MITC ROLLING MILLS P.LTD, MUMBAI V. ASST CIT 10(2), MUMBAI

ITA 2789/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3592 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 25-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T M GOSHER
• Keywords: Depreciation; Additional depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 2789/MUM/2012 (ASSESSMENT YEAR: 2009-10) M/S. MITC ROLLING MILLS P. LTD. A C I T - 10(2) C/O. T.M. GOSHER & CO., CAS AAYAKAR BHAVAN, M.K. RO AD 12, SHIVAJI FORT CO-OP. HSG. SOCIETY VS. MUMBAI 400020 LTD., N.S. MANKIKAR MARG, SION (E) MUMBAI 400022 PAN - AAACN1731C APPELLANT RESPONDENT APPELLANT BY: SHRI T.M. GOSHER RESPONDENT BY: SHRI MOHIT JAIN DATE OF HEARING: 13.05.2013 DATE OF PRONOUNCEMENT: 13.05.2013 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL FILED AT THE INSTANCE OF THE ASSESSEE I S DIRECTED AGAINST THE ORDER DATED 27.01.2012 PASSED BY THE CIT(A)-22, MUM BAI AND IT PERTAINS TO A.Y. 2009-10. 2. THE FOLLOWING GROUND WAS URGED BY THE ASSESSEE BEFO RE US: - 1. THE CLAIM FOR BALANCE ADDITIONAL DEPRECIATION O F RS.7,41,231/- U/S. 32(1)(IIA) OF THE INCOME TAX ACT, 1961 IN RESP ECT OF MACHINERY WHICH WAS ACQUIRED IN THE PREVIOUS YEAR R ELEVANT TO A.Y. 2008-09 WHICH IS CLAIMED IN THE A.Y. 2009-10 I S DISALLOWED BY THE A.O. AND SAID VIEW HAS BEEN UPHELD BY CIT(A) . THE CLAIM REQUIRES TO BE ALLOWED. ALTERNATIVELY, THE ADDITION AL DEPRECIATION NEEDS TO BE ALLOWED IN THE YEAR OF INSTALLATION I.E . A.Y. 2008-09. 3. THE FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE REFERRED TO IN BRIEF. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF IRON AND STEEL. ASSESSEE INSTALLED CERTAIN NEW P LANT AND MACHINERY AFTER SEPTEMBER, 2007. FOR THE PREVIOUS YEAR RELEVANT TO A.Y. 2008-09 THE PLANT AND MACHINERY HAVING BEEN PUT TO OPERATION FOR LESS THAN 180 DAYS THE ITA NO. 2789/MUM/2013 M/S. MITC ROLLING MILLS P. LTD. 2 COMPANY CLAIMED ONLY 50% OF THE RATE OF ADDITIONAL DEPRECIATION AND THE BALANCE 50% WAS CLAIMED IN THE PREVIOUS YEAR RELEVA NT TO A.Y. 2009-10, WHICH IS THE YEAR UNDER CONSIDERATION. THE AO AS WE LL AS THE CIT(A) WERE OF THE OPINION THAT THE ASSESSEE IS NOT ENTITLED TO CL AIM BALANCE 50% DEPRECIATION IN THE SUBSEQUENT YEAR UNDER SECTION 3 2(1)(IIA) OF THE ACT. THE CASE OF THE ASSESSEE WAS THAT IT IS A ONE TIME INCE NTIVE ALLOWED TO THE ASSESSEE UNDER THE ACT WHERE THE OBJECT WAS TO ENCO URAGE ESTABLISHMENT OF INDUSTRIES AND HENCE BALANCE 50% IS ALLOWABLE IN TH E YEAR UNDER CONSIDERATION. THE LEARNED CIT(A) OBSERVED THAT AS PER PROVISO TO SECTION 32(1)(IIA) ADDITIONAL DEPRECIATION EQUAL TO 20% OF THE COST OF PLANT AND MACHINERY HAS TO BE ALLOWED AS DEDUCTION. PROVISO T O SECTION 32(1)(IIA) RESTRICTS SUCH DISALLOWANCE OF DEPRECIATION TO HALF IN CASE THE MACHINERY WAS PUT TO USE FOR LESS THAN 180 DAYS IN THE PREVIOUS Y EAR. THEREFORE, THE ASSESSEE CANNOT CLAIM THE BALANCE 50% DEPRECIATION IN THE YEAR UNDER CONSIDERATION. 4. FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE F OLLOWING DECISIONS OF THE ITAT DELHI BENCH IN SUPPORT OF HIS CONTENTION THAT THERE IS NO EMBARGO IN CLAIMING DEDUCTION IN THE SECOND YEAR SO LONG AS CO MPLETE DEPRECIATION WAS NOT ALLOWED IN THE FIRST YEAR: - I. DCIT VS. COSMO FILMS LTD. 139 ITD 628 (DEL) II. ACIT VS. SIL INVESTMENT LTD. 54 SOT 54 (DEL) 5. DELHI BENCH OF THE TRIBUNAL OBSERVED THAT THERE IS NO RESTRICTION ON ALLOWING BALANCE OF ONE TIME INCENTIVE IN THE SUBSE QUENT YEAR IF THE PROVISIONS ARE CONSTRUCTED REASONABLY, LIBERALLY AN D PURPOSIVE. ONE HAS TO NOTICE THAT ADDITIONAL BENEFIT WAS INTENDED TO GIVE IMPETUS TO INDUSTRIALISATION AND IN THAT DIRECTION THE ASSESSE E DESERVES TO GET THE BENEFIT IN FULL WHEN THERE IS NO RESTRICTION IN THE STATUTE TO DENY THE BENEFIT OF BALANCE 50% WHEN THE NEW PLANT AND MACHINERY WAS ACQUIRED AND PUT TO USE FOR LESS THAN 180 DAYS IN THE IMMEDIATELY PRECE DING YEAR. THE OVERALL DEDUCTION OF DEPRECIATION UNDER SECTION 32 SHALL, H OWEVER, NOT EXCEED THE TOTAL COST OF PLANT AND MACHINERY. ITA NO. 2789/MUM/2013 M/S. MITC ROLLING MILLS P. LTD. 3 6. ON THE OTHER HAND, THE LEARNED D.R. WAS UNABLE TO P LACE ANY CONTRARY JUDGEMENT ON THIS ASPECT THOUGH HE STRONGLY RELIED UPON THE ORDERS PASSED BY THE TAX AUTHORITIES. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN THE LIGHT OF THE ABOVE DECISIONS OF THE ITAT DELHI BENCH (SUPRA) WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION IN THE SUBSEQUENT YEAR IF THE ENTIRE DEPRECIATION IS NOT ALLOWED IN THE FIRST YEAR OF INSTALLATION. WITH THIS OBSERVATION THE APPEAL FILED BY THE ASSESSEE C OMPANY IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MAY, 2013. SD/- SD/- (RAJENDRA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 13 TH MAY, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 22, MUMBAI 4. THE CIT 10, MUMBAI CITY 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.