M/s. Axles India Ltd., CHENNAI V. DCIT, CHENNAI

ITA 2270/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8073 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 01-08-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Keywords: Depreciation; Additional depreciation; Unabsorbed depreciation; Revenue expenditure
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , !.. # $% , & '( ) [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.2269 & 2270/MDS/2016 / ASSESSMENT YEARS : 2010-11 & 2011-12 M/S AXLES INDIA LTD 21, PATTULOS ROAD CHENNAI 600 002 VS. THE DY. COMMISSIONER OF INCOME-TAX LARGE TAXPAYER UNIT-II CHENNAI [PAN AAACA 3173 D] ( *+ / APPELLANT) ( ,-*+ /RESPONDENT) / APPELLANT BY : SHRI C. NARESH, CA /RESPONDENT BY : SHRI SUPRIYO PAL, JCIT / DATE OF HEARING : 20 - 10 - 2016 ! / DATE OF PRONOUNCEMENT : 10 - 11 - 2016 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER THESE APPEALS OF THE ASSESSEE FOR ASSESSMENT YEA RS 2010- 11 AND 2011-12 ARE DIRECTED AGAINST THE COMMON ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-17, CHENNAI, D ATED 30.3.2016. SINCE THE COMMON ISSUES ARISE FOR CONSIDERATION IN BOTH THE APPEALS, WE DISPOSE OF THE SAME BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NO. 2269 & 2270/16 :- 2 -: 2. THE FIRST ISSUE IS RELATED TO THE DISALLOWANCE OF C ARRY FORWARD AND CLAIM OF ADDITIONAL DEPRECIATION AMOUNTING TO ` 2,06,55,752/- FOR ASSESSMENT YEAR 2010-11 IN RESPECT OF THE ASSETS AC QUIRED IN THE PRECEDING ASSESSMENT YEAR 2009-10 FOR WHICH ONLY 50 % OF THE ELIGIBLE ADDITIONAL DEPRECIATION WAS ALLOWED. FOR THE ASSES SMENT YEAR 2010- 11, THE ASSESSEE CLAIMED THE REMAINING AMOUNT OF A DDITIONAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT. THE ASSES SEE HAS ACQUIRED THE ASSETS DURING THE SECOND HALF OF THE ASSESSMENT YEA R 2009-10 AND CLAIMED 50% OF THE ADDITIONAL DEPRECIATION SINCE TH E ASSETS WERE PUT TO USE LESS THAN 180 DAYS AND THE BALANCE AMOUNT OF 50% DEPRECIATION WAS CLAIMED IN THE YEAR UNDER CONSIDER ATION. THE ASSESSING OFFICER DISALLOWED THE ASSESSEES CLAIM O BSERVING THAT ADDITIONAL DEPRECEIATION IS ALLOWABLE ONLY FOR THE NEW ASSETS ADDED DURING THE YEAR AND THERE IS NO PROVISION IN THE AC T PERMITTING THE BALANCE DEPRECIATION TO BE ALLOWED IN SUCCEEDING YE AR. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, TH E ASSESSEE WENT ON APPEAL BEFORE THE LD. CIT(A) AND T HE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 4. THE LD. AR SUBMITTED THAT THE ASSESSEE CLAIMED BALA NCE ADDITIONAL DEPRECIATION DURING THE YEAR UNDER CONSI DERATION. THE LD ITA NO. 2269 & 2270/16 :- 3 -: COUNSEL FURTHER CLARIFIED THAT THE PLANT AND MACHIN ERY WERE INSTALLED IN THE SECOND HALF OF THE EARLIER YEAR AND CLAIMED 50% OF THE ADDITIONAL DEPRECIATION, HENCE, THE ASSESSEE CLAIMED 50% OF AD DITIONAL DEPRECIATION DURING THE YEAR UNDER CONSIDERATION. IN OTHER WORDS ACCORDING TO THE LD. COUNSEL, SINCE THE MACHINERY W AS USED FOR LESS THAN 180 DAYS IN THE EARLIER A.Y., THE ASSESSEE CLA IMED 50% DEPRECIATION AND THE BALANCE WAS CLAIMED DURING THE YEAR UNDER CONSIDERATION. HENCE THE LD. COUNSEL ARGUED THAT TH E ASSESSEE IS ENTITLED FOR THE ADDITIONAL DEPRECIATION DURING TH E YEAR UNDER CONSIDERATION. FURTHER THE A.R ARGUED THAT THE ADD ITIONAL DEPRECIATION BEING INCENTIVE PROVISION, SHOULD BE INTERPRETED LIBERALLY AS HELD BY THE HONBLE APEX COURT AND THE KARNATKA HIGH COURT IN THE CASE OF RITTAL INDIA (P) LTD . THE LD. AR ALSO RELIED ON T HE DECISION OF THIS TRIBUNAL IN THE CASE OF M/S AUTOMOTIVE COACHES & CO MPONENTS LTD IN I.T.A.NO. 1789/MDS/2014, DATED 12.2.2016 AND ALSO T HE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS RITTAL INDIA PVT. LTD. 380 ITR 423. ON THE OTHER HAND LD. D.R. SUPPOR TED THE ORDERS OF THE LOWER AUTHORITIES. 5 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE MATERIAL PLACED ON RECORD. SECTION 32(1)(IIA) PROVIDES FOR ADDITIONAL DEPRECIATION AT THE RATE OF 20%.THE ITA NO. 2269 & 2270/16 :- 4 -: ASSESSING OFFICER ALLOWED 10% OF ADDITIONAL DEPRECI ATION IN RESPECT OF THE PLANT AND MACHINERY PURCHASED DURING THE A.Y .2009-10. THE A.O. FOUND THAT THE ADDITIONS TO THE FIXED ASSESTS MADE IN THE SECOND HALF OF THE FINANCIAL YEAR ,THEREFORE,50% OF THE ADDITIONAL DEPRECIATION HAS BEEN CLAIMED.THE BALANCE 50% WAS C ARRIED FORWARD IN THE NEXT YEAR. THE A.O. FOUND THAT THE ADDITIONAL DEPRECIATION IS ALLOWABLE ONLY DURING THE YEAR IN W HICH THE MACHINERY WAS INSTALLED AND USED FOR THE BUSINESS O F THE ASSESSEE. THERE IS NO PROVISION IN THE INCOME TAX ACT.FOR CAR RY FORWARD OF THE ADDITIONAL DEPRECIATION TO THE SUBSEQUENT YEAR. THI S ISSUE WAS EXAMINED BY THE COCHIN BENCH OF THIS TRIBUNAL IN AP OLLO TYRES LTD.V.ACIT REPORTED IN [2014] 45 TAXMANN.COM 337 (COCHIN - TRIB.) . THE COCHIN BENCH FOUND THAT ADDITIONAL DEPRECIATION COULD NOT BE ALLOWED AT THE RATE 20% DURING THE YEAR IN WHICH TH E MACHINERY WAS INSTALLED., THE BALANCE 50% HAS TO BE ALLOWED I N THE SUBSEQUENT YEAR. IN FACT THE COCHIN BENCH OF THIS TRIBUNAL HAS OBSERVED AS FOLLOWS: 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 32(1)(IIA ) READS AS FOLLOWS: '32(1)(IIA) IN THE CASE OF ANY NEW MACHINERY OR PLA NT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AF TER THE 31ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MAN UFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, A FURTHER SUM EQUAL TO TWENTY PER CENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDU CTION UNDER CLAUSE (II): PROVIDED THAT NO DEDUCTION SHALL BE ALLOWED IN RESP ECT OF ITA NO. 2269 & 2270/16 :- 5 -: (A) ANY MACHINERY OR PLANT WHICH, BEFORE ITS INSTALLATION BY THE ASSESSEE, WAS USED EITHER WITHIN OR OUTSIDE INDIA BY ANY OTHER PE RSON; OR (B) ANY MACHINERY OR PLANT INSTALLED IN ANY OFFICE PREM ISES OR ANY RESIDENTIAL ACCOMMODATION, INCLUDING ACCOMMODATION IN THE NATUR E OF A GUEST- HOUSE; OR (C) ANY OFFICE APPLIANCES OR ROAD TRANSPORT VEHICLES; O R (D) ANY MACHINERY OR PLANT, THE WHOLE OF THE ACTUAL COS T OF WHICH IS ALLOWED AS A DEDUCTION (WHETHER BY WAY OF DEPRECIATION OR OTHE RWISE) IN COMPUTING THE INCOME CHARGEABLE UNDER TH E HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' OF ANY ONE PREVIOUS YEAR.' 10. WE HAVE ALSO CAREFULLY GONE THROUGH THE SECOND PROV ISO TO SECTION 32(1)(II) OF THE ACT, WHICH READS AS FOLLOWS: 'PROVIDED FURTHER THAT WHERE AN ASSET REFERRED TO C LAUSE (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 PURPOSE OF BUSINESS OR PROFES SION FOR A PERIOD OF LESS THAN ONE HUNDRED AND EIGHTY DAYS IN THAT PREVIOUS YEAR, THE DEDUCTION UNDER THIS SUB- SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTE D TO FIFTY PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR AN ASSE T UNDER CLAUSE (I) OR CLAUSE (II) OR CLAUSE (IIA) AS THE CASE MAY BE.' 11. A BARE READING OF THIS SECTION 32(1)(IIA) CLEARLY SAYS THAT IN CASE A NEW MACHINERY OR PLANT WAS ACQUIRED AND INSTALLED AFTER 31-03-2005 BY AN ASSESSEE, WHO IS ENGAGED IN THE BUSINESS OF MANUFACTURE OR PR ODUCE OF ARTICLE OR THING, THEN, A SUM EQUAL TO 20% OF THE ACTUAL COST OF THE MACHINERY AND PLANT SHALL BE ALLOWED AS A DEDUCTION. IT IS NOT IN DISPUTE THAT T HE ASSESSEE HAS ACQUIRED AND INSTALLED THE MACHINERY AFTER 31-03- 2005. IT IS AL SO NOT IN DISPUTE THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURE OF ARTICLE O R THING. THEREFORE, THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION WHICH IS EQ UIVALENT TO 20% OF THE ACTUAL COST OF SUCH MACHINERY. THE DISPUTE IS THE YEAR IN WHICH THE DEPRECIATION HAS TO BE ALLOWED. THE ASSESSEE HAS ALREADY CLAIMED 10% OF THE DEPRECIATION IN THE EARLIER ASSESSMENT YEAR SINCE THE MACHINERY WAS USE D FOR LESS THAN 180 DAYS AND CLAIMING THE BALANCE 10% IN THE YEAR UNDER CONSIDER ATION. SECTION 32(1)(IIA) DOES NOT SAY THAT THE YEAR IN WHICH THE ADDITIONAL DEPRECIATION HAS TO BE ALLOWED. IT SIMPLY SAYS THAT THE ASSESSEE IS ELIGIBLE FOR AD DITIONAL DEPRECIATION EQUAL TO 20% OF THE COST OF THE MACHINERY PROVIDED THE MACHI NERY OR PLANT IS ACQUIRED AND INSTALLED AFTER 31-03-2005. PROVISO TO SECTION 32(1)(IIA) SAYS THAT IF THE MACHINERY WAS ACQUIRED BY THE ASSESSING DURING THE PREVIOUS YEAR AND HAS PUT TO USE FOR THE PURPOSE OF BUSINESS LESS THAN 180 DAYS, THE DEDUCTION SHALL BE RESTRICTED TO 50% OF THE AMOUNT CALCULATED AT THE P RESCRIBED RATE. THEREFORE, IF THE MACHINERY IS PUT TO USE IN ANY PARTICULAR YEAR, THE ASSESSEE IS ENTITLED FOR 50% OF THE PRESCRIBED RATE OF ADDITIONAL DEPRECIATION. THE INCOME-TAX ACT IS SILENT ABOUT THE ALLOWANCE OF THE BALANCE 10% ADDITIONAL DEPRECI ATION IN THE SUBSEQUENT YEAR. TAKING ADVANTAGE OF THIS POSITION, THE ASSESSEE NOW CLAIMS THAT THE YEAR IN WHICH THE MACHINERY WAS PUT TO USE THE ASSESSEE IS ENTITL ED FOR 50% ADDITIONAL DEPRECIATION SINCE THE MACHINERY WAS PUT TO USE FOR LESS THAN 180 DAYS AND THE BALANCE 50% SHALL BE ALLOWED IN THE NEXT YEAR SINCE THE ELIGIBILITY OF THE ASSESSEE ITA NO. 2269 & 2270/16 :- 6 -: FOR CLAIMING 20% OF THE ADDITIONAL DEPRECIATION CAN NOT BE DENIED BY INVOKING SECOND PROVISO TO SECTION 32(1)(II) OF THE ACT. 12. THIS ISSUE WAS CONSIDERED BY THE DELHI BENCH OF TH IS TRIBUNAL IN THE CASE OF COSMO FILMS LTD ( SUPRA ). THE REVENUE HAS TAKEN A SIMILAR GROUND AS TAKEN BEFORE THIS TRIBUNAL THAT THE ASSESSEE CANNOT CARRY FORWARD THE ADDITIONAL DEPRECIATION TO BE ALLOWED IN THE SUBSEQUENT ASSESS MENT YEAR. THE DELHI BENCH OF THIS TRIBUNAL AFTER CONSIDERING THE PROVISIONS O F SECTION 32(1)(IIA) AND PROVISO TO SECTION 321)(II) OF THE ACT FOUND THAT WHEN THER E IS NO RESTRICTION IN THE ACT TO DENY THE BENEFIT OF BALANCE 50%, THE ASSESSEE IS EN TITLED FOR THE BALANCE ADDITIONAL DEPRECIATION IN THE SUBSEQUENT ASSESSMEN T YEAR. IN FACT, THE DELHI BENCH OF THIS TRIBUNAL HAS OBSERVED AS FOLLOWS AT P AGES 641 AND 642 OF THE ITD: 'THUS, THE INTENTION WAS NOT TO DENY THE BENEFIT TO THE ASSESSEES WHO HAVE ACQUIRED OR INSTALLED NEW MACHINERY OR PLANT. THE S ECOND PROVISO TO SECTION 32(1)(II) RESTRICTS THE ALLOWANCES ONLY TO 50% WHER E THE ASSETS HAVE BEEN ACQUIRED AND PUT TO USE FOR A PERIOD LESS THAN 180 DAYS IN THE YEAR OF ACQUISITION. THIS RESTRICTION IS ONLY ON THE BASIS OF PERIOD OF USE. THERE I NO RESTRICTION THAT BALANCE OF ONE TIME INCENTIVE IN THE FORM OF ADDITI ONAL SUM OF DEPRECIATION SHALL NOT BE AVAILABLE IN THE SUBSEQUENT YEAR. SECTION 32 (2) PROVIDES FOR A CARRY FORWARD SET UP OF UNABSORBED DEPRECIATION. THIS ADD ITIONAL BENEFIT IN THE FORM OF ADDITIONAL ALLOWANCE U/S 32(1)(IIA) IS ONE TIME BEN EFIT TO ENCOURAGE THE INDUSTRIALIZATION AND IN VIEW OF THE DECISION OF HO N'BLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. V. CIT [1992] 196 ITR 188 , THE PROVISIONS RELATED TO IT HAVE TO BE CONSTRUED REASONABLY, LIBERALLY AND PURP OSIVE TO MAKE THE PROVISION MEANINGFUL WHILE GRANTING THE ADDITIONAL ALLOWANCE. THIS ADDITIONAL BENEFIT IS TO GIVE IMPETUS TO INDUSTRIALIZATION AND THE BASIC INT ENTION AND PURPOSE OF THESE PROVISIONS CAN BE REASONABLY AND LIBERALLY HELD THA T THE ASSESSEE DESERVES TO GET THE BENEFIT IN FULL WHEN THERE IS NO RESTRICTION IN THE STATUTE TO DENY THE BENEFIT OF BALANCE OF 50% WHEN THE NEW MACHINERY AND PLANT WER E ACQUIRED AND USED FOR LESS THAN 180 DAYS. ONE TIME BENEFIT EXTENDED TO AS SESSEE HAS BEEN EARNED IN THE YEAR OF ACQUISITION OF NEW MACHINERY AND PLANT . IT HAS BEEN CALCULATED @15% BUT RESTRICTED TO 50% ONLY ON ACCOUNT OF USAGE OF T HESE PLANT & MACHINERY IN THE YEAR OF ACQUISITION. IN SECTION 32(1)(IIA), THE EXP RESSION USED I 'SHALL BE ALLOWED'. THUS, THE ASSESSEE HAD EARNED THE BENEFIT AS SOON AS HE HAD PURCHASED THE NEW MACHINERY AND PLANT IN FULL BUT IT IS RESTR ICTED TO 50% IN THAT PARTICULAR YEAR ON ACCOUNT OF PERIOD USAGES. SUCH RESTRICTIONS CANNOT DIVEST THE STATUTORY RIGHT. LAW DOES NOT PROHIBIT THAT BALANCE 50% WILL NOT BE ALLOWED IN SUCCEEDING YEAR. THE EXTRA DEPRECIATION ALLOWABLE U/S 32(1)(II A) IN AN EXTRA INCENTIVE WHICH HAS BEEN EARNED AND CALCULATED IN THE YEAR OF ACQUI SITION BUT RESTRICTED FOR THAT YEAR TO 50% ON ACCOUNT OF USAGE. THE SO EARNED INCE NTIVE MUST BE MADE AVAILABLE IN THE SUBSEQUENT YEAR. THE OVERALL DEDUC TION OF DEPRECIATION U/S 32 SHALL DEFINITELY NOT EXCEED THE TOTAL COST OF MACHI NERY AND PLANT . IN VIEW OF THIS MATTER, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT TO EXTEND THE BENEFIT. WE ALLOW GROUND NO.2 OF THE ASSESSEE'S APP EAL. SINCE WE HAVE DECIDED GROUND NO.2 IN FAVOUR OF ASSESSEE, THERE IS NO NEED TO DECIDE THE ALTERNATE CLAIM RAISED IN GROUND NO.3. THE SAME IS DISMISSED.' ITA NO. 2269 & 2270/16 :- 7 -: 13. THIS ISSUE WAS ALSO CONSIDERED BY ANOTHER BENCH OF THIS TRIBUNAL AT DELHI IN SIL INVESTMENT LTD ( SUPRA ). AT PAGE 233 OF THE TTJ, THE TRIBUNAL HAS OBSERVE D AS FOLLOWS: '40. THERE IS NOTHING ON RECORD TO SHOW THAT THE DI RECTIONS GIVEN BY THE LEARNED CIT(A) ARE NOT PROPER. THE ELIGIBILITY FOR DEDUCTIO N OF ADDITIONAL DEPRECIATION STANDS ADMITTED, SINCE 50 PER CENT THEREOF HAD ALRE ADY BEEN ALLOWED BY THE AO IN THE ASST.YR.2005-06, I.E. THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THEREFORE, OBVIOUSLY, THE BALANCE 50 PER CENT OF THE DEDUCTION IS TO BE ALLOWED IN THE CURRENT YEAR, I.E. ASST. YR. 2006-07. THE LEARNED CIT(A) HA S MERELY DIRECTED THE VERIFICATION OF THE CONTENTIONS OF THE ASSESSEE AND TO ALLOW THE BALANCE ADDITIONAL DEPRECIATION AFTER SUCH FACTUAL VERIFICATION. ACCOR DINGLY, FINDING NO MERIT THEREIN, GROUND NO.3 RAISED BY THE DEPARTMENT IS RE JECTED.' 14. A SIMILAR VIEW WAS TAKEN BY MUMBAI BENCH OF THIS T RIBUNAL IN MITC ROLLING MILLS (P.) LTD. ( SUPRA ). IN VIEW OF THE ABOVE DECISIONS OF THE CO-ORDINAT E BENCHES OF THIS TRIBUNAL ON IDENTICAL SET OF FACTS THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE BALANCE 50% OF THE DEPR ECIATION HAS TO BE ALLOWED IN THE SUBSEQUENT YEAR, THEREFORE, THE ORDERS OF THE L OWER AUTHORITIES ON THIS ISSUE ARE SET SIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF BALANCE 50% ADDITIONAL DEPRECIATION IN THE YEAR UNDER CONSI DERATION. 6. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUD GMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS RITTAL INDIA PVT. LTD. 380 ITR 423. HON'BLE KARNATAKA HIGH COURT AFTE R EXTRACTING THE PROVISIONS OF SECTION 32(1)(IIA) OF THE ACT ,FOUND THAT BENEFICIAL LEGISLATION HAS TO BE INTERPRETED LIBERALLY SO AS T O BENEFIT THE ASSESSEE. KARNATAKA HIGH COURT ALSO FOUND THAT THE INTENTION OF THE LEGISLATION IS TO ALLOW THE ADDITIONAL BENEFIT. THE KARNATAKA HIGH COURT OPINED THAT THE PROVISO WOULD NOT RESTRAIN THE ASSESSEE FROM CL AIMING THE BALANCE OF THE BENEFIT OF ADDITIONAL DEPRECIATION IN THE SU BSEQUENT ASSESSMENT YEAR. ACCORDINGLY CONFIRMED THE ORDER OF THE BANALO RE BENCH OF THIS TRIBUNAL. IN FACT KARNATAKA HIGH HAS OBSERVED AS FO LLOWS:- ITA NO. 2269 & 2270/16 :- 8 -: 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 FR OM 01.04.2006. PRIOR TO THAT, A PROVISO TO THE SAID CLAUSE WAS THERE, WHICH PROVIDED FOR THE BENEFIT TO BE GIVEN ONLY TO A NEW INDUSTRIAL UNDERTAKING, OR O NLY WHERE A NEW INDUSTRIAL 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 SUBSTIT UTING CLAUSE (IIA) WITH EFFECT FROM 01.04.2006. THE GRANT OF ADDITIONAL DEP RECIATION, UNDER THE AFORESAID PROVISION, IS FOR THE BENEFIT OF THE ASSE SSEE AND WITH THE PURPOSE OF ENCOURAGING INDUSTRIALIZATION, BY EITHER SETTING UP A NEW INDUSTRIAL UNIT OR BY EXPANDING THE EXISTING UNIT BY PURCHASE OF NEW PLAN T 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 U SE FOR LESS THAN 180 DAYS IN A FINANCIAL YEAR. HOWEVER, IT NOWHERE RESTRICTS THAT THE BALANCE 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 S UCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (II)'. T HE 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 R EFERRED TO ABOVE, ONLY 10% CAN BE CLAIMED IN ONE YEAR, IF PLANT AND MACHINERY IS PUT TO USE FOR LESS THAN 180 DAYS IN THE SAID FINANCIAL YEAR. THIS WOULD NEC ESSARILY MEAN THAT THE BALANCE 10% ADDITIONAL DEDUCTION CAN BE AVAILED IN THE SUBSEQUENT ASSESSMENT YEAR, OTHERWISE THE VERY PURPOSE OF INSE RTION 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, SHO ULD BE GIVEN LIBERAL INTERPRETATION SO AS TO BENEFIT THE ASSESSEE. IN TH IS CASE, THE INTENTION OF THE LEGISLATION IS ABSOLUTELY CLEAR, THAT THE ASSESSEE SHALL BE ALLOWED CERTAIN ADDITIONAL BENEFIT, WHICH WAS RESTRICTED BY THE PRO VISO TO ONLY HALF OF THE SAME BEING GRANTED IN ONE ASSESSMENT YEAR, IF CERTA IN CONDITION WAS NOT FULFILLED. BUT, THAT, IN OUR CONSIDERED VIEW, WOULD NOT RESTRAIN THE ASSESSEE FROM CLAIMING THE BALANCE OF THE BENEFIT IN THE SUB SEQUENT ASSESSMENT YEAR. THE TRIBUNAL, IN OUR VIEW, HAS RIGHTLY HELD, THAT A DDITIONAL DEPRECIATION ALLOWED UNDER SECTION 32(1)(IIA) OF THE ACT IS A ON E TIME BENEFIT TO ENCOURAGE INDUSTRIALIZATION, AND THE PROVISIONS RELATED TO IT HAVE TO BE CONSTRUED REASONABLY, LIBERALLY AND PURPOSIVELY, TO MAKE THE PROVISION MEANINGFUL WHILE GRANTING ADDITIONAL ALLOWANCE. WE ARE IN FULL AGREEMENT WITH SUCH OBSERVATIONS MADE BY THE TRIBUNAL.. ITA NO. 2269 & 2270/16 :- 9 -: 7. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE IS ENTITLED FOR REMAINING 10% OF THE DEPRECIATION DURING THE YEAR UNDER CONSIDERATION.. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE ADDI TION MADE BY THE ASSESSING OFFICER OF ` 2,06,55,725/- FOR ASSESSMENT YEAR 2010-11 AND ` 1,49,50,229/- FOR ASSESSMENT YEAR 2011-12. THE GR OUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 8. THE NEXT ISSUE RAISED VIDE GROUND NOS.2.1 AND 2.2 IS RELATED TO DISALLOWANCE OF LEASE RENT PAID OF ` 11,01,971/- FOR ASSESSMENT YEAR 2010-11 AND ` 15,13,653/- FOR ASSESSMENT YEAR 2011-12. 9. THE ASSESSEE IN ITS BOOKS OF ACCOUNTS DEBI TED A SUM OF ` 8,44,362/- AND ` 8,85,330/- BY WAY OF LEASE RENTALS PAID FOR THE ASSESSMENT YEAR 2010-11 AND 2011-12 RESPECTIVELY. H OWEVER IN ITS COMPUTATION STATEMENT IT HAS CLAIMED THE LEASE RENT ALS AT ` .19,46,333/- AND ` 23,98,983/- RESPECTIVELY FOR THE A.Y.S 2010-11 AND 2011-12. THE ASSESSEE BEFORE THE A.O EXPLAINED THAT THE LEASE RENTALS REPRESENT THE LEASE CHARGES PAID ON THE CARS/ EQUIP MENTS TAKEN ON LEASE AND USED BY THE EXECUTIVES/EMPLOYEES. THOUGH A PORTION OF IT IS DEBITED TO THE PROFIT & LOSS ACCOUNT, THE ENTIRE PA YMENT IS REVENUE EXPENDITURE AND HENCE CLAIMED THE TOTAL PAYMENT AS AN ALLOWABLE ITA NO. 2269 & 2270/16 :- 10 -: DEDUCTION IN COMPUTATION STATEMENT. HOWEVER THE AS SESSING OFFICER NOTICED THAT THE DISPUTES RESOLUTION PANEL(DRP) HAS UPHELD THE SIMILAR DISALLOWANCE IN THE DRAFT ASSESSMENT FOR THE A.Y.2 008-09 AND 2011-12 AND THE ASSESSING OFFICER FOLLOWING THE DRPS ORDER DISALLOWED THE ASSESSEES CLAIM AND RESTRICTED THE ALLOWANCE ONLY TO THE EXTENT OF ` 8,44,362/- AND ` 8,85,330/- DEBITED TO THE PROFIT & LOSS ACCOUNT. 10. AGGRIEVED BY THE ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND THE CIT(A) HAS CONFIRMED THE ADDITION MA DE BY THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 11. DURING APPEAL, THE LD. AR ARGUED THAT THE LEASE RENTALS WERE DEBITED TO THE PROFIT & LOSS ACCOUNT AMOUNTING TO ` 8,44,362/- BEING INTEREST COMPONENT INCLUDED IN LEASE RENTALS. IN O RDER TO GET FULL DEDUCTION FOR THE SUM OF ` 19,46,333/- REPRESENTING THE PART OF LEASE RENTAL PAYMENT IN THE MEMO OF ADJUSTMENT OF TOTAL I NCOME, THE ASSESSEE HAS ADDED BACK THE INTEREST COMPONENT AND CLAIMED THE GROSS AMOUNT OF LEASE RENT PAID I.E ` 19,46,333/- AS DEDUCTION. THE ABOVE METHOD OF DEDUCTION HAS BEEN NECESSITATED IN VIEW OF ACCOUNTING STANDARD-19 ISSUED BY THE INSTITUTE OF C HARTERED ACCOUNTANTS OF INDIA. THE LEASE PAYMENTS SHOULD BE APPORTIONED ITA NO. 2269 & 2270/16 :- 11 -: BETWEEN THE FINANCE CHARGES AND THE REDUCTION OF TH E OUTSTANDING LIABILITY FOR INCOME-TAX PURPOSES. THE ENTIRE LEAS E PAYMENT WAS CLAIMED AS DEDUCTION SINCE THE ASSETS TAKEN ON LEAS E WERE NOT CAPITALIZED FOR THE PURPOSE OF INCOME-TAX ACT, 1961 AND ALSO DEPRECIATION HAS NOT BEEN CLAIMED. THEREFORE, THE LD. AR CONTENDED THAT THE ASSESSEE HAS RIGHTLY CLAIMED THE DEDUCTIO N OF LEASE PAYMENT. THE LD. AR PLACED RELIANCE ON THE DECISION OF THE C O-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN I.T.A.NO. 2245/MDS/2012, DATED 2.7.2013 FOR ASSESSMENT YEAR 2008-09. THE CO -ORDINATE BENCH HAS SET ASIDE THE ISSUE TO THE ASSESSING OFFICER BY OBSERVING AS UNDER: 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAIL ABLE ON RECORD. IN THE INSTANT CASE, THE UNDISPUTED FACTS ARE THAT THE ASSESSEE DEBITED ` 3,98,733/- AS LEASE RENT IN ITS BOOKS OF ACCOUNT. IN THE COMPUTATION OF INCOME THE ASSESSEE CLAIMED DEDUCTI ON FOR LEASE RENT OF ` 12,42,820/-. IN REPLY TO THE QUERY OF THE ASSESSIN G OFFICER, THE ASSESSEE COULD NOT OFFER ANY EXPLANAT ION. BEFORE THE DRP, THE ASSESSEE SUBMITTED THAT ACCORDING TO ACC OUNTING STANDARDS-19 ISSUED BY THE ICAI, THE ASSESSEE CAPI TALIZED THE COST OF THE ASSET INVOLVED IN THE FINANCE LEASE AND CLAIMED DEPRECIATION ON THE SAME BUT FOR INCOME TAX PURPOSE S, THE ASSESSEE HAS CLAIMED THE ENTIRE AMOUNT PAID AS LEAS E RENT AS DEDUCTION FROM THE COMPUTATION OF INCOME IN ACCORDA NCE WITH CBDT CIRCULAR NO. 2 OF 2001 DATED 9.2.2001. ON THE ABOVE FACTS OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT IF AS PER THE AGREEMENT, THE LESSOR OF THE ASSET RETAINS OWNERSHI P OF THE ASSET AND GIVES THE ASSET TO THE ASSESSEE FOR USE THEN T HE LEASE RENT PAID IS ALLOWABLE AS DEDUCTION FROM THE COMPUTATION OF INCOME OF THE ASSESSEE. IF ACCORDING TO THE LEASE AGREEMENT , THE OWNERSHIP OF THE ASSET IS TRANSFERRED TO THE LESSEE , THEN IN THAT CASE, THE LEASE INSTALMENT COMPRISING OF THE COST O F THE ASSET HAS TO BE CAPITALIZED BY THE ASSESSEE AND ON THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION AND THE INTEREST PORTION O F THE INSTALMENT IS ALLOWABLE DEDUCTION AS REVENUE EXPENDITURE IN TH E COMPUTATION ITA NO. 2269 & 2270/16 :- 12 -: OF INCOME OF THE ASSESSEE. WE FIND THAT IN THE IN STANT CASE, THE ASSESSEE HAS CLAIMED DEDUCTION OF THE ENTIRE AMOUNT OF LEASE RENTAL OF ` 12,42,820/- WHILE COMPUTING THE INCOME FOR INCOME TAX PURPOSES BUT HAS DEBITED IN THE BOOKS OF ACCOUNT ON LY ` 3,98,733/- TOWARDS LEASE RENT. BOTH THE PARTIES BE FORE US HAVE NOT FILED THE COPY OF THE LEASE AGREEMENT AND THERE FORE, WE ARE NOT IN A POSITION TO ADJUDICATE THE ISSUE COMPLETEL Y. WE, THEREFORE, ARE OF THE VIEW THAT IT WILL BE IN THE I NTEREST OF JUSTICE TO RESTORE THIS ISSUE BACK TO THE FILE OF THE ASSESSIN G OFFICER TO READJUDICATE THE ISSUE AFRESH IN THE LIGHT OF THE D ISCUSSION HEREIN ABOVE AFTER EXAMINING THE LEASE AGREEMENT OF THE A SSESSEE. THUS, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE AL LOWED FOR STATISTICAL PURPOSES. 12. SINCE THE FACTS ARE IDENTICAL, WE SET ASIDE THE ORDERS OF THE CIT(A) FOR THE A.Y. 2010-11& 2011-12 AND RESTORE T HE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO RE-ADJUDICATE THE SAME AFRESH IN THE LIGHT OF THE DISCUSSION MADE IN THE ITATS ORDER FO R THE ASSESSMENT YEAR 2008-09. FOR STATISTICAL PURPOSES, THE GROUND S RAISED BY THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS ARE ALLOWED. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESS EE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH NOVEMBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . . # $% ) (D.S. SUNDER SINGH) & / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 10 TH NOVEMBER, 2016 RD ITA NO. 2269 & 2270/16 :- 13 -: &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF