DCIT, CHENNAI V. Addison & Company Ltd., CHENNAI

ITA 791/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8795 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 30-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVASJCIT
• Keywords: Depreciation; Additional depreciation
• Section: 143(3); 32; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , # BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.791/MDS/2016 ( / ASSESSMENT YEAR: 2008-09) DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(1), CHENNAI-34. VS M/S. ADDISON & COMPANY LTD., 803, ANNA SALAI, CHENNAI-600 002. PAN:AAACA5199H ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SHIVA SRINIVAS,JCIT /RESPONDENT BY : MR.SAROJ KUMAR PARIDA, ADVOCATE /DATE OF HEARING : 2 ND JUNE, 2016 /DATE OF PRONOUNCEMENT : 5 TH AUGUST, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 1, CHENNAI DATED 05.10.2015 IN ITA NO.112/ CIT(A)-1 /2014- 15 PASSED UNDER SECTION 143(3) R.W.S.147 & 250(6) OF THE ACT. 2. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEAL, HOWEVER THE CRUX OF THE ISSUE IS AS FOLLOWS:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW ADDITIONAL DEPRECIATION OF RS.89,96,334/- UNDER SECTION 32(1)((II) OF THE ACT. 2 ITA NO.791/MDS/2016 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY FILED ITS RETURN OF INCOME ON 29.09.2008 FO R THE ASSESSMENT YEAR 2008-09 DECLARING TOTAL INCOME OF ` 4,81,11,040/-. THEREAFTER ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 27.12.2010 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AS ` 5,14,12,360/-. SUBSEQUENTLY, ONCE AGAIN THE LEARNED ASSESSING OFFICER REOPENED T HE ASSESSMENT UNDER SECTION 147OF THE ACT BY ISSUING N OTICE UNDER SECTION 148 ON 30.01.2013 AND ASSESSMENT WAS COMPLETED ON 28.02.2014 WHEREIN THE LEARNED ASSESSI NG OFFICER DISALLOWED THE CLAIM OF ADDITIONAL DEPRECIA TION OF `89,96,334/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE LEARNED ASSESSING OFFICER THAT THE ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION UNDER SECTION 3 2(1)(IIA) OF THE ACT FOR THE RELEVANT ASSESSMENT YEAR AMOUNTI NG TO `89,96,334/- IN RESPECT OF ASSET ACQUIRED IN THE SE COND HALF OF THE FINANCIAL YEAR 2006-07 RELEVANT TO THE ASSESSME NT YEAR 2007-08 FOR WHICH ADDITIONAL DEPRECIATION @ 10% WAS ALREADY ALLOWED IN THE ASSESSMENT YEAR 2007-08. THE 3 ITA NO.791/MDS/2016 LEARNED ASSESSING OFFICER WAS OF THE VIEW THAT THER E IS NO PROVISION IN THE ACT FOR ALLOWING THE BALANCE ADDIT IONAL DEPRECIATION IN THE SUCCEEDING ASSESSMENT YEAR IE, FOR THE RELEVANT ASSESSMENT YEAR. THEREFORE, HE DISALLOWED THE ADDITIONAL DEPRECIATION OF `89,96,334/- CLAIMED FOR THE RELEVANT ASSESSMENT YEAR. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWI NG THE DECISION OF THE TRIBUNAL BY OBSERVING AS UNDER:- 7. FROM THE FOREGOING DISCUSSION RELATING TO THE I SSUE IT IS CLEAR THAT THE APPELLANT IS AGGRIEVED WITH THE ACTI ON OF THE ASSESSING OFFICER NOT ALLOWING THE CLAIM OF ADDITIO NAL DEPRECIATION U/S.32(1)(IIA) AMOUNTING TO `89,96,334 /- IN RESPECT OF ASSETS ACQUIRED IN THE SECOND HALF OF F INANCIAL YEAR 2006-07 FOR WHICH ADDITIONAL DEPRECIATION AT 1 0% WAS ALLOWED IN ASSESSMENT YEAR 2007-08. THE APPELLANT H AS ALSO PRESSED INTO SERVICE THE DECISION OF THE HONB LE JURISDICTIONAL TRIBUNAL IN THE CASE OF DEVI POLYMER S P.LTD. VS. ACIT IN ITA NO.165/MDS/2014 IN ORDER DATED 9.4. 2014. 8. I HAVE CAREFULLY CONSIDERED THE FACTS IN ISSUE, THE VIEW TAKEN BY THE ASSESSING OFFICER, THE ARGUMENTS ADVANCED BY THE APPELLANT AND MATERIAL ON RECORD. HITHERTO, HONBLE ITAT IN THE CASE OF BRAKES INDIA LTD. IN ITA NO.1069/MDS/2010 FOR ASSESSMENT YEAR 2006-07 DATED 06.01.2012 DECIDED THE ISSUE AGAINST THE ASSE SSEE. HOWEVER, THE APPELLANT HAS PLACED ON RECORD THE JURISDICTIONAL ITAT ORDER IN THE CASE OF DEVI POLYM ERS P.LTD. (SUPRA) WHEREIN ON IDENTICAL QUESTION THE MA TTER WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE ITAT HEL D THEREIN AFTER CONSIDERING THE RATIO IN DCIT VS. BRA KES INDIA LTD. (SUPRA) AND M/S. CRI PUMPS P.LTD. VS. ACIT (SU PRA) THAT ADDITIONAL DEPRECIATION TO THE EXTENT NOT CLAI MED BY 4 ITA NO.791/MDS/2016 THE ASSESSEE IN THE EARLIER YEAR OUGHT TO BE ALLOWE D. RESPECTFULLY FOLLOWING THE SAME, THE PLEA OF THE AP PELLANT IS ALLOWED. THIS ISSUE IS ALLOWED. 6. AT THE OUTSET WE FIND THAT THIS ISSUE IS ONCE AG AIN HELD IN FAVOUR OF THE ASSESSEE IN THE CASE OF M/S. AUTOM OTIVE COACHES & COMPONENTS VS. DCIT IN ITA NO. 1789/MDS/2014 VIDE ORDER DATED 12.02.2016 WHEREIN T HE TRIBUNAL HELD AS FOLLOWS:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECO RD. SECTION 32(1)(IIA) PROVIDES FOR ADDITIONAL DEPRECIATION AT THE RATE OF 20%. THE ASSESSING OFFICER ALLOWED 10% OF ADDITIONAL DEP RECIATION IN RESPECT OF THE PLANT AND MACHINERY PURCHASED DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER FOUND T HAT THE ADDITIONS TO FIXED ASSETS WERE MADE IN THE SECOND H ALF OF THE FINANCIAL YEAR, THEREFORE, 50% OF ADDITIONAL DEPREC IATION HAS BEEN CLAIMED. THE BALANCE 50% WAS CARRIED FORWARD IN TH E NEXT YEAR. THE ASSESSING OFFICER FOUND THAT THE ADDITIONAL DEP RECIATION IS ALLOWABLE ONLY DURING THE YEAR IN WHICH THE MACHINE RY WAS INSTALLED AND USED FOR BUSINESS OF THE ASSESSEE. T HERE IS NO PROVISION IN THE INCOME-TAX ACT FOR CARRY FORWARD O F THE ADDITIONAL DEPRECIATION TO THE SUBSEQUENT ASSESSMENT YEAR. TH IS ISSUE WAS EXAMINED BY THE COCHIN BENCH OF THIS TRIBUNAL IN AP OLLO TYRES LTD. V. ACIT (SUPRA). THE COCHIN BENCH FOUND THAT IF AD DITIONAL DEPRECIATION COULD NOT BE ALLOWED AT THE RATE OF 20 % DURING THE YEAR IN WHICH THE MACHINERY WAS INSTALLED, THE BALA NCE 50% HAS TO BE ALLOWED IN THE SUBSEQUENT YEAR. IN FACT, THE CO CHIN BENCH OF THIS TRIBUNAL HAS OBSERVED AS FOLLOWS:- 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER 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 ACQ UIRED AND INSTALLED AFTER THE 31ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, A FURTHER SUM E QUAL 5 ITA NO.791/MDS/2016 TO TWENTY PER CENT OF THE ACTUAL COST OF SUCH MACHI NERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (II): PROVIDED THAT NO DEDUCTION SHALL BE ALLOWED IN RESP ECT OF (A) ANY MACHINERY OR PLANT WHICH, BEFORE ITS INSTALLATI ON BY THE ASSESSEE, WAS USED EITHER WITHIN OR OUTSIDE INDIA B Y ANY OTHER PERSON; OR (B) ANY MACHINERY OR PLANT INSTALLED IN ANY OFFICE PREM ISES OR ANY RESIDENTIAL ACCOMMODATION, INCLUDING ACCOMMODATION IN THE NATURE 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 DEPRECIAT ION OR OTHERWISE) IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' OF AN Y ONE PREVIOUS YEAR.' 10. WE HAVE ALSO CAREFULLY GONE THROUGH THE SECOND PROVISO TO SECTION 32(1)(II) OF THE ACT, WHICH READS AS FOL LOWS: 'PROVIDED FURTHER THAT WHERE AN ASSET REFERRED TO CLAUSE (I) OR CLAUSE (II) OR CLAUSE (IIA), AS THE C ASE MAY BE, IS ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSE 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 CALCULAT ED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET UNDER CLAUSE (I) OR CLAUSE (II) OR CLAUSE (IIA) AS THE CASE MAY BE.' 11. A BARE READING OF THIS SECTION 32(1)(IIA) CLEAR LY SAYS THAT IN CASE A NEW MACHINERY OR PLANT WAS ACQUIRED AND I NSTALLED 6 ITA NO.791/MDS/2016 AFTER 31-03-2005 BY AN ASSESSEE, WHO IS ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCE OF ARTICLE OR TH ING, 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 THE ASSESSEE HAS ACQUIRED AND INSTA LLED THE MACHINERY AFTER 31-03- 2005. IT IS ALSO NOT IN DISP UTE THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURE OF ARTIC LE OR THING. THEREFORE, THE ASSESSEE IS ELIGIBLE FOR ADDI TIONAL DEPRECIATION WHICH IS EQUIVALENT TO 20% OF THE ACTU AL COST OF SUCH MACHINERY. THE DISPUTE IS THE YEAR IN WHICH THE DEPRECIATION HAS TO BE ALLOWED. THE ASSESSEE HAS AL READY CLAIMED 10% OF THE DEPRECIATION IN THE EARLIER ASSE SSMENT YEAR SINCE THE MACHINERY WAS USED FOR LESS THAN 180 DAYS AND CLAIMING THE BALANCE 10% IN THE YEAR UNDER CONSIDERATION. SECTION 32(1)(IIA) DOES NOT SAY THAT THE YEAR IN WHICH THE ADDITIONAL DEPRECIATION HAS TO BE ALLO WED. IT SIMPLY SAYS THAT THE ASSESSEE IS ELIGIBLE FOR ADDIT IONAL DEPRECIATION EQUAL TO 20% OF THE COST OF THE MACHIN ERY PROVIDED THE MACHINERY OR PLANT IS ACQUIRED AND INS TALLED AFTER 31-03-2005. PROVISO TO SECTION 32(1)(IIA) SAY S 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 RESTRICT ED TO 50% OF THE AMOUNT CALCULATED AT THE PRESCRIBED RATE. TH EREFORE, IF THE MACHINERY IS PUT TO USE IN ANY PARTICULAR YE AR, THE ASSESSEE IS ENTITLED FOR 50% OF THE PRESCRIBED RATE OF ADDITIONAL DEPRECIATION. THE INCOME-TAX ACT IS SILE NT ABOUT THE ALLOWANCE OF THE BALANCE 10% ADDITIONAL DEPRECI ATION IN THE SUBSEQUENT YEAR. TAKING ADVANTAGE OF THIS POSIT ION, THE ASSESSEE NOW CLAIMS THAT THE YEAR IN WHICH THE MACH INERY WAS PUT TO USE THE ASSESSEE IS ENTITLED FOR 50% ADD ITIONAL 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 FOR CLAIMING 20% OF THE ADDITIONAL DEPRECIATION CANNOT BE DENIED BY INVOKING SECOND PROVISO TO SECTION 32(1)(II) OF THE ACT. 12. THIS ISSUE WAS CONSIDERED BY THE DELHI BENCH OF THIS TRIBUNAL IN THE CASE OF COSMO FILMS LTD (SUPRA). TH E REVENUE HAS TAKEN A SIMILAR GROUND AS TAKEN BEFORE THIS TRI BUNAL THAT THE ASSESSEE CANNOT CARRY FORWARD THE ADDITION AL DEPRECIATION TO BE ALLOWED IN THE SUBSEQUENT ASSESS MENT YEAR. THE DELHI BENCH OF THIS TRIBUNAL AFTER CONSID ERING THE 7 ITA NO.791/MDS/2016 PROVISIONS OF SECTION 32(1)(IIA) AND PROVISO TO SEC TION 321)(II) OF THE ACT FOUND THAT WHEN THERE IS NO RESTRICTION IN THE ACT TO DENY THE BENEFIT OF BALANCE 50%, THE ASSESSE E IS ENTITLED FOR THE BALANCE ADDITIONAL DEPRECIATION IN THE SUBSEQUENT ASSESSMENT YEAR. IN FACT, THE DELHI BENC H OF THIS TRIBUNAL HAS OBSERVED AS FOLLOWS AT PAGES 641 AND 642 OF THE ITD: THUS, THE INTENTION WAS NOT TO DENY THE BENEFIT TO THE ASSESSEES WHO HAVE ACQUIRED OR INSTALLED NEW MACHIN ERY OR PLANT. THE SECOND PROVISO TO SECTION 32(1)(II) RESTRICTS THE ALLOWANCES ONLY TO 50% WHERE THE ASSE TS HAVE BEEN ACQUIRED AND PUT TO USE FOR A PERIOD LESS THAN 180 DAYS IN THE YEAR OF ACQUISITION. THIS RESTRICTI ON IS ONLY ON THE BASIS OF PERIOD OF USE. THERE I NO RESTRICTION THAT BALANCE OF ONE TIME INCENTIVE IN T HE FORM OF ADDITIONAL SUM OF DEPRECIATION SHALL NOT BE AVAILABLE IN THE SUBSEQUENT YEAR. SECTION 32(2) PRO VIDES FOR A CARRY FORWARD SET UP OF UNABSORBED DEPRECIATI ON. THIS ADDITIONAL BENEFIT IN THE FORM OF ADDITIONAL ALLOWANCE U/S 32(1)(IIA) IS ONE TIME BENEFIT TO ENC OURAGE THE INDUSTRIALIZATION AND IN VIEW OF THE DECISION O F HON'BLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LT D. 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 INTENTIO N AND PURPOSE OF THESE PROVISIONS CAN BE REASONABLY AND LIBERALLY HELD THAT THE ASSESSEE DESERVES TO GET TH E 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 WERE ACQUIRED AND USED FOR LESS THAN 180 DAYS. ONETIME BENEFIT EXTENDED TO ASSESSEE HAS BEEN EARNED IN THE YEAR OF ACQUISITION OF NEW MACHINERY AND PLANT . IT HAS BEEN CALCULATED @1 5% BUT RESTRICTED TO 50% ONLY ON ACCOUNT OF USAGE OF T HESE PLANT & MACHINERY IN THE YEAR OF ACQUISITION. IN SE CTION 32(1)(IIA), THE EXPRESSION USED I 'SHALL BE ALLOWED '. THUS, THE ASSESSEE HAD EARNED THE BENEFIT AS SOON A S HE HAD PURCHASED THE NEW MACHINERY AND PLANT IN FULL B UT IT IS RESTRICTED TO 50% IN THAT PARTICULAR YEAR ON ACC OUNT OF PERIOD USAGES. SUCH RESTRICTIONS CANNOT DIVEST T HE 8 ITA NO.791/MDS/2016 STATUTORY RIGHT. LAW DOES NOT PROHIBIT THAT BALANCE 50% WILL NOT BE ALLOWED IN SUCCEEDING YEAR. THE EXTRA DEPRECIATION ALLOWABLE U/S 32(1)(IIA) IN AN EXTRA INCENTIVE WHICH HAS BEEN EARNED AND CALCULATED IN T HE YEAR OF ACQUISITION BUT RESTRICTED FOR THAT YEAR TO 50% ON ACCOUNT OF USAGE. THE SO EARNED INCENTIVE MUST B E MADE AVAILABLE IN THE SUBSEQUENT YEAR. THE OVERALL DEDUCTION OF DEPRECIATION U/S 32 SHALL DEFINITELY N OT EXCEED THE TOTAL COST OF MACHINERY AND PLANT . IN V IEW 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 APPEAL. SINCE W E HAVE DECIDED GROUND NO.2 IN FAVOUR OF ASSESSEE, THE RE IS NO NEED TO DECIDE THE ALTERNATE CLAIM RAISED IN GRO UND NO.3. THE SAME IS DISMISSED.' 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 OBSERVED AS FOLLOW S: '40. THERE IS NOTHING ON RECORD TO SHOW THAT THE DIRECTIONS GIVEN BY THE LEARNED CIT(A) ARE NOT PROP ER. THE ELIGIBILITY FOR DEDUCTION OF ADDITIONAL DEPRECI ATION 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) HAS MERELY DIRECTED THE VERIFICA TION OF THE CONTENTIONS OF THE ASSESSEE AND TO ALLOW THE BALANCE ADDITIONAL DEPRECIATION AFTER SUCH FACTUAL VERIFICATION. ACCORDINGLY, FINDING NO MERIT THEREIN , GROUND NO.3 RAISED BY THE DEPARTMENT IS REJECTED.' 14. A SIMILAR VIEW WAS TAKEN BY MUMBAI BENCH OF THI S TRIBUNAL IN MITC ROLLING MILLS (P.) LTD. (SUPRA). I N VIEW OF THE ABOVE DECISIONS OF THE CO-ORDINATE BENCHES OF T HIS 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 LOWER AUTHORITIES ON THIS ISSUE ARE S ET SIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF BALANCE 50% ADDITIONAL DEPRECIATION IN THE YEAR UND ER CONSIDERATION. 9 ITA NO.791/MDS/2016 WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF KARNATAKA HIGH COURT IN RITTAL INDIA PVT. LTD. (SUPRA). THE KARNATAKA HIGH COURT, AFTER EXTRACTING THE PROVISIONS OF SECTION 3 2(1)(IIA) OF THE ACT, FOUND THAT BENEFICIAL LEGISLATION HAS TO BE IN TERPRETED LIBERALLY SO AS TO BENEFIT THE ASSESSEE. KARNATAKA HIGH COUR T HAS ALSO FOUND THAT THE INTENTION OF THE LEGISLATION IS TO A LLOW ADDITIONAL BENEFIT. THE KARNATAKA HIGH COURT OPINED THAT THE PROVISO WOULD NOT RESTRAIN THE ASSESSEE FROM CLAIMING THE BALANCE OF THE BENEFIT OF ADDITIONAL DEPRECIATION IN THE SUBSEQUENT ASSESS MENT YEAR. ACCORDINGLY, CONFIRMED THE ORDER OF THE BANGALORE B ENCH OF THIS TRIBUNAL. IN FACT, THE KARNATAKA HIGH COURT HAS OB SERVED AS FOLLOWS:- 7. CLAUSE (IIA) OF SECTION 32(1) OF THE ACT, AS IT NOW STANDS, WAS SUBSTITUTED BY THE FINANCE ACT, 2005, APPLICABLE WITH EFFECT FROM 0L.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 ONLY 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 UNDERTAKING ACQUIRING NEW PLANT AND MACHINERY SHOULD BE A NEW INDUSTRIAL UNDERTAKING, OF THAT IT SHOULD BE CLAIMED IN ONE YEAR, HAVE BEEN DONE AWAY BY SUBSTITUTING CLAUSE (IIA) WITH EFFECT FROM 01.0.2006. THE GRANT OF ADDITIONAL DEPRECIATION, UNDER THE AFORESAID PROVISION, IS FOR THE BENEFIT O F THE ASSESSEE 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 PLANT 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 USE 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 ASSESSEMENT YEAR. 9. THE LANGUAGE USED IN CLAUSE (IIA) OF THE SAID 10 ITA NO.791/MDS/2016 SECTION CLEARLY PROVIDES THAT 'A FURTHER SUM EQUAL TO 20% 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% ADDITIONAL DEPRECIATION. BY VIRTUE OF THE PROVISO REFERRED TO ABOVE, ONLY 10% CAN. BE CLAIMED IN ONE YEAR, IF PLANT AND MACHINERY IS PUT TO USE FOR LESS THAN 180 DAYS SAID FINANCIAL YEAR. VERY PURPOSE OF INSERTION OF CLAUSE (IIA) WOULD BE DEFEATED BECAUSE IT PROVIDES FOR 20% DEDUCTION WHICH SHALL BE ALLOWED. 10. IT HAS BEEN CONSISTENTLY HELD BY THIS COURT, AS WELL AS THE APEX COURT, THAT 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 LEGISLATION IS ABSOLUTELY CLEAR, THAT THE ASSESSEE SHALL BE ALLOWE D 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, IN OUR CONSIDERED VIEW, WOULD NOT RESTRAIN THE ASSESSEE FROM CLAIMING THE BALANCE OF THE BENEFIT IN THE SUBSEQUENT ASSESSMENT YEAR. THE TRIBUNAL, IN OUR VIEW, HAS RIGHLY HELD, THAT ADDITIONAL DEPRECIATION ALLOWED UNDER SECTION 32(1)(IIA) OF THE ACT IS A ONE TIME BENEFIT TO ENCOURAGE INDUSTRIALIZATION, AND 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. 6. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE ASSESSEE IS ENTITLED FOR REMAINING 10% OF THE DEPRECIATION DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE ASSESSING OFFICER IS DIRECTED TO ALLOW BALANCE 50% OF DEPRECI ATION, NAMELY, 10% OF ADDITIONAL DEPRECIATION DURING THE YEAR UNDE R CONSIDERATION. 11 ITA NO.791/MDS/2016 7. FOLLOWING THE ABOVE DECISION, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 5 TH AUGUST, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) ! # /JUDICIAL MEMBER # / ACCOUNTANT MEMBER ! /CHENNAI, % /DATED 5 TH AUGUST, 2016 SOMU '( )( /COPY TO: 1. APPELLANT 2. RESPONDENT 3. * ( ) /CIT(A) 4. * /CIT 5. ( - /DR 6. /GF .