DCIT, Circle-6(1), Kolkata, Kolkata V. M/s National Engineering Industries Ltd., Kolkata

ITA 1791/KOL/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8806 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 03-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Keywords: Business income; Depreciation; Additional depreciation; Question of law
• Section: 32(1)(iia); 32

Judgement Text

1 ITA NO.1791/KOL/2017 M/S. NATIONAL ENGINEERING INDUSTRIES LTD. AY- 2013- 14 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A.T. VARK EY, JM] I.T.A. NO. 1791/KOL/2017 ASSESSMENT YEAR: 2013-14 DCIT, CIRCLE 6(1), KOLKATA VS. M/S. NATIONAL ENGIN EERING INDUSTRIES LTD. (PAN: AAACN 9969 I) APPELLANT RESPONDENT DATE OF HEARING 10.12.2018 DATE OF PRONOUNCEMENT 28.12.2018 FOR THE APPELLANT SHRI P.K. SRIHARI, CIT, DR FOR THE RESPONDENT SHRI R.N. BAJORIA, SHRI ASIM CHO UDHURY & SHRI ROHAN PODDAR, ADVOCATE ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)- 22, KOLKATA DATED 11.05.2017 FOR AY 2013-14. 2. GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE UPWARD ADJUSTMENT OF RS. 1,28,07,54 3/- IGNORING PROVISIONS OF SECTION 92CA(3) OF THE I.T. ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN TREATING THE SERVICE CHARGES AS BUSINESS INCOME INS TEAD OF HOUSE PROPERTY INCOME AND ALLOWING DEDUCTION OF EXPENSES AND DEPRECIATION INS TEAD OF DEDUCTION OF 30% OF ANNUAL RENTAL VALUE. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF BALANCE ADDITIONAL DEPRECIATI ON AMOUNTING TO RS. 6,36,83,752/- ON THE ASSETS WHICH WERE PUT TO USE IN EARLIER FINA NCIAL YEAR. 4. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELE TE OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2 ITA NO.1791/KOL/2017 M/S. NATIONAL ENGINEERING INDUSTRIES LTD. AY- 2013- 14 3. GROUND NO. 1 IS AGAINST THE ORDER OF THE LD. CIT (A) DELETING THE UPWARD ADJUSTMENT OF RS. 1,28,07,543/- IGNORING PROVISIONS OF SECTION 92CA(3) OF THE ACT. AT THE OUTSET ITSELF, IT HAS BEEN BROUGHT TO OUR NOTICE THAT SIMILAR ISSU E AROSE IN THE ASSESSEES OWN CASE FOR THE A.Y. 2011-12 AND 2012-13 WHEREIN THE ASSESSEE HAD C HARGED GUARANTEE COMMISSION `@ 0.38% OF THE OUTSTANDING GUARANTEED AMOUNT. HOWEVER TPO/AO ASSESSED CORPORATE FEE @ 3% IN PLACE OF 0.38%. AGGRIEVED THE ASSESSEE PREFER RED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO DELETE THE ALP ADJUSTMENT ON COR PORATE GUARANTEE FEE. AGAINST THE ACTION OF THE LD. CIT(A), THE REVENUE HAS PREFERRED APPEALS BEFORE THIS TRIBUNAL. AND THE TRIBUNAL WAS PLEASED TO PARTLY ALLOW THE APPEAL OF THE REVENUE BY HOLDING THAT GUARANTEE COMMISSION BE BENCHMARKED BY TAKING THE RATE OF 1% OF THE OUTSTANDING GUARANTEE AMOUNT BY OBSERVING AS UNDER: IN WAKE OF THESE FACT AND WITHOUT GOING INTO THE O THER ARGUMENTS OF THE ASSESSEE AND ALSO LOOKING TO THE FACT THAT THE TRIBUNAL IN VARIO US CASES HAS ACCEPTED GUARANTEE COMMISSION CHARGEABLE BETWEEN 0.5% TO 1%, WE HOLD T HAT GUARANTEE COMMISSION OF 1% SHOULD BE CHARGEABLE. HERE IN THIS CASE, ASSESSEE I TSELF HAS AGREED TO CHARGE GUARANTEE COMMISSION @ 0.38% OF THE OUTSTANDING GUARANTEED AM OUNT, ACCORDINGLY, WE ALSO HOLD THAT A GUARANTEE COMMISSION SHOULD BE BENCHMARK BY TAKING THE RATE OF 1% OF THE OUTSTANDING GUARANTEED AMOUNT IN LINE WITH THE CONS ISTENT VIEWS TAKEN BY THE COORDINATE BENCHES, FROM ITS AE AND ADJUSTMENTS SHOULD BE MADE ACCORDINGLY. THUS, THIS GROUND RAISED BY THE REVENUE IS TREATED AS PARTLY ALLOWED. 4. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF T HE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE, WE SET ASIDE THE ORDER OF T HE LD. CIT(A) AND DIRECT THAT THE GUARANTEE COMMISSION BE BENCHMARKED BY TAKING THE R ATE OF 1% OF THE OUTSTANDING GUARANTEE AMOUNT BE COMPUTED AND ADJUSTMENT SHOULD BE MADE ACCORDINGLY. THUS GROUND NO. 1 OF THE REVENUES APPEAL IS PARTLY ALLOWED. 5. GROUND NO. 2 IS AGAINST THE ACTION OF THE LD. CI T(A) IN TREATING THE SERVICE CHARGES AS BUSINESS INCOME INSTEAD OF HOUSE PROPERTY INCOME . AT THE OUTSET ITSELF, THE SR. COUNSEL APPEAR FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT THIS ISSUE IS NO LONGER RES INTEGRA AND DREW OUR ATTENTION TO ASSESSEES OWN CASE FOR A.Y. 2006- 07 (ITAT NO. 188 OF 2010 / G.A. NO. 2777 OF 2010 WHEREIN THE HONBLE CALCUTTA HIGH COUR T HAS UPHELD THE DECISION OF THE 3 ITA NO.1791/KOL/2017 M/S. NATIONAL ENGINEERING INDUSTRIES LTD. AY- 2013- 14 TRIBUNAL AND LD. CIT(A) UPHOLDING THE CLAIMS OF THE ASSESSEE. THE QUESTION OF LAW BEFORE THE HONBLE CALCUTTA HIGH COURT WAS AS UNDER: WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LEARNED TRIBUNAL IS JUSTIFIED IN LAW IN HOLDING SERVICE CHARGE RECEIVED AS BUSINE SS INCOME INSTEAD OF HOUSE PROPERTY WITHOUT CONSIDERING THE DECISION OF THE LATEST JUDG MENT REPORTED IN 249 ITR 47 (CAL) 6. WE NOTE THAT THE AFORESAID GROUNDS RAISED BY THE REVENUE BEFORE THE HONBLE HIGH COURT HAS BEEN DISMISSED AND THE TRIBUNALS ORDER T O TREAT THE SERVICE CHARGES AS BUSINESS INCOME INSTEAD FROM HOUSE PROPERTY HAS BEEN UPHELD. WE NOTE THAT THE ORDER OF THE TRIBUNAL HAS BEEN FOLLOWED BY THE LD. CIT(A) IN THE IMPUGNED ORDER AND ALSO THE LD. CIT(A) HAS DECIDED THE LIS BY RELYING ON THE DECISION OF THE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT VS MODEL MFG. CO. REPORTED IN 175 ITR 374 (CAL) AND IN THE CASE OF CIT VS RUSSEL PROPERTIES PVT. LTD. 137 ITR 473 (CAL). WE NOTE THA T SINCE THE ASSESSEES CASE ON THIS ISSUE HAVE BEEN CONSISTENTLY UPHELD BY THE CIT(A) WHICH I N TURN HAS BEEN UPHELD BY THIS TRIBUNAL AND WHICH DECISION HAS BEEN UPHELD BY THE HONBLE J URISDICTIONAL HIGH COURT (SUPRA), THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT(A) A LLOWING THE TREATMENT OF SERVICE CHARGES OF RS. 2,29,16,880/- AS BUSINESS INCOME INSTEAD OF INCOME FROM HOUSE PROPERTY. THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 7. GROUND NO. 3 OF THE REVENUE IS AGAINST THE ACTIO N OF THE LD. CIT(A) IN ALLOWING THE CLAIM OF BALANCE ADDITIONAL DEPRECIATION AMOUNTING TO RS. 6,36,83,752/- ON THE ASSETS WHICH WERE PUT TO USE IN THE EARLIER FINANCIAL YEAR. 8. THE BRIEF FACTS OF THE CASE IS THAT THE AO NOTED THAT THE ASSESSEE HAS CLAIMED RS. 6,36,83,752/- ON ACCOUNT OF BALANCE ADDITIONAL DEPR ECIATION @ 10% ON THE ASSETS WHICH WERE PURCHASED AND PUT TO USE ON THE LATTER HALF OF A.Y. 2012-13. THE AO NOTED THAT THE ISSUE RELATES TO THE ALLOWABILITY OF BALANCE ADDITI ONAL DEPRECIATION IN THE SUBSEQUENT ASSESSMENT YEAR ON THE ASSETS WHICH WERE PUT TO USE FOR LESS THAN 180 DAYS FOR THE FINANCIAL YEAR RELATING TO PRECEDING ASSESSMENT YEAR. AFTER H EARING THE ASSESSEE ON THE ISSUE, THE AO WAS OF THE OPINION THAT THERE WAS NO PROVISION IN T HE ACT FOR CLAIMING IN THE SUBSEQUENT FINANCIAL YEAR THE BALANCE 50% OF ADDITIONAL DEPREC IATION, WHEN THE ASSESSEE HAD CLAIMED 4 ITA NO.1791/KOL/2017 M/S. NATIONAL ENGINEERING INDUSTRIES LTD. AY- 2013- 14 INITIAL 50% OF ADDITIONAL DEPRECIATION IN THE YEAR OF PURCHASE OF ASSET AS IT IS USED FOR LESS THAN 180 DAYS IN TERMS OF PROVISO TO SECTION 32(1) OF THE ACT. THE AO ALSO NOTED THAT THOUGH LATER ON AMENDMENT HAS COME, IT ONLY COMES TO EFFEC T IN THE FINANCE ACT, 2015 WITH EFFECT FROM 01.04.2016 AND NOTING THAT IT IS NOT A RETROSP ECTIVE ENACTMENT, HE DISALLOWED THE CLAIM OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED AN A PPEAL BEFORE LD. CIT(A) WHO WAS PLEASED TO GIVE THE RELIEF TO THE ASSESSEE BY HOLDI NG AS UNDER: AFTER CAREFULLY CONSIDERING THE FACTUAL AND LEGAL MATRIX, I FIND MYSELF IN AGREEMENT WITH THE APPELLANT THAT THE BALANCE 10% ADDITIONAL DEPRECIATION HAS TO BE ALLOWED IN THE NEXT YEAR. I ALSO NOTE THAT THE ACT HAS BEEN AM ENDED VIDE FINANCE ACT, 2015, AS ALSO THAT THE FINANCE ACT, 2015 HAS BEEN BROUGHT IN TO E NHANCE INVESTMENTS AND HENCE THE AMENDMENT IS IN THE NATURE OF A WELFARE MEASURE. MO REOVER, IT IS ALSO NOTED THAT THERE ARE THREE JURISDICTIONAL HONBLE ITAT DECISIONS IN FAVOUR OF THE APPELLANT NAMELY: A. BIRLA CORPORATION LTD. VS DCIT (2015) 69 SOT 217 (K OLKATA ITAT) B. CENTURY ENKA LTD. VS DCIT (2015) 37 ITR (TRIB) 644 (KOLKATA ITAT) C. UNIVERSAL CABLES LTD. VS DCIT (2015) 57 TAXMANN.COM 95 (KOLKATA ITAT) THUS, FOLLOWING THE AFORESAID DECISIONS, THE SAID G ROUND OF APPEAL IS ALLOWED AND DECIDED IN FAVOUR OF THE APPELLANT. THE LD. AO IS D IRECTED TO ALLOW ADDITIONAL DEPRECIATION OF RS. 6,36,83,752/-. HOWEVER, AS A CO NSEQUENCE OF ALLOWING THE SAID ADDITIONAL DEPRECIATION, THE CLOSING WDV OF PLANT & MACHINERY AS REPORTED BY THE APPELLANT / TAX AUDITOR AFTER DEDUCTION OF ADDITION AL DEPRECIATION WILL BE CARRIED FORWARD. 9. AGGRIEVED THE REVENUE BEFORE US. WE HAVE HEARD B OTH THE PARTIES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LEAR NED SENIOR COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT THIS ISSUE IS NO LONGER RES INTEGRA AND THE HONBLE KARNATAKA HIGH COURT IN CIT VS RITTAL (INDIA) LTD. 388 ITR 423 HAS ADJUDICATED SIMILAR ISSUE WHEREIN HONBLE HIGH COURT HELD AS UNDER: THIS APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGI NG THE ORDER OF THE TRIBUNAL WHEREBY FULL BENEFIT OF SECTION 32(1)(IIA) OF THE I NCOME TAX ACT, 1961 (FOR SHORT 'ACT') HAS BEEN GIVEN TO THE ASSESSEE. 2. THE UNDISPUTED FACTS OF THIS CASE ARE THAT THE RES PONDENT-ASSESSEE WAS AN EXISTING INDUSTRIAL UNDERTAKING, WHEN IT HAD ACQUIRED AND IN STALLED NEW PLANT AND MACHINERY IN 5 ITA NO.1791/KOL/2017 M/S. NATIONAL ENGINEERING INDUSTRIES LTD. AY- 2013- 14 THE FINANCIAL YEAR 2006-07 AND CLAIMED 50% OF ADDIT IONAL 20% DEPRECIATION (I.E. 10% ADDITIONAL DEPRECIATION) UNDER SECTION 32(1)(IIA) O F THE ACT IN THE CORRESPONDING ASSESSMENT YEAR 2007-08. THIS WAS SO CLAIMED BECAUS E ADMITTEDLY THE NEW MACHINERY WAS ACQUIRED AFTER 01.10.2006 AND BEFORE 31.03.2007 , MEANING THEREBY THAT IT WAS PUT TO USE FOR THE PURPOSE OF BUSINESS FOR A PERIOD OF LESS THAN 180 DAYS. THERE IS ALSO NO DISPUTE WITH REGARD TO THE FACT THAT UNDER SECTION 32(1)(IIA), READ WITH SECOND PROVISO TO 32(1)(II) OF THE ACT, FOR THE ASSESSMENT YEAR 2007- 08, THE RESPONDENT- ASSESSEE COULD HAVE BEEN, AND WAS GRANTED BENEFIT OF 50% OF THE 20 % OF THE AMOUNT OF DEPRECIATION ALLOWABLE UNDER SUB-SECTION (II) OF SECTION 32(1) O F THE ACT. 3. THE DISPUTE IN THE PRESENT APPEAL IS WITH REGARD T O THE ALLOWANCE OF THE BALANCE 10% DEPRECIATION IN THE NEXT ASSESSMENT YEAR 2008-09, S O THAT THE BENEFIT OF THE TOTAL 20% ALLOWABLE DEPRECIATION UNDER SECTION 32(1)(IIA) OF THE ACT WAS GIVEN. THE ASSESSING OFFICER, AS WELL AS THE APPELLATE COMMISSIONER, DIS ALLOWED THE CLAIM OF THE ASSESSEE, WHEREAS THE TRIBUNAL, VIDE ITS ORDER DATED 28.01.20 14, HAS ALLOWED THE APPEAL OF THE ASSESSEE. CHALLENGING THE SAME, THIS FURTHER APPEAL HAS BEEN FILED BY THE REVENUE. 4. WE HAVE HEARD SRI K.V. ARAVIND, LEARNED COUNSEL FO R THE APPELLANTS AS WELL AS SRI T. SURYANARAYANA, LEARNED COUNSEL APPEARING FOR THE RE SPONDENT-ASSESSEE AND PERUSED THE RECORD. 5. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWING T WO SUBSTANTIAL QUESTION OF LAW: 'I. WHETHER THE TRIBUNAL IS CORRECT IN EXTENDING TH E BENEFIT OF SECTION 32(1)(IIA) OF THE ACT TO THE NEXT ASSESSMENT YEAR WHEN THE INCOME TAX ACT DOES NOT PROVIDE FOR SUCH CARRYOVER, THEREBY VIOLATING THE LEGAL PRINCIPLES O F 'CASSUS OMISSUS' WHICH STATES THAT THE COURTS CANNOT COMPENSATE FOR WHAT THE LEGISLATU RE HAS OMITTED TO ENACT? II. WHETHER THE TRIBUNAL WAS CORRECT IN HOLDING THA T ADDITIONAL DEPRECIATION ALLOWED U/S.32(1)(IIA) IS A ONE TIME BENEFIT TO ENCOURAGE I NDUSTRIALIZATION AND THE RELEVANT PROVISIONS HAS BEEN CONSTRUED REASONABLY AND PURPOS IVE WITHOUT APPRECIATING THAT THE ADDITIONAL DEPRECIATION IS ALLOWED IN THE YEAR OF P URCHASE AND IF IN THE YEAR OF PURCHASE THE ASSESSEE IS ELIGIBLE ONLY FOR 50% DEPRECIATION, THE BALANCE 50% CANNOT BE CARRIED FORWARD FOR THE SUBSEQUENT YEAR ON THE CLAIM CANNOT BE ALLOWED IN ANY OTHER YEAR?' 6. THE RELEVANT PROVISIONS OF SECTION 32 ARE REPRODUC ED BELOW: 'SECTION 32. (1) IN RESPECT OF DEPRECIATION OF (I) BUILDINGS, MACHINERY, PLANT OR FURNITURE, BEING T ANGIBLE ASSETS; (II) KNOW- HOW, PATENTS, COPYRIGHTS, TRADE MARKS, LICENCES, FR ANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE, BE ING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1ST DAY OF APRIL, 1998, 6 ITA NO.1791/KOL/2017 M/S. NATIONAL ENGINEERING INDUSTRIES LTD. AY- 2013- 14 OWNED, WHOLLY OR PARTLY, BY THE ASSESSEE AND USED F OR THE PURPOSES OF THE BUSINESS OR PROFESSION, THE FOLLOWING DEDUCTIONS SHALL BE ALLOW ED (I) IN THE CASE OF ASSETS OF AN UNDERTAKING ENGAGED I N GENERATION OR GENERATION AND DISTRI BUTION OF POWER, SUCH PERCENTAGE ON THE ACTUAL COST THEREOF TO THE ASSESSEE AS MAY BE PRESCRIBED ; (II) IN THE CASE OF ANY BLOCK OF ASSETS, SUCH PERCENTA GE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED : PROVIDED . . . . . . . . . . . . . . (A) . . . . . . . . . . . . (B) . . . . . . . . . . . . PROVIDED FURTHER THAT WHERE AN ASSET REFERRED TO IN CLAUSE (I) OR CLAUSE (II) OR CLAUSE (IIA), AS THE CASE MAY BE, IS ACQUIRED BY THE ASSES SEE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS OR PROFESSION F OR A PERIOD OF LESS THAN ONE HUNDRED AND EIGHTY DAYS IN THAT PREVIOUS YEAR, THE DEDUCTIO N UNDER THIS SUB-SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTED TO FIFTY PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET UNDER CLAUSE (I) OR CLAUSE (II) 1 OR CLAUSE (IIA), AS THE CASE MAY BE: PROVIDED ALSO. . . . . . . . . . . . . PROVIDED ALSO. . . . . . . . . . . . . PROVIDED ALSO. . . . . . . . . . . . . PROVIDED ALSO. . . . . . . . . . . . . EXPLANATION 1. . . . . . . . . . . . . EXPLANATION 2. . . . . . . . . . . . . EXPLANATION 3. . . . . . . . . . . . . EXPLANATION 4. . . . . . . . . . . . . EXPLANATION 5. . . . . . . . . . . . . (IIA) IN THE CASE OF ANY NEW MACHINERY OR PLANT (OT HER 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 PRODUCTIO N OF ANY ARTICLE OR THING OR GENERATION OR GENERATION AND 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). 7 ITA NO.1791/KOL/2017 M/S. NATIONAL ENGINEERING INDUSTRIES LTD. AY- 2013- 14 PROVIDED. . . . . . . . . . . . .' 7. CLAUSE (IIA) OF SECTION 32(1) OF THE ACT, AS IT NO W STANDS, WAS SUBSTITUTED BY THE FINANCE ACT, 2005, APPLICABLE WITH EFFECT FROM 01.0 4.2006. PRIOR TO THAT, A PROVISO TO THE SAID CLAUSE WAS THERE, WHICH PROVIDED FOR THE B ENEFIT TO BE GIVEN ONLY TO A NEW INDUSTRIAL UNDERTAKING, OR ONLY WHERE A NEW INDUSTR IAL UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE DURING ANY YEAR PREVIOUS TO THE RELEVANT ASSESSMENT YEAR. 8. THE AFORESAID TWO CONDITIONS, I.E., THE UNDERTAKIN G ACQUIRING NEW PLANT AND MACHINERY SHOULD BE A NEW INDUSTRIAL UNDERTAKING, O R THAT IT SHOULD BE CLAIMED IN ONE YEAR, HAVE BEEN DONE AWAY BY SUBSTITUTING CLAUSE (I IA) WITH EFFECT FROM 01.04.2006. THE GRANT OF ADDITIONAL DEPRECIATION, UNDER THE AFORESA ID PROVISION, IS FOR THE BENEFIT OF THE ASSESSEE AND WITH THE PURPOSE OF ENCOURAGING INDUST RIALIZATION, BY EITHER SETTING UP A NEW INDUSTRIAL UNIT OR BY EXPANDING THE EXISTING UN IT BY PURCHASE OF NEW PLANT AND MACHINERY, AND PUTTING IT TO USE FOR THE PURPOSE OF BUSINESS. THE PROVISO TO CLAUSE (II) OF THE SAID SECTION MAKES IT CLEAR THAT ONLY 50% OF THE 20% WOULD BE ALLOWABLE, IF THE NEW PLANT AND MACHINERY SO ACQUIRED IS PUT TO USE F OR LESS THAN 180 DAYS IN A FINANCIAL YEAR. HOWEVER, IT NOWHERE RESTRICTS THAT THE BALANC E 10% WOULD NOT BE ALLOWED TO BE CLAIMED BY THE ASSESSEE IN THE NEXT ASSESSMENT YEAR . 9. THE LANGUAGE USED IN CLAUSE (IIA) OF THE SAID SECT ION CLEARLY PROVIDES THAT 'A FURTHER SUM EQUAL TO 20% OF THE ACTUAL COST OF SUCH MACHINE RY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (II)'. THE WORD 'SHALL' USED IN THE SAID CLAUSE IS VERY SIGNIFICANT. THE BENEFIT WHICH IS TO BE GRANTED IS 20% ADDITIONAL DEPRECIATION. BY VIRTUE OF THE PROVISO REFERRED TO ABOVE, ONLY 10% CAN BE C LAIMED IN ONE YEAR, IF PLANT AND MACHINERY IS PUT TO USE FOR LESS THAN 180 DAYS IN T HE SAID FINANCIAL YEAR. THIS WOULD NECESSARILY MEAN THAT THE BALANCE 10% ADDITIONAL DE DUCTION CAN BE AVAILED IN THE SUBSEQUENT ASSESSMENT YEAR, OTHERWISE THE VERY PURP OSE OF INSERTION OF CLAUSE (IIA) WOULD BE DEFEATED BECAUSE IT PROVIDES FOR 20% DEDUC TION WHICH SHALL BE ALLOWED. 10. IT HAS BEEN CONSISTENTLY HELD BY THIS COURT, AS WE LL AS THE APEX COURT, THAT BENEFICIAL LEGISLATION, AS IN THE PRESENT CASE, SHOULD BE GIVE N LIBERAL INTERPRETATION SO AS TO BENEFIT THE ASSESSEE. IN THIS CASE, THE INTENTION OF THE LE GISLATION IS ABSOLUTELY CLEAR, THAT THE ASSESSEE SHALL BE ALLOWED CERTAIN ADDITIONAL BENEFI T, WHICH WAS RESTRICTED BY THE PROVISO TO ONLY HALF OF THE SAME BEING GRANTED IN ONE ASSES SMENT YEAR, IF CERTAIN CONDITION WAS NOT FULFILLED. BUT, THAT, IN OUR CONSIDERED VIEW, W OULD NOT RESTRAIN THE ASSESSEE FROM CLAIMING THE BALANCE OF THE BENEFIT IN THE SUBSEQUE NT ASSESSMENT YEAR. THE TRIBUNAL, IN OUR VIEW, HAS RIGHTLY HELD, THAT ADDITIONAL DEPRECI ATION ALLOWED UNDER SECTION 32(1)(IIA) OF THE ACT IS A ONE TIME BENEFIT TO ENCOURAGE INDUS TRIALIZATION, AND THE PROVISIONS RELATED TO IT HAVE TO BE CONSTRUED REASONABLY, LIBE RALLY AND PURPOSIVELY, TO MAKE THE PROVISION MEANINGFUL WHILE GRANTING ADDITIONAL ALLO WANCE. WE ARE IN FULL AGREEMENT WITH SUCH OBSERVATIONS MADE BY THE TRIBUNAL. 8 ITA NO.1791/KOL/2017 M/S. NATIONAL ENGINEERING INDUSTRIES LTD. AY- 2013- 14 11. IN VIEW OF THE AFORESAID, WE DO NOT FIND THAT ANY INTERFERENCE IS CALLED FOR WITH THE ORDER OF THE TRIBUNAL, OR THAT ANY QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. 10. FURTHER WE NOTE THAT COORDINATE BENCH OF THIS TRIBUNAL CENTURY ENKA LTD. VS DCIT 154 ITD 426 AND BIRLA CORPORATION LTD. VS DCIT 69 S OT 217 HAS ALSO TAKEN A SIMILAR VIEW AND WE NOTE THAT THE LD. CIT(A) HAS GIVEN A RELIEF TO THE ASSESSEE BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN BIRLA CORPORATION LTD. (SUPRA) AND CENTURY ENKA LTD. (SUPRA) AND THE UNIVERSAL CABLES LTD. VS DCIT (2015) 57 TAXMANN.COM 95 (KOLKATA). SINCE THE LD. CIT(A) HAS FOLLOWED THE RATIO OF DECISIONS OF THIS TRIBUNA L (SUPRA), AND WE RELYING ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN CIT VS RITTA L (INDIA) LTD ( SUPRA) WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28TH DECE MBER, 2018. SD/- (J. SUDHAKAR REDDY) SD/- (ABY. T. VAR KEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH DECEMBER, 2018 BISWAJIT (SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DCIT, CIRCLE 6(1), P-7, CHOWRINGHEE SQUARE, KOLKATA 69. 2 RESPONDENT M/S. NATIONAL ENGINEERING INDUSTRIES LTD., 9/1, R.N. MUKHERJEE ROAD, KOLKATA 01. 3. THE CIT(A) -22, KOLKATA. (SENT THROUGH E-MAIL) 4. 5. CIT KOLKATA. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR