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

ITA 862/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8774 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 04-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHADEVAN
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Capital asset; Depreciation; Additional depreciation; Unabsorbed depreciation; Revenue expenditure
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . ! , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO. 862/MDS/2016 $ %$ / ASSESSMENT YEAR : 2011-12 DEPUTY COMMISSIONER OF INCOME-TAX, CORPORATE CIRCLE -1(1), CHENNAI 600 034. V. M/S.ADDISON & COMPANY LTD., 803, ANNA SALAI, CHENNAI 600 002. [PAN NO.AAACA5199H] ( &' /APPELLANT) ( ()&' /RESPONDENT) &' * + /APPELLANT BY : SHRI. SAHADEVAN, JCIT ()&'*+ /RESPONDENT BY : SHRI. R.VIJAYARAGHAVAN, ADVOCAT E , *-' /DATE OF HEARING : 07.06.2016 . % *-' /DATE OF PRONOUNCEMENT : 05.08.2016 /O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT (A)-1, CHENNAI DATED 05.10.2015 AND PERTAINS TO ASS ESSMENT YEAR 2011-12. THE FIRST ISSUE ARISES FOR CONSIDERATION I S ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE UNDER SECTION 32 (1)(II) OF THE ACT. 2 I.T.A. NO.862/MDS/2016 SHRI SAHADEVAN, THE LD.DR SUBMITTED THAT THE ASSESS EE ACQUIRED THE ASSET IN THE SECOND HALF OF THE FINANCIAL YEAR 2006 -07 FOR WHICH THE ADDITIONAL DEPRECIATION WAS ALREADY ALLOWED AT THE RATE OF 10%. THERE IS NO PROVISION IN THE ACT FOR CARRY FORWARD OF THE AD DITIONAL DEPRECIATION IN THE SUCCEEDING YEAR. THEREFORE, THE CIT (A) IS NOT JUSTIFIED IN CLAIMING THE DEPRECIATION. 2. ON THE CONTRARY, SHRI R.VIJAYARAGHAVAN, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ADMITTEDLY, THE ASSESSEE AC QUIRED THE ASSET IN THE SECOND HALF OF THE FINANCIAL YEAR AND CLAIMED A DDITIONAL DEPRECIATION. THE ASSESSING OFFICER IN FACT ALLOWED ADDITIONAL DEPRECIATION AT THE RATE OF 10%. THE ASSESSEE CLAIM ED THE BALANCE 10% ADDITIONAL DEPRECIATION IN THE YEAR UNDER CONSIDERA TION. PLACING RELIANCE ON THE DECISION OF THIS BENCH OF THE TRIBUNAL IN IT A NO.1789/MDS/2014 DATED 12.02.2016 SUBMITTED THAT ON IDENTICAL SET OF FACTS, THIS TRIBUNAL BY PLACING RELIANCE ON THE DECISION OF THE COCHIN B ENCH IN APOLLO TYRES LTD. VS. ACIT (2014) 64 SOT 203 AND THE JUDGEMENT O F THE KARNATAKA HIGH COURT IN CIT VS. RITTAL INDIA PVT. LTD. IN ITA NO.268/2014 DATED 24.11.2015, ALLOWED THE CLAIM OF THE ASSESSEE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE MATERIAL ON RECORD. IT IS NOT IN DISPUT E THAT THE ASSESSEE CLAIMED ADDITIONAL DEPRECIATION AND THE ASSESSING O FFICER ALSO ALLOWED 10% ADDITIONAL DEPRECIATION IN THE EARLIER ASSESSME NT YEAR. THE 3 I.T.A. NO.862/MDS/2016 ASSESSEE NOW CLAIMS THAT THE REMAINING 10% DEPRECIA TION HAS TO BE ALLOWED IN THE YEAR UNDER CONSIDERATION. THE ONLY O BJECTION OF THE DEPARTMENT IS THAT THERE IS NO PROVISION IN THE INC OME TAX ACT FOR CARRY FORWARD OF THE ADDITIONAL DEPRECIATION TO THE SUBSE QUENT ASSESSMENT YEAR. . THIS CONTENTION OF THE REVENUE WAS EXAMINED BY THIS BENCH OF THE TRIBUNAL IN M/S.AUTOMOTIVE COACHES & COMPONENTS LTD. AND OBSERVED AS FOLLOWS: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER 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 4 I.T.A. NO.862/MDS/2016 