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Income Tax Appellate Tribunal, PANAJI BENCH, PANAJI
Before: HON’BLE SHRI S. S. GODARA & SHRI G. D. PADMAHSHALI
॥ आयकर अपीलीय न्यायाधिकरण, पणजी न्यायपीठ, पणजी में ॥ IN THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, PANAJI BEFORE HON’BLE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER (Through Virtual hearing at Pune) आयकर अपील सं. / ITA No. 131/PAN/2019 धििाारण वर्ा / Assessment Year : 2010-11 Dempo Industries Pvt. Ltd., Dempo House, Campal, Panaji, Goa - 403001 PAN: AAACU1745F . . . . . . . अपीलार्थी / Appellant
बनाम / V/s. Income Tax Officer, Ward-1(2), Panaji . . . . . . .प्रत्यर्थी / Respondent द्वारा / Appearances Assessee by : Ms Rucha Vaidya Revenue by : Mr Prabhakar Anand DJ सुनवाई की तारीख / Date of conclusive Hearing : 12/07/2023 घोषणा की तारीख / Date of Pronouncement : 01/09/2023 आदेश / ORDER PER G. D. PADMAHSHALI, AM; This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax -1, Panaji [‘CIT(A)’ in short] dt. 11/02/2019 passed u/s 250 of the Income-tax Act, 1961 [‘the Act’ in short] which in turn arisen out of the assessment order dt. 29/03/2016 passed u/s 143(3) r.w.s. 263 of the Act by the Income Tax Officer, Ward-1(2), Panaji Goa [‘AO’ in short].
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Dempo Industries Pvt. Ltd., ITA No.131/PAN/2019 AY: 2010-11
A small issue for our consideration arising in present appeal is eligibility for additional depreciation on newly installed machinery which was acquired in the year other than previous year relevant to assessment year 2010-11
Pithily stated the facts of the case are; 3.1 The assessee is a company engaged in the business of newspaper printing & publication which for the assessment year [‘AY’ in short] 2010-11 filed its return of income [‘ITR’ in short] on 23/09/2010 declaring total income of ₹ 4,87,68,560/- u/s 139 of the Act. The case of the assessee was subjected to scrutiny and the regular assessment in the first instance u/s 143(3) of the Act was completed on 29/01/2013 assessing the total income at ₹8,73,34,825/-.
3.2 Subsequent to regular assessment upon direction of Ld. Pr. Commissioner of Income Tax, Panaji [‘PCIT’ in short] u/s 263 of the Act, the assessment was reframed u/s 143(3) r.w.s. 263 of the Act on 29/03/2016 by disallowing additional depreciation of ₹21,69,257/- claimed u/s 32(1)(iia) of the Act on threefold reasons viz; (1) the business of newspaper publication do not amount to manufacturing or production of any article or thing (2) items against which additional depreciation is claimed do not qualify to be plant & machinery and (3) items were purchased prior to previous year relevant to assessment year.
3.3 The assessee challenged the aforesaid disallowance before first appellate authority in an appeal u/s 246A(1) of the Act. By the impugned order, the Ld. CIT(A) partly allowed the claim holding that (1) newspaper publication business squarely falls within the eligible business in the light of Co-ordinate
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Dempo Industries Pvt. Ltd., ITA No.131/PAN/2019 AY: 2010-11
Bench decision in ‘DCIT Vs Mathrubhumi Printing and Publishing Co. Ltd’ [ITA no. 104/Coch/2014] and ‘Rajasthan Patrika Pvt. Ltd. Vs ACIT’ (2) items against which additional depreciation is claimed are qualified to be ‘machinery’ used in the business if not ‘Plant’. However came to confirm balance disallowance attributable to machinery purchased in the financial year 2008-2009. Aggrieved by the balance disallowance appellant assessee instituted present appeal u/s 253(1)(a) of the Act with following grounds; “1. The Learned Commissioner of Income Tax Appeals has erred in confirming the disallowance of additional depreciation on certain items of plant and machinery holding that the same do not qualify as plant and were purchased in the previous year. Your appellant contends that the items are part of the factory machinery and that they were put to use for the first time in the current assessment year. Your Petitioner, therefore, prays for directions for deleting the disallowance and restoring the claim of the appellant.
Your Petitioner craves leave to add, alter, amend or delete any of the above Grounds of Appeal.” 4. The ground number 2 is general, since not pressed into service for adjudication, therefore we have heard rival contentions of both the parties on ground number 1; and subject to the provisions of rule 18 of Income Tax Appellate Tribunal Rules, 1963 perused the material placed on record, case laws relied upon rival parties and duly considered the facts of the case in the light of settled legal position, which are also forewarned to parties present.
Admittedly, the business of newspaper publication is ‘manufacturing’ for the purpose of section 32(1)(iia) of the Act and further there is no dispute over Gensets, Transformer and Stabilizer (as listed at Sr No 6, 7 and 8 in the table
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Dempo Industries Pvt. Ltd., ITA No.131/PAN/2019 AY: 2010-11
placed at para 6 of assessment order) qualifying as ‘machinery’ for the purpose of additional depreciation. Irrefutably aforestated items of machinery were acquired in the financial year 2008-2009 and installed in impugned previous year 2009-10 relevant to assessment year under consideration, for the reasons tax authorities below denied the benefit of additional depreciation thereon.
Now it is apt to quote text of relevant provision in verbum as under; (iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation, transmission or distribution of power, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) : (Emphasis supplied) A bare reading clause (iia) of section 32(1) unambiguously prescribes that new plant or machinery acquired and installed after 31st March, 2005 subject to 2nd proviso are eligible for additional depreciation. Presently we are not concerned with 2nd proviso which disentitles the additional depreciation under four bullet circumstances. Once the assessee establishes on record that new plant or machinery is acquired and installed after aforestated date (supra), shall ispo- fact entitles the assessee for additional depreciation u/c (iia) (supra), irrespective of the fact whether such plant or machinery is installed in the year of its acquisition or any subsequent year of its acquisition.
Undisputedly in the extant case, the qualifying ‘machinery viz Gensets, Transformer and Stabilizer’ were acquired after 31st March, 2005 and installed after 31st March, 2005 thus the basic condition to avail additional depreciation
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Dempo Industries Pvt. Ltd., ITA No.131/PAN/2019 AY: 2010-11
stand established and applying the rule of stricter interpretation as laid by Hon’ble Supreme Court in ‘State of Uttar Pradesh Vs Koreas India Ltd.’ reported in AIR 1977 SC 132 and ‘Dilip Kumar Vs CCE’ reported 9 SCC 1 we therefore hold there remains no scope to read the provision for its denial.
In our considered view, the additional depreciation u/s 32(1)(iia) of the Act is in the nature of incentive to the assessee so as to enable to upgrade its manufacturing activities with new plant & machinery. Therefore these provisions are to be interpreted fairly and liberally to promote the intention of the legislature. In interpreting the aforestated clause (iia) (supra) liberally we place reliance on ‘Bajaj Tempo Ltd. Vs CIT’ reported in 3 SCC 78 wherein Hon’ble Apex Court laid that the beneficial provisions intended for promoting economic growth to be interpreted liberally, the restriction on it, too, has to be construed so as to advance the objective of the section and not to frustrate it. In nutshell, we allow the ground raised for claim of additional depreciation.
In result, the appeal of the assessee is ALLOWED in above terms. U/s 34 of ITAT Rules, order is pronounced in the open court on this Friday 01st day of September, 2023.
-S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 01st day of September, 2023. आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1.अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The CIT-(A)-1, Panaji 4. The Pr. CIT, Panaji 5. DR, ITAT, Panaji Bench, Panaji 6. गार्डफ़ाइल / Guard File. Ashwini आदेशानुसार / By Order, वररष्ठ ननजी सनिव / Sr. Private Secretary आयकरअपीलीय न्यायानधकरण, पुणे / ITAT, Pune.
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