ACIT Circle-18(2), New Delhi V. Nippon Audiotronix Ltd., New Delhi

ITA 4014/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9583 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 05-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Rectification of order; Additional depreciation
• Section: 32; 154; 143(3); 32(1)(iia)

Judgement Text

I.T.A.No.4014/Del/2019/A.Y.2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E” NEW DELHI BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER आ .अ.स ं /.I.T.A No.4014/Del/2019 /Assessment Year:2012-13 ACIT Circle 18(2) New Delhi. ब म Vs. Nippon Audiotronix Ltd. N-191, Greater Kailash-1, New Delhi. PAN No. AAACN2163L अ Appellant /Respondent Assessee by None Revenue by Shri Jeetendra Chand, Sr. DR स ु नवाईक तारीख/ Date of hearing: 30.08.2022 उ ोषणाक तारीख/Pronouncement on 30.09.2022 आदेश /O R D E R PER C.N. PRASAD, J.M. This appeal is filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-6, Delhi dated 15.02.2019 for the AY 2012-13 in holding that Section 154 cannot be invoked for making disallowance on account of additional depreciation. 2. In spite of issue of notice fixing the date of hearing on several dates, none appeared on behalf of the assessee nor any adjournment was I.T.A.No.4014/Del/2019/A.Y.2012-13 2 moved. Therefore, we proceed to dispose off this appeal on hearing the Ld. DR. 3. Briefly stated the facts are that the assessee filed return of income on 31.12.2012 declaring income of Rs.39,23,24,830/-. The assessment was completed u/s 143(3) on 27.02.2015 accepting the income returned by the assessee. Subsequently the order u/s 154 dated 16.09.2016 was passed determining the income of the assessee at Rs.39,50,78,285/- and while doing so the Assessing Officer disallowed additional depreciation of Rs.27,53,455/-. The assessee filed appeal before the Ld.CIT(A) contending that the eligible additional depreciation is calculated @ 20% on the cost of qualifying assets and since the assets were put to use for less than 180 days the claim for additional depreciation was restricted to half i.e. 10% and the same was claimed as deduction in the AY 2011-12 and the balance remaining additional depreciation being 10% is allowable in the succeeding assessment year and accordingly in the AY 2012-13 which is under appeal an amount of Rs.19,69,241/- being 10% of the value of machines purchased in the AY 2011-12 and put to use for less than 180 days in that year was claimed as deduction in the return filed and this was also accepted by the Assessing Officer while passing the order u/s 143(3) of the Act. The assessee also contended that in view of various judgments the claim for additional depreciation cannot be disallowed. It was also contended that even otherwise disallowance of additional depreciation cannot be subject matter of rectification u/s 154 I.T.A.No.4014/Del/2019/A.Y.2012-13 3 of the Act. The Ld.CIT(A) considering the submissions of the assessee and the relevant case laws on the issue deleted the disallowance of additional depreciation made by the Assessing Officer while passing the order u/s 154 of the Act, observing as under: “4.1.1 I have considered the impugned order and the submissions of the appellant. The third proviso to section 32(1)(iia) has been inserted on the statute with effect from 01.04.2016 and is applicable from AY 2016-17 onwards. However, with respect to claim of additional depreciation u/s 32(1)(iia), various courts have held that if the plant and machinery which is eligible for additional depreciation u/s 32(1)(iia) is put to use for less than 180 days in the said financial year and only 50% of additional depreciation can be claimed in that year, balance 50% can be availed in the subsequent year. The Hon’ble Karnataka High Court, in the case of CIT vs. Rittal India Pvt. Ltd. (66 taxmann.com) (supra), which has been relied upon by the appellant on the said issue, have held as under: “It has been consistently held by this Court, as well as the Apex Court, that beneficial legislation, as in the instant case, should be given liberal interpretation so as to benefit the assessee. In this case, the intention of the legislation is absolutely clear, that the assessee shall be allowed certain additional benefit which was restricted by the proviso to only half of the same being granted in one assessment year, if certain condition was not fulfilled. But, that would not restrain the assessee from claiming the balance of the benefit in the subsequent assessment year. The Tribunal, has rightly held, that additional depreciation allowed u/s 32(1)(iia) is a one-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. 4.1.2 In appellant’s own case for AY 2015-16, addition made on account of claim of balance additional depreciation was deleted by following the order of the Ld.CIT(A)-22 in I.T.A.No.4014/Del/2019/A.Y.2012-13 4 appellant’s own case for AY 2013-14 and the decision of Hon’ble ITAT Delhi in the case of DCIT vs. Cosmo Film Ltd. (139 ITD 268) where, on similar issue, the Ld.CIT(A)-22 had held as under: “62. .....The Ld. AR has relied upon various decisions including Hon’ble ITAT Delhi Decision in the case of DCIT vs. Cosmo Film Ltd. (139 ITD 268). I have carefully gone through the decisions cited by the Ld. AR. The decision cited is applicable in the case of appellant. 6.3 There is no bar in law that once the amount @ 15% of new plant and machinery is calculated and only 50% is allowable in that particular year on account of period of usage then balance shall not be allowed forever. The law does not restrict/prohibit that the balance of 50% so calculated shall not be allowed in the immediate succeeding year. The additional depreciation u/s 32(1)(iia) as provided by the Finance (No.2) Act, 2022 w.e.f. 01.04.2003 is explained by Circular No. 8 of 2002 27.08.2002 reported in 258 ITR (ST) 13 as being ‘a deduction of a further sum’ as depreciation, therefore, what was proposed to be allowed is depreciation though it was called as additional depreciation. Section 32(1)(iia) mandates the grant of additional sum depreciation. Therefore, any balance of the amount of additional sum depreciation would have to be considered to be carry forward and set off in terms of sub-section (2) of section 32 of the Act. 6.4 Section 32(iia) of the Act is an incentive provision for encouraging the industrialization and such a provision would have to be construed liberally. A provision for promoting economic growth has to be interpreted liberally. This benefit is one time allowance and the restrictions, if any, on such incentive provisions have to be construed so as to advance the objective of the provision and not to frustrate it. The construction which frustrates the basic purpose of the provision should be avoided, the ratios laid down in the decision of Hon’ble I.T.A.No.4014/Del/2019/A.Y.2012-13 5 Supreme Court in the case of Bajaj Tempo Ltd. vs. CIT (196 ITR 188/62 Taxman 480) were relied upon by the appellant. 6.5 The additional depreciation as provided in clause (iia) of sub-section (1) section 32 is a one time benefit whereas the normal depreciation is year to year feature. If the benefit is restricted only to 50% then it will be against the basic intention to provide incentive for encouraging the industrialization. This will also frustrate the object of the provisions and it will be unfair, inequitable and unjust. There is no restriction provided in law which restrict the carry forward of the additional sum of depreciation which is a one time affair available to assessee on the new machinery and plant”. 6.6 The rationale of the section 32 (1)(iia) towards the allowance of the additional depreciation has been dealt in detail in all the case laws cited by the appellant. As it appears that in order to settle the said anomaly in the interpretation of the law, suitable amendment was enacted under provisions of additional depreciation u/s 32(1)(ii) by the Finance Act, 2015, which is in line with the rationale of the allowability of the full eligible quantum of the claim of additional depreciation. 6.7 Therefore, considering the factual matrix of the case, ration of judicial pronouncements relied upon on the similar facts, I am of the considered view that the AO’s denial of appellant’s claim of additional depreciation is not justified. Therefore, the addition made by the AO of Rs.7,80,906/- is hereby deleted. Ground of appeal is allowed.” 4.1.3 Even otherwise also, the said issue cannot be subject matter of rectification under section 154. Section 154 provides for rectification of mistake which is apparent from record. The Hon’ble Supreme Court in T.S. Balaram, ITO vs. Volkart Brothers & Others (82 ITR 50) have held that mistake must be obvious and patent and not something which can be established by a long-drawn process of reasoning on points on which there may be two opinions. The Hon’ble Court also I.T.A.No.4014/Del/2019/A.Y.2012-13 6 held that a decision on a debatable point of law is not a mistake apparent from record. In the case of Hotz Hotels Pvt. Ltd. Vs. CIT (118 Taxman 94) the Hon’ble Delhi High Court have held that- “5. A bare look at section 154 makes it clear that a mistake apparent from the record is rectifiable. In order to attract the application of section 154, the mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. ‘Mistake’ means to take or understand wrongly or inaccurately, to make an error in interpreting, it is an error, a fault, a misunderstanding, a misconception. ‘Apparent’ means visible, capable of being seen, obvious, plain. It means open to view, visible, evident, appears, appearing as real and true, conspicuous, manifest, obvious, seeming. A mistake which can be rectified u/s 154 is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. In our view amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order...... ..........What the Revenue intends to do in the present case is precisely the substitution of the order which, according to us, is not permissible under the provisions of section 154 and, therefore, the Tribunal was not justified in holding that there was mistake apparent on the face of the record........ .........In order to bring in application u/s 154, the mistake must be ‘apparent’ from the record. Section 154 does not enable an order to be reversed by revision or by review, but permits only some error which is apparent on the face of the record to be corrected. Where an error is far from self-evident, it ceases to be an apparent error. It is, no doubt, true that a mistake capable of being rectified u/s 154 is not confined to clerical or arithmetical mistakes. On the other hand, it does not cover any mistake which may be I.T.A.No.4014/Del/2019/A.Y.2012-13 7 discovered by a complicated process of investigation, argument or proof.” 4.1.4 In view of the above and relying of the decision of the Hon’ble Supreme Court in the case of T.S. Balaram, ITO vs. Volkart Brothers & Others (supra) and decision of the Hon’ble Delhi High Court in the case of Hotz Hotels Pvt. Ltd. vs. CIT (supra), it is held that section 154 cannot be invoked for making disallowance on account of additional depreciation. Hence, the addition made is deleted. Grounds of appeal Nos. 1 to 3 are allowed.” 4. On careful perusal of the order of the Ld. CIT(Appeals), we do not see any infirmity in the order passed by the Ld. CIT(A) in deleting the disallowance of additional depreciation made by the Assessing Officer while passing the order u/s 154 of the Act. Grounds raised by the Revenue are rejected. 5. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 30.09.2022 Sd/- Sd/- (ANIL CHATURVEDI) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 30.09.2022 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi