DCIT, CHENNAI V. M/s. AZTEC Auto Pvt. Ltd., CHENNAI

ITA 2752/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7799 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 23-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: C NARESH C A
• Keywords: Depreciation; Additional depreciation
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE , ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./I.T.A. NOS.2751 & 2752/MDS/2016 / ASSESSMENT YEAR : 2009-2010 & 2012-2013. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(1) CHENNAI. VS. M/S. AZTEC AUTO PVT. LTD, 88, SIDCO INDUSTRIAL ESTATE, AMBATTUR, CHENNAI 600 098. [PAN AAACA 6238K] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : SHRI. A.V. SREEKANTH, IRS, JCIT $% ! ' # /RESPONDENT BY : SHRI. C. NARESH, C.A. & ' '( /DATE OF HEARING : 20-12-2016 )* ' '( /DATE OF PRONOUNCEMENT : 21-12-2016 ! / O R D E R SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: THESE ARE APPEALS FILED BY THE DEPARTMENT DIRECTE D AGAINST ORDERS DATED 14.07.2016 OF COMMISSIONER OF INCOME T AX (APPEALS)-1, CHENNAI. ITA NOS.2751 & 2752/2016 :- 2 -: 2. FACTS APROPOS ARE THAT ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2009-2010 CLAIMED ADDIT IONAL DEPRECIATION OF 10% ON PLANT AND MACHINERY WHICH WERE PURCHASED AND PUT TO USE IN THE PREVIOUS YEAR RELEVANT TO THE PRECEDING ASS ESSMENT YEAR RELYING ON SECTION 32(1)(IIA) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). ASSESSEE HAD USED SUCH PLANT AND MACHINERY FOR A PE RIOD LESS THAN 180 DAYS IN THE PRECEDING YEAR AND THEREFORE IT COU LD CLAIM ONLY 50% OF THE ADDITIONAL DEPRECIATION. THE, CLAIM FOR AD DITIONAL DEPRECIATION IN THE PRECEDING ASSESSMENT YEAR IN RESPECT OF NEW PLANT AND MACHINERY PURCHASED IN THAT YEAR WAS RESTRICTED TO 10%. BALANCE 10% COMING TO C4,33,414/- WAS CLAIMED BY THE ASSES SEE IN THE IMPUGNED ASSESSMENT YEAR AS CARRIED FORWARD ADDITIO NAL DEPRECIATION FROM THE PRECEDING ASSESSMENT YEAR. THERE WAS A SI MILAR CLAIM MADE BY THE ASSESSEE FOR ASSESSMENT YEAR 2012-2013 FOR P LANT AND MACHINERY ACQUIRED IN PREVIOUS YEAR RELEVANT TO ASS ESSMENT YEAR 2011-2012. THIS CLAIM CAME TO C14,06,042/-. BOTH THESE WERE DISALLOWED BY THE LD. ASSESSING OFFICER HOLDING THA T THE ACT DID NOT PERMIT CARRY FORWARD OF ADDITIONAL DEPRECIATION ON NEW PLANT AND MACHINERY TO THE EXTENT IT COULD NOT BE AVAILED DUE TO USAGE LESS THAN 180 DAY. ITA NOS.2751 & 2752/2016 :- 3 -: 3. IN ITS APPEALS BEFORE LD. COMMISSIONER OF INCOME TA X (APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT CO- ORDINATE BENCHES OF THIS TRIBUNAL IN THE CASES OF M /S. ADDISON AND COMPANY VS. DCIT (ITA NO.2198/MDS/2015, DATED 4.3.2016), M/S. HINDU JA FOUNDARIES LTD VS. ACIT (ITA NO.1590, 1591, 1592 AND 1593/MDS/ 2015, DATED 19.02.2016) AND M/S. DEVI POLYMERS PVT. LTD VS. ACI T (ITA NO.165/MDS/2014, DATED 09.4.2014 ALLOWED SIMILAR CLAIM FOR CARRIED FORWARD ADDITIONAL DEPRECIATION. 4. LD. COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONS IDERING THE SUBMISSIONS OF THE ASSESSEE WAS OF THE OPINION THAT THERE WERE CONTRARY DECISIONS OF CO-ORDINATE BENCHES OF THIS TRIBUNAL ON THE ISSUE. AS PER LD. COMMISSIONER OF INCOME TAX (APPE ALS) THOUGH THE DECISIONS MENTIONED IN THE PRECEDING PARA WERE IN F AVOUR OF THE ASSESSEE, IN THE CASES OF CRI PUMPS PVT. LTD VS. ACIT 58 SOT 134 (CHENNAI) AND DCIT VS. IP RINGS (ITA NO.1328/MDS/20 14, DATED 26.09.2014), A VIEW IN FAVOUR OF THE REVENUE WAS TAKEN. HOWEV ER, HE HELD THAT ASSESSEE COULD TAKE ADVANTAGE OF DECIS IONS WHICH WERE IN ITS FAVOUR. HE DIRECTED THE LD. ASSESSING OFFICER T O ALLOW THE CLAIM OF THE ASSESSEE. ITA NOS.2751 & 2752/2016 :- 4 -: 5. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE ST RONGLY ASSAILING THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) SUBMITTED THAT THE WORDINGS OF SEC. 32(1)(IIA) OF T HE ACT DID NOT ALLOW A CLAIM OF CARRY FORWARD UNABSORBED ADDITIONAL DEPR ECIATION. 6. . PER CONTRA, LD. AUTHORISED REPRESENTATIVE ONCE AGA IN RELIED ON THE VERY SAME DECISIONS ON WHICH ASSESSEE HAD B ANKED BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. RITTAL INDIA PVT. LTD 380 ITR 423 . ACCORDING TO HIM, THE DECISION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS IN ACC ORDANCE WITH LAW. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IN SO FAR AS CLAIM OF CARRY FORWARD OF ADDITIONAL DEPRECIATION TO THE EXTENT IT COULD NOT BE ALLOWED IN EARLIER YEAR DUE TO USE LESSER THAN 180 DAYS, NO DOUBT TH ERE ARE DECISIONS OF CO-ORDINATE BENCH WHICH ARE FOR AND AGAINST THE ASS ESSEE. HOWEVER, IN OUR OPINION THE ISSUE IS NO MORE RES INTEGRA DU E TO THE JUDGMENT OF KARNATAKA HIGH COURT IN THE CASE OF RITTAL INDIA PVT. LTD(SUPRA). THEIR LORDSHIP AFTER CONSIDERING SEC. 32(1)(IIA) OF THE A CT HELD AT PARA 3 TO 10 AS UNDER :- 3. THE DISPUTE IN THE PRESENT APPEAL IS WITH REGARD TO THE ALLOWANCE OF THE BALANCE 10 PER CENT. DEPRECIATION IN THE NEXT ITA NOS.2751 & 2752/2016 :- 5 -: ASSESSMENT YEAR 2008-09, SO THAT THE BENEFIT OF THE TOTAL 20 PER CENT. ALLOWABLE DEPRECIATION UNDER SECTION 32(1)(II A) OF THE ACT WAS GIVEN. THE ASSESSING OFFICER, AS WELL AS THE AP PELLATE COMMISSIONER, DISALLOWED THE CLAIM OF THE ASSESSEE, WHEREAS THE TRIBUNAL, VIDE ITS ORDER DATED JANUARY 28, 2014 , HAS ALLOWED THE APPEAL OF THE ASSESSEE. CHALLENGING THE SAME, T HIS FURTHER APPEAL HAS BEEN FILED BY THE REVENUE. 4. WE HAVE HEARD SRI K. V. ARAVIND, LEARNED COUNSEL FOR THE APPELLANTS AS WELL AS SRI T. SURYANARAYANA, LEARNED COUNSEL APPEARING FOR THE RESPONDENT-ASSESSEE AND PERUSED T HE RECORD. 5. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWING TWO SUBSTANTIAL QUESTIONS OF LAW : '(I) WHETHER THE TRIBUNAL IS CORRECT IN EXTENDING T HE BENEFIT OF SECTION 32(1)(IIA) OF THE ACT TO THE NEX T ASSESSMENT YEAR WHEN THE INCOME TAX ACT DOES NOT PROVIDE FOR SUCH CARRYOVER, THEREBY VIOLATING THE L EGAL PRINCIPLES OF 'CASUS OMISSUS' WHICH STATES THAT THE COURTS CANNOT COMPENSATE FOR WHAT THE LEGISLATURE HAS OMIT TED TO ENACT ? (II) WHETHER THE TRIBUNAL WAS CORRECT IN HOLDING TH AT ADDITIONAL DEPRECIATION ALLOWED UNDER SECTION 32(1) (IIA) IS A ONE-TIME BENEFIT TO ENCOURAGE INDUSTRIALISATION A ND THE RELEVANT PROVISIONS HAS BEEN CONSTRUED REASONABLY A ND PURPOSIVE WITHOUT APPRECIATING THAT THE ADDITIONAL DEPRECIATION IS ALLOWED IN THE YEAR OF PURCHASE AND IF IN THE YEAR OF PURCHASE THE ASSESSEE IS ELIGIBLE ONLY FOR 50 PER CENT. DEPRECIATION, THE BALANCE 50 PER CENT. CA NNOT BE CARRIED FORWARD FOR THE SUBSEQUENT YEAR ON THE CLAI M CANNOT BE ALLOWED IN ANY OTHER YEAR ?' 6. THE RELEVANT PROVISIONS OF SECTION 32 ARE REPROD UCED BELOW : '32.(1) IN RESPECT OF DEPRECIATION OF (I) BUILDINGS, MACHINERY, PLANT OR FURNITURE, BEING TANGIBLE ASSETS ; II) KNOW-HOW, PATENTS, COPYRIGHTS, TRADE MARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE, BEING INTANGIB LE ASSETS ACQUIRED ON OR AFTER THE 1ST DAY OF APRIL, 1 998, ITA NOS.2751 & 2752/2016 :- 6 -: OWNED, WHOLLY OR PARTLY, BY THE ASSESSEE AND USED F OR THE PURPOSES OF THE BUSINESS OR PROFESSION, THE FOLLOWING DEDUCTIONS SHALL BE ALLOWED (I) IN THE CASE OF ASSETS OF AN UNDERTAKING ENGAGED IN GENERATION OR GENERATION AND DISTRIBUTION 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 PERCE NTAGE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED : . . . PROVIDED FURTHER THAT WHERE AN ASSET REFERRED TO IN CLAUSE (I) OR CLAUSE(II) OR CLAUSE (IIA), AS THE CA SE MAY BE, IS ACQUIRED BY THE ASSES SEE DURING THE PREVIOU S YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS OR PROFESSION FOR A PERIOD OF LESS THAN ONE HUNDRED AN D EIGHTY DAYS IN THAT PREVIOUS YEAR, THE DEDUCTION UN DER THIS SUB-SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTED TO FIFTY PER CENT. OF THE AMOUNT CALCULA TED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET UNDER CLAUSE (I) OR CLAUSE (II) OR CLAUSE (IIA), AS THE CASE MAY BE . . . (IIA) IN THE CASE OF ANY NEW MACHINERY OR PLANT (OT HER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED A ND 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 BUSINE SS OF 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. CLAUSE (IIA) OF SECTION 32(1) OF THE ACT, AS IT NOW STANDS, WAS SUBSTITUTED BY THE FINANCE ACT, 2005, APPLICABL E WITH EFFECT FROM APRIL 1, 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 ONLY WHERE A NEW INDUSTRIAL UNDERTAKING BEGINS TO MANUFACTURE OR PRO DUCE DURING ANY YEAR PREVIOUS TO THE RELEVANT ASSESSMENT YEAR. 8. THE AFORESAID TWO CONDITIONS, I.E., THE UNDERTAK ING ACQUIRING NEW PLANT AND MACHINERY SHOULD BE A NEW INDUSTRIAL UNDERTAKING, OR THAT IT SHOULD BE CLAIME D IN ONE YEAR, HAVE BEEN DONE AWAY BY SUBSTITUTING CLAUSE (I IA) WITH EFFECT FROM APRIL 1, 2006. THE GRANT OF ADDITIONAL ITA NOS.2751 & 2752/2016 :- 7 -: DEPRECIATION, UNDER THE AFORESAID PROVISION, IS FOR THE BENEFIT OF THE ASSESSEE AND WITH THE PURPOSE OF ENCOURAGING INDUSTRIALISATION, BY EITHER SETTING UP A NEW INDUS TRIAL UNIT OR BY EXPANDING THE EXISTING UNIT BY PURCHASE OF NEW P LANT AND MACHINERY, AND PUTTING IT TO USE FOR THE PURPOSE OF BUSINESS. THE PROVISO TO CLAUSE (II) OF THE SAID SECTION MAKE S IT CLEAR THAT ONLY 50 PER CENT. OF THE 20 PER CENT. WOULD BE ALLOWABLE, IF THE NEW PLANT AND MACHINERY SO ACQUIRED IS PUT T O USE FOR LESS THAN 180 DAYS IN A FINANCIAL YEAR. HOWEVER, IT NOWHERE RESTRICTS THAT THE BALANCE 10 PER CENT. WOULD NOT B E ALLOWED TO BE CLAIMED BY THE ASSESSEE IN THE NEXT ASSESSMEN T YEAR. 9. THE LANGUAGE USED IN CLAUSE (IIA) OF THE SAID SE CTION CLEARLY PROVIDES THAT 'A FURTHER SUM EQUAL TO 20 PE R CENT. OF THE ACTUAL COST OF SUCH MACHINERY 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 PER CENT. ADDITIONAL DEPRECIATION. BY VIRTUE OF THE PROVISO REFERRED TO ABOVE, ONLY 10 PER CENT. CA N 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 NECESSARILY MEAN THAT THE BALANCE 10 PER CENT. ADDI TIONAL DEDUCTION CAN BE AVAILED OF IN THE SUBSEQUENT ASSES SMENT YEAR, OTHERWISE THE VERY PURPOSE OF INSERTION OF CL AUSE (IIA) WOULD BE DEFEATED BECAUSE IT PROVIDES FOR 20 PER CE NT. DEDUCTION WHICH SHALL BE ALLOWED. 10. IT HAS BEEN CONSISTENTLY HELD BY THIS COURT, AS WELL AS THE APEX COURT, THAT THE BENEFICIAL LEGISLATION, AS IN THE PRESENT CASE, SHOULD BE GIVEN 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 ALLOWE D CERTAIN ADDITIONAL BENEFIT, WHICH WAS RESTRICTED BY THE PRO VISO TO ONLY HALF OF THE SAME BEING GRANTED IN ONE ASSESSMENT YE AR, IF CERTAIN CONDITION WAS NOT FULFILLED. BUT, THAT, IN OUR CONSIDERED VIEW, WOULD NOT RESTRAIN THE ASSESSEE FR OM CLAIMING THE BALANCE OF THE BENEFIT IN THE SUBSEQUE NT ASSESSMENT YEAR. THE TRIBUNAL, IN OUR VIEW, HAS RIG HTLY HELD, THAT ADDITIONAL DEPRECIATION ALLOWED UNDER SECTION 32(1)(IIA) OF THE ACT IS A ONE-TIME BENEFIT TO ENCOURAGE INDUSTRIALISATION, AND THE PROVISIONS RELATED TO IT HAVE TO BE CONSTRUED REASONABLY, LIBERALLY AND PURPOSIVELY, TO MAKE THE PROVISION MEANINGFUL WHILE GRANTING THE ADDITIONAL ALLOWANCE. WE ARE IN FULL AGREEMENT WITH SUCH OBSERVATIONS MAD E BY THE TRIBUNAL. ITA NOS.2751 & 2752/2016 :- 8 -: WE ARE OF THE OPINION THAT AS ON DATE THERE IS NO J UDGMENT OF ANY OTHER HIGH COURTS WHICH IS IN FAVOUR OF THE DEPARTM ENT. HENCE, WE DO NOT FIND ANY REASON TO DISTURB THE VIEW TAKEN BY TH E LD. COMMISSIONER OF INCOME TAX (APPEALS). 8. IN THE RESULT, APPEALS OF THE REVENUE FOR BOTH THE ASSESSMENT YEARS ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 21ST DAY OF DECE MBER, 2016, AT CHENNAI. SD/- ( . ) (G. PAVAN KUMAR) $ % / JUDICIAL MEMBER SD/- ( . ) (ABRAHAM P. GEORGE) & % / ACCOUNTANT MEMBER +& / CHENNAI , / DATED: 21ST DECEMBER, 2016 KV - ' $'./ 0/' / COPY TO: 1 . ! / APPELLANT 3. 1' () / CIT(A) 5. /45 $'6 / DR 2. $% ! / RESPONDENT 4. 1' / CIT 6. 57 8& / GF