DCIT, Cir. 4(1), Kolkata V. M/s Gloster Ltd., Kolkata

ITA 213/KOL/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5872 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 12-07-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Additional depreciation; Period of limitation; Time period of passing order; Condonation of delay
• Section: 143(3); 32(1)(iia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA Nos.213 & 214/Kol/2021 Assessment Years: 2012-13 & 2013-14 Deputy Commissioner of Income Tax, Circle-4(1), Kolkata. Vs. M/s. Gloster Ltd. 21, Strand Road, Kolkata- 700 001. (PAN: AAACG9800B) (Appellant) (Respondent) Present for: Appellant by : Shri Shaily Sanwaria, ACA Respondent by : Shri Biswanath Das, Addl. CIT Date of Hearing : 11.05.2022 Date of Pronouncement : 19.07.2022 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: Both these appeals by the revenue are directed against the separate orders of ld. CIT(A)-6, Kolkata vide Appeal Nos. CIT(A), Kolkata-6/10613/2016-17 and 562/CIT(A)-5/Circle-1(1)/18-29/Kol dated 27.08.2019 and 19.11.2019 for A.Ys. 2012-13 and 2013-14 passed against the assessment order u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) by DCIT, Circle-1(1),Kolkata dated 28.02.2015 and 24.03.2016 respectively. Since grounds are common and facts are identical except for quantum, we dispose of both these appeals by this consolidated order for the sake of convenience. 2. Shri Biswanath Das, Addl. CIT appeared on behalf of the revenue and Shri Shaily Sanwaria, ACA appeared for the assessee. 3. We note that in both these departmental appeals, there is a delay in filing which is of 610 days for AY 2012-13 and 486 days for AY 2013-14. For both the appeals petitions for condonation of delay giving reasons for the delay caused are placed on record. From the perusal of ITA Nos.213 &214/Kol/2021 M/s. Gloster Ltd., A.Ys: 2012-13 & 2013-14 2 the said petitions, we note that the order of Ld. CIT(A) was received on 12.09.2019 for AY 2012-13 and on 19.11.2019 for AY 2013-14. Both the appeals ought to have been filed by the due date which fell before the breakdown of Pandemic of Covid-19. For the delay in respect of period prior to the breakdown of Pandemic of Covid-19, it is submitted that it is attributed to extraneous burden of time barring work on the Income-tax Authorities because of which necessary documentary preparation could not be done. Subsequently, the Pandemic of Covid- 19 broke and disturbed the normal functioning of the department. Approval for filing of these appeals were received from the office of Ld. CIT in the month of August, 2020 and October, 2020 respectively after which necessary preparations were done and the appeals were filed on 13.07.2021. This intervening period from the receipt of approval from the office of Ld. CIT till the filing of appeals are covered by the decision of Hon’ble Supreme Court owing to Covid-19 Pandemic for which the Hon’ble Supreme Court has directed that the period from 15.03.2020 to 28.02.2022 is to be excluded for the purpose of computing the limitation period during the COVID-19 pandemic. Further, a period of 90 days is allowed after 28.02.2022 vide same order. Accordingly, considering the administrative and regular compliance work because of which the departmental machinery was hard pressed on time barring matters and subsequent outbreak of Covid -19, we condone the delay in filing both the appeals and admit it for adjudication. 4. Revenue has raised the following common grounds of appeal for AYs 2012-13 and 2013-14: “1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in allowing additional depreciation in the consecutive assessment years although the same plant and machinery suffered additional depreciation in the very last year when it was installed and put to use for the first time and as such the assessee is not entitled to get additional depreciation in any subsequent year including the instant assessment year.” ITA Nos.213 &214/Kol/2021 M/s. Gloster Ltd., A.Ys: 2012-13 & 2013-14 3 5. Since facts are identical we are going to dispose of both the appeals by stating the facts of AY 2012-13 and the result of which will follow in the other appeal also. 6. Brief facts as observed by the AO are that the assessee at Serial No. 3 of the Notes forming part of the original return has clarified that the company has claimed Additional Depreciation u/s 32(1)(iia) of the Act which includes additional depreciation on new plant & machinery acquired and installed after 31-03-2005 but before 01-04-2011. During the year under consideration, the assessee has claimed Additional Depreciation u/s 32(1)(iia) amounting to Rs. 2,68,64,700/-, which includes an amount of Rs. 2,26,80,809/- on account of new Plant & Machinery acquired and installed after 31-03-2005 but before 01-04- 2011. The assessee is of the view that in terms of the provision of Sec. 32(1)(iia), additional depreciation is available in A. Y. 2007-08 and subsequent years in respect of all the new plant & machinery acquired and installed after 31-03-2005 subject to the conditions specified in the said clause, and subject to overall criteria that total depreciation does not exceed the actual cost. 7. It was further noticed that out of additional depreciation of Rs.2,26,80,809/-, Rs. 39,91,274 pertains to additional depreciation in respect of plant & machinery acquired and installed in Previous Year 2008-09, Rs. 47,41,596 is related to Previous Year 2009-10 and Rs.1,39,47,939/- is related to Previous Year 2010-11. Ld. AO noted that actually this plant and machinery had already suffered additional depreciation in the very first year when it was installed and put to use for the first time and, therefore, it is not eligible to get additional depreciation in any subsequent year including this assessment year. Moreover, according to him, the assessee has claimed additional ITA Nos.213 &214/Kol/2021 M/s. Gloster Ltd., A.Ys: 2012-13 & 2013-14 4 depreciation not on the opening WDV of the asset at the beginning of the year but on the original cost of the asset. 8. In view of the above and following the decision taken in earlier years, Ld. AO held that the additional depreciation of Rs. 2,26,80,809/- claimed by the assessee on account of Plant & Machinery acquired and installed before the financial year relevant to instant assessment year is added back. Aggrieved, assessee preferred an appeal before the Ld. CIT(A). 9. On appeal, the Ld. CIT(A) observed as under: 10. After observing the facts stated above and considering the submissions of both the sides, Ld. CIT(A) held as under: “I have considered the submissions made by the Ld. A/R and find that identical issue has been already decided in faovur of the appellant by the Hon’ble Kolkata ITAT in appellant’s own case for AY 2007-08 in ITA No. 95/Kol/11 dated 01.03.2017, wherein it was held at paras 31 and 32 that there is no restriction that the additional depreciation will be allowed only in one year or that it would be allowed only on the written down value. Hence, in terms of provisions of section 32(1)(iia), additional depreciation is available in AY 2012-13 in respect of all Plant & Machinery acquired and installed after 31.03.2005 subject to the overall criteria that total depreciation should not exceed the actual cost. Hence, Ground No. 4 is decided in favour of the Appellant.” ITA Nos.213 &214/Kol/2021 M/s. Gloster Ltd., A.Ys: 2012-13 & 2013-14 5 11. Aggrieved, revenue is in appeal before this Tribunal. 12. We have heard rival submissions and gone through the facts and circumstances of the case. Before us, Ld. AR of the assessee submitted that this issue is squarely covered in favour of the assessee by the decision of Coordinate Bench of this Tribunal in DCIT Vs. Gloster Jute Mills Ltd. in ITA No. 95/Kol/2011 order dated 01.03.2017 for AY 2007- 08 i.e. in assessee’s own case. On perusal of the said decision, we are in agreement with the submission of the assessee. We note that identical issue has been decided by the Coordinate bench in assessee’s own case which is in favour of the assessee and against the revenue. The operative part of the said order is reproduced as under: “31. Aggrieved by the order of CIT(A) the revenue has raised ground no.3 before the Tribunal. The ld. DR placed reliance on the order of the AO. The ld. Counsel for the assessee submitted that fiscal statute shall be interpreted on the basis of the language used therein and not de hors the same. It was argued that Clause (iia) to Sec. 32(1) was first introduced vide Finance (No. 2) Act, 1980 w.e.f. 01-04- 81 and was applicable till AY 1987-88. The clause was subsequently re- introduced vide Finance Act, 2002 w.e.f. 01-04-03. On perusal of clause (iia) to Sec. 32(1) as existed during the aforesaid period, it could be seen that the legislature conferred the benefit of additional depreciation only in the first AY when the asset was installed and first put to use. However vide Finance Act, 2005, clause (iia) to Sec. 32(1) was amended w.e.f. 01-04-06 wherein the condition of claiming additional depreciation only in the initial AY was deleted. It was submitted that since the specific condition for claim of additional depreciation in one year has been done away with, it should be construed as the intention of the legislature to allow additional depreciation in subsequent years as well. Reliance was placed on the following decisions wherein it has been held that a fiscal statute shall have to be interpreted on the basis of the language used therein and not de hors the same. Even if there is a casus omissus, the defect can be remedied only by legislation and not by judicial interpretation :- - Orissa State Warehousing Corporation -vs.- CIT (1999) 237 ITR 589 (SC) - ITA No.95/Kol/2011 M/s. Gloster Jute Mills Ltd. A.Yr.2007-08 23 - Prakash Nath Khanna and Another -vs.- CIT (2004) 266 ITR 1 (SC) - Smt. Tarulata Shyam & Othrs -vs.- CIT (1977) 108 ITR 345 (SC) - Padmasundara Rao vs. State of Tamil Nadu: 255 ITR 147 (SC) Apart from the above, it was also pointed out that DTC Bill 2013 has proposed expressly that additional depreciation would be allowed in the FY in which the P&M is used for the first time and those provisions are not made with retrospective effect. It was argued that the legislature has consciously not restricted the allowance of additional depreciation on the original cost for AY 2006-07 till AY 2013-14 to one year only and therefore the additional depreciation should be allowed on the original cost of the asset for the second and subsequent years as well. It was submitted that the condition imposed by the relevant provisions was that Plant and Machinery must be new at the time of ITA Nos.213 &214/Kol/2021 M/s. Gloster Ltd., A.Ys: 2012-13 & 2013-14 6 installation to be eligible for additional depreciation u/ s 32(1)(iia) and not new in subsequent years. 32. We have given very careful consideration to the rival submissions and are of the view that the provision of section 32(1)(iia) as amended w.e.f. 01.04.2006 by the Finance Act 2005, there is no restriction that the additional depreciation will be allowed only in one year or that it would be allowed only on the written down value. The law as it prevailed prior to the said amendment imposed such a condition that additional depreciation will be allowed only in the year of installation of machinery or plant or the year in which it is first put to use or the year in which the concerned undertaking begins to manufacture or produce any article or thing or achieves substantial expansion by way of increase in installed capacity by 25%. The only objection of the AO is that the provisions refer to “new machinery or plant” and therefore the machinery will cease to be a new machinery after the end of the first year in which it is installed or put to use. In our view this stand taken by the revenue is not supported by the language of statutory provision. The condition imposed by the relevant provisions is that Plant and Machinery must be new at the time of installation to be eligible for additional depreciation u/s. 32(1)(iia) and not new in subsequent years. The expression “new machinery” is therefore to be construed as referring to the condition that at the time of acquisition or installation the machinery or plant should be new. Going by the legislative history of the relevant provision, we are of the view that the condition for allowing additional depreciation only in the initial assessment year ceased to exist as and from 01.04.2006. The plain language of the section warrants such an interpretation. We therefore uphold the order of CIT(A) and dismiss ground no.3 raised by the revenue.” 13. Since the facts of the case are identical except for change in quantum and there being no change in the applicable law, as decided by the Coordinate bench in assessee’s own case for AY 2007-08, we, therefore, respectfully following the same, dismiss both the appeals of the revenue, by upholding the order of Ld. CIT(A). Therefore, ground in both the appeals of the revenue is dismissed 14. In the result, both the appeals of the revenue are dismissed. Order is pronounced in the open court on 19 th July, 2022. Sd/- Sd/- (RAJPAL SINGH) (GIRISH AGRAWAL) VICE PRESIDENT ACCOUNTANT MEMBER Kolkata, Dated: 19.07.2022 JD, Sr. P.S. ITA Nos.213 &214/Kol/2021 M/s. Gloster Ltd., A.Ys: 2012-13 & 2013-14 7 Copy to: 1. The Appellant: 2. The Respondent:. 3. CIT(A)-6 & 5, Kolkata 4. The CIT- Kolkata. 5. The DR, ITAT, Kolkata Bench, Kolkata //True Copy// [ By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata