C R I Pumps (P) Ltd., CHENNAI V. JCIT, Coimbatore

ITA 578/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95967 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 10-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 23-03-2015
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: RADHIKA VASUDEVAN
• Keywords: Depreciation; Additional depreciation
• Section: 32

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL ME MBER I.T.A. NO. 5 78 /MDS/2015 ASSESSMENT YEAR : 20 1 0 - 11 M/S. CRI PUMPS (P) LTD., NO. 7/46/1, KEERANATHAM ROAD, SARAVANAMPATTI, COIMBATORE. [PAN: A AAC C9497N ] VS. THE JOINT COMMISSIONER OF INCOME TAX , RANGE IV , 63, RACE COURSE ROAD, COIMBATORE 641 01 8. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MS. RADHIKA VASUDEVAN, ADVOCATE / RESPONDENT BY : SHRI PATHLAVATH PEERYA , CIT / DATE OF HEARING : 1 0 . 0 8 .201 5 / DATE OF P RONOUNCEMENT : 28 . 0 8 .201 5 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1, COIMBATORE, DATED 20.02.2015 RELEVANT TO THE ASSESSMENT YEAR 2010 - 11. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS RELATING TO CLAIM OF ADDITIONAL DEPRECIATION. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED AS UNDER: 4(II). THE ASSESSEE COMPANY HAS CLAIMED ADDITIONAL DEPRECIATIO N ON PLANT AND MACHINERY ACQUIRED AND INSTALLED IN THE PRECEDING YEARS I.T.A. NO . 5 78 /M/ 15 2 OTHER THAN THE NEW MACHINERY ACQUIRED AND INSTALLED DURING THE PREVIOUS YEAR. AS PER THE PROVISIONS OF SECTION 32 (1)(II)(A), NO DEDUCTION IS ALLOWABLE TO ANY PLANT AND MACHINERY, THE WHOLE OR THE ACTUAL COST OF WHICH IS ALLOWED AS DEDUCTION WHETHER BY WAY OF DEPRECIATION OR OTHERWISE, IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION OF ANY ONE PREVIOUS YEAR . THE ADDITIONAL DEPRECIATION U/S 32 IS ELIGIBLE ONLY TO ANY NEW MACHINERY OR PLANT ACQUIRED AND INSTALLED BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE AND PRODUCTION OF ANY ARTICLE OR THING IN THE PREVIOUS YEAR RELEVANT TO THE RESPECTIVE ASSESSMENT YEAR. ONCE A NEW MACHINERY OR PLANT ACQUIRED AND INSTALLED IN A YEAR AND CLAIMED DEPRECIATION AND ADDITIONAL DEPRECIATION FOR THE YEAR OF INSTALLATION, THE ASSESSEE IS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION IN THE SUBSEQUENT YEAR SINCE THE PLANT AND MACHINERY LOST ITS CHARACTER OF NE W PLANT AND MACHINERY. THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION ONLY TO THE NEW PLANT AND MACHINERY ACQUIRED AND INSTALLED DURING THE PREVIOUS YEAR. THE ADDITIONAL DEPRECIATION IS ONLY ELIGIBLE TO THE NEW PLANT AND MACHINERY ACQUIRED AND INSTAL LED DURING A GIVEN YEAR AND CANNOT BE EXTENDED TO SUBSEQUENT YEARS AS SUCH PLANT AND MACHINERY WILL NOT QUALIFY FOR ADDITIONAL DEPRECIATION SINCE IT WAS NO LONGER NEW MACHINERY IN THE SUBSEQUENT YEARS. THE ADDITIONAL DEPRECIATION IS INTRODUCED BY THE LEGIS LATURE IN ORDER TO PROMOTE INDUSTRIES AS ONE TIME MEASURE IN THE YEAR OF INSTALLATION BY PROVIDING OVER AND ABOVE THE NORMAL ENTITLED DEPRECIATION ON PLANT AND MACHINERY. THE FINANCE ACT 2002 PROVIDED ADDITIONAL DEPRECIATION AT THE RATE OF 15% AND THE FI NANCE (NO.2) ACT 2004 PROVIDED 20% ADDITIONAL DEPRECIATION TO THE NEW PLANT AND MACHINERY ACQUIRED AND INSTALLED. THE VERY SAME WAY THE FINANCE ACT 2005 ALSO PROVIDED 20% ADDITIONAL DEPRECIATION TO THE NEW PLANT AND MACHINERY. ALL THE ABOVE REFERRED AMENDM ENTS INSISTED AND HIGHLIGHTED THE ACQUISITION AND INSTALLATION OF NEW MACHINERY OR PLANT AN SPECIFICALLY POINTED OUT THAT NO DEDUCTION IS ELIGIBLE TO ANY PLANT OR MACHINERY, WHOLE OF THE ACTUAL COST TO WHICH IS ALLOWED AS A DEDUCTION (WHETHER BY WAY OF DEP RECIATION OR OTHERWISE) IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION OF ANY ONE PREVIOUS YEAR. IT IS PERTINENT TO POINT OUT THAT THE ADDITIONAL DEPRECIATION IS ELIGIBLE ONLY TO NEW MACHINERY, OR PLANT ACQU IRED OR INSTALLED AND NOT AVAILED ANY DEDUCTION BY WAY OF DEPRECIATION OR OTHERWISE IN THE YEAR OF SUCH MACHINERY OR PLANT PUT INTO USE BY AN ASSESSEE. THIS ISSUE WAS PRESENT IN THE A.Y. 2008 - 09 & 2009 - 10 ALSO IN THE CASE OF ASSESSEE COMPANY AND DISALLOW ANCE WAS MADE. FURTHER, CIT I.T.A. NO . 5 78 /M/ 15 3 (A) AS WELL AS ITAT, CHENNAI BENCH HAS UPHELD THIS DISALLOWANCE AND ASSESSEE COMPANY HAS PREFERRED APPEAL BEFORE THE HIGH COURT OF MADRAS. THEREFORE, FOR THE CURRENT YEAR ALSO DISALLOWANCE OF CLAIM OF ADDITIONAL DEPRECIATION IS MADE. 3. ON APPEAL, THE LD. CIT(A), BY FOLLOWING HIS OWN DECISIONS FOR THE EARLIER ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 IN ASSESSEE S OWN CASE, DISMISS ED THE GROUND RAISED BY THE ASSESSEE. 4. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD A ND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE LD. CIT(A), BY FOLLOWING HIS OWN DECISIONS FOR THE EARLIER ASSESSMENT YEARS, HAS OBSERVED AS UNDER: 9. I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT AND ALSO THE ORDER OF THE ASSESSING OFFI CER. FOR THE ASST. YEAR 2008 - 09 THE SAME ISSUE WAS DEALT ELABORATE BY ME IN MY APPELLATE ORDER IN ITA NO. 213/10 - 11 DATED 08.03.2012 AND DECIDED IN FAVOUR OF THE REVENUE. SUBSEQUENTLY FOR THE ASST. YEAR 2009 - 10, ON THE SAME ISSUE IN ITA NO. 105/12 - 13 DATED 20.08.2013, THE GROUND OF APPEAL WAS DECIDED AGAINST THE ASSESSEE. FOLLOWING MY EARLIER ORDERS FOR THE ASST. YEAR 2008 - 09 AND 2009 - 10, I CONFIRM THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WITH REGARD TO ADDITIONAL DEPRECIATION. THIS GROUND OF APPEAL I S DISMISSED. 5. SIMILAR ISSUE HAS BEEN RAISED BEFORE THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08 IN I.T.A. NO. 1824 & 1825/MDS/2010 VIDE ORDER DATED 04.04.2013 , WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER: 8. WE HAVE PERUSED TH E ORDERS AND HEARD THE RIVAL SUBMISSIONS. THERE IS NO DISPUTE THAT THE ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEES, FOR IMPUGNED ASSESSMENT YEAR, WERE ON MACHINERY ALREADY ACQUIRED DURING THE YEARS 2002 - 03 TO 2004 - 05 AND 2005 - 06. THUS, IN THE PREVIO US YEAR RELEVANT TO IMPUGNED ASSESSMENT YEAR, THE MACHINERY WERE NO MORE NEW. CLAIM OF THE ASSESSEES IS THAT UNDER SECTION 32(1)(IIA) OF THE ACT, ADDITIONAL DEPRECIATION FOR NEW PLANT AND MACHINERY ACQUIRED WAS AVAILABLE IN EVERY YEAR AFTER ITS INSTALLATIO N IF I.T.A. NO . 5 78 /M/ 15 4 SUCH INSTALLATION HAPPENED AFTER 31ST MARCH, 2005. SAID CLAUSE (IIA) OF SECTION 32(1) IS REPRODUCED HEREUNDER: - 32 (1) IN RESPECT OF DEPRECIATION OF . . . . . . . . . . . . . . . . . . .. .. .. .. . . . . . . . . . .. .. . . . . . . . . . . . . . (IIA) IN THE CASE OF ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER THE 31ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MA NUFACTURE AND 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 DEDUCTION UNDER CLAUSE (II): PROVIDED THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF - (A) ANY M ACHINERY OR PLANT WHICH, BEFORE ITS INSTALLATION BY THE ASSESSEE, WAS USED EITHER WITHIN OR OUTSIDE INDIA BY ANY OTHER PERSON; OR (B) ANY MACHINERY OR PLANT INSTALLED IN ANY OFFICE PREMISES OR ANY RESIDENTIAL ACCOMMODATION, INCLUDING ACCOMMODATION IN THE NATURE OF A GUEST - HOUSE; OR (C) ANY OFFICE APPLIANCES OR ROAD TRANSPORT VEHICLES; OR ANY MACHINERY OR PLANT, THE WHOLE OF THE ACTUAL COST OF WHICH IS ALLOWED AS A DEDUCTION (WHETHER BY WAY OF DEPRECIATION OR OTHERWISE) IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION OF ANY ONE PREVIOUS YEAR; 9. FIRST REQUIREMENT FOR BEING ELIGIBLE FOR THE CLAIM OF ADDITIONAL DEPRECIATION IS THAT IT SHOULD BE ON A NEW MACHINERY OR PLANT. A MACHINERY IS NEW ONLY WHEN IT IS FIRST PUT TO USE. ONCE IT IS USED, IT IS NO LONGER A NEW MACHINERY. ADMITTEDLY, THE MACHINERY, ON WHICH ADDITIONAL DEPRECIATION HAS BEEN CLAIMED, WAS ALREADY USED IN VARIOUS PRECEDING PREVIOUS YEARS. THEREFORE, FOR THE IMPUGNED ASSESSMENT YEAR, IT IS NO MORE A NEW MACHINERY OR PLANT. ONCE IT IS NOT A NEW MACHINERY OR PLANT, ALLOWANCE UNDER SECTION 32(1)(IIA) CANNOT BE ALLOWED. ADDITIONAL DEPRECIATION ITSELF IS ONLY FOR A NEW MACHINERY OR PLANT. A CLAIM OF ADDITIONAL DEPRECIATION AS MADE BY THE ASSESSE E, IF ALLOWED, WILL NOT BE AN ALLOWANCE FOR A NEW MACHINERY OR PLANT. I.T.A. NO . 5 78 /M/ 15 5 INTENTION OF THE LEGISLATURE WAS TO GIVE SUCH ADDITIONAL DEPRECIATION IN THE YEAR IN WHICH ASSETS WERE PUT TO USE AND NOT FOR ANY SUCCEEDING YEAR. THERE IS NOTHING IN THE STATUTE WHICH ALLOWS SUCH CLAIM OF ADDITIONAL DEPRECIATION EVERY YEAR ON MACHINERY ACQUIRED IN EARLIER YEAR. THERE CANNOT BE ANY PRESUMPTION THAT UNLESS A CLAIM IS SPECIFICALLY DENIED, IT HAS TO BE ALLOWED. IN THE CASE OF BRAKES INDIA LTD. (SUPRA) WHERE ASSESSEE CLAIME D CARRY FORWARD OF ADDITIONAL DEPRECIATION, THIS TRIBUNAL HAD HELD AS UNDER AT PARA 15 OF ITS ORDER: - 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE PROVISIONS OF SECTION 32 AS APPLICABLE FOR THE RELEVANT ASSESSMENT YEAR CLEARLY SHOWS TH AT ADDITIONAL DEPRECIATION IS ALLOWABLE ON THE PLANT AND MACHINERY ONLY FOR THE YEAR IN WHICH THE CAPACITY EXPANSION HAS TAKEN PLACE WHICH HAS RESULTED IN THE SUBSTANTIAL INCREASE IN THE INSTALLED CAPACITY. IN THE ASSESSEE S CASE THIS TOOK PLACE IN THE ASS ESSMENT YEAR 2005 - 06 AND THE ASSESSEE HAS ALSO CLAIMED THE ADDITIONAL DEPRECIATION DURING THAT YEAR AND THE SAME HAS ALSO BEEN ALLOWED. EACH ASSESSMENT YEAR IS SEPARATE AND INDEPENDENT ASSESSMENT YEAR. THE PROVISIONS OF SECTION 32 OF THE ACT DO NOT PROVI DE FOR CARRY FORWARD OF THE RESIDUAL ADDITIONAL DEPRECIATION, IF ANY. IN THE CIRCUMSTANCES, THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. CONSEQUENTLY, GROUND NO.1 OF THE ASSESSEE S APPEAL S TANDS DISMISSED. 10. WHEN AN ALLOWANCE WHICH IS ORDINARILY NOT AVAILABLE UNDER NORMAL COMMERCIAL PRINCIPLES OF ACCOUNTING, IS MADE SPECIFICALLY ALLOWABLE, THROUGH ENACTMENT OF CERTAIN SPECIFIC PROVISIONS OF THE ACT, IT IS ALSO A REQUIREMENT THAT THERE S HOULD BE SIMILAR SPECIFIC PROVISION WHICH SHOWS ITS APPLICABILITY EVERY YEAR, UNLESS THE CONTEXT STRONGLY CALLS FOR SUCH AN INTERPRETATION. WE ARE THUS OF THE OPINION THAT CIT(APPEALS) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF ADDITIONAL DEPRECIATION. NO INTERFERENCE IS WARRANTED. 6. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08 ON SIMILAR ISSUE RAISED, FOR THE ASSESSMENT YEAR 2010 - 11 ALSO, THE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. I.T.A. NO . 5 78 /M/ 15 6 4 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 28 TH OF AUGUST, 2015 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( V. DURGA RAO ) JUDICIAL MEMBER CHENNAI, DATED, THE 28 . 0 8 .201 5 VM/ - / COPY TO: 1. / APPELLANT , 2. / RES PONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.