Court in the presence of learned Representatives from both the sides at the conclusion of the hearing on 26th May 2015.

Sd/– Sd/– (N.K. Billaiya) (Joginder Singh) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER भुिंफई Mumbai; ददनािंक Dated : 01/06/2015

5 M/s. Godrej Industries Ltd.

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