LTD. V. ACIT (SUPRA). THE COCHIN BENCH FOUND THAT IF ADDITIONAL 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 COCHIN 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 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, A FURTHER SUM E QUAL TO TWENTY PER CENT OF THE ACTUAL COST OF SUCH MACHINER Y OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (I I): 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 BY ANY OTHER PERSON; OR (B) ANY MACHINERY OR PLANT INSTALLED IN ANY OFFICE PREMISES OR ANY RESIDENTIAL ACCOMMODATION, INCLUDIN G ACCOMMODATION IN THE NATURE OF A GUEST-HOUSE; OR (C) ANY OFFICE APPLIANCES OR ROAD TRANSPORT VEHICLES; O R 5 I.T.A. NO.862/MDS/2016 (D) ANY MACHINERY OR PLANT, THE WHOLE OF THE ACTUAL COS T 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.' 10. WE HAVE ALSO CAREFULLY GONE THROUGH THE SECOND PROVISO TO SECTION 32(1)(II) OF THE ACT, WHICH READS AS FOLLOW S: 'PROVIDED FURTHER THAT WHERE AN ASSET REFERRED TO C LAUSE (I) OR CLAUSE (II) OR CLAUSE (IIA), AS THE CASE MAY BE, IS ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR A ND IS PUT TO USE FOR THE PURPOSE OF BUSINESS OR PROFESSIO N FOR A PERIOD OF LESS THAN ONE HUNDRED AND EIGHTY DAYS IN THAT PREVIOUS YEAR, THE DEDUCTION UNDER THIS SUB-SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTED TO FIFTY PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIB ED 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 INST ALLED AFTER 31-03-2005 BY AN ASSESSEE, WHO IS ENGAGED IN THE BU SINESS OF MANUFACTURE OR PRODUCE OF ARTICLE OR THING, THEN, A SUM EQUAL TO 20% OF THE ACTUAL COST OF THE MACHINERY AND PLAN T SHALL BE ALLOWED AS A DEDUCTION. IT IS NOT IN DISPUTE THAT T HE ASSESSEE HAS ACQUIRED AND INSTALLED THE MACHINERY AFTER 31-0 3- 2005. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE IS ENGA GED IN THE MANUFACTURE OF ARTICLE OR THING. THEREFORE, THE ASS ESSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION WHICH IS EQUIV ALENT TO 20% OF THE ACTUAL COST OF SUCH MACHINERY. THE DISPUTE I S THE YEAR IN WHICH THE DEPRECIATION HAS TO BE ALLOWED. THE AS SESSEE HAS ALREADY CLAIMED 10% OF THE DEPRECIATION IN THE EARL IER ASSESSMENT YEAR SINCE THE MACHINERY WAS USED FOR LE SS THAN 180 DAYS AND CLAIMING THE BALANCE 10% IN THE YEAR U NDER CONSIDERATION. SECTION 32(1)(IIA) DOES NOT SAY THAT THE YEAR IN 6 I.T.A. NO.862/MDS/2016 WHICH THE ADDITIONAL DEPRECIATION HAS TO BE ALLOWED . IT SIMPLY SAYS THAT THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL D EPRECIATION EQUAL TO 20% OF THE COST OF THE MACHINERY PROVIDED THE MACHINERY OR PLANT IS ACQUIRED AND INSTALLED AFTER 31-03-2005. PROVISO TO SECTION 32(1)(IIA) SAYS THAT IF THE MACH INERY WAS ACQUIRED BY THE ASSESSING DURING THE PREVIOUS YEAR AND HAS PUT TO USE FOR THE PURPOSE OF BUSINESS LESS THAN 180 DA YS, THE DEDUCTION SHALL BE RESTRICTED TO 50% OF THE AMOUNT CALCULATED AT THE PRESCRIBED RATE. THEREFORE, IF THE MACHINERY IS PUT TO USE IN ANY PARTICULAR YEAR, THE ASSESSEE IS ENTITLE D FOR 50% OF THE PRESCRIBED RATE OF ADDITIONAL DEPRECIATION. THE INCOME- TAX ACT IS SILENT ABOUT THE ALLOWANCE OF THE BALANC E 10% ADDITIONAL DEPRECIATION IN THE SUBSEQUENT YEAR. TAK ING ADVANTAGE OF THIS POSITION, THE ASSESSEE NOW CLAIMS THAT THE YEAR IN WHICH THE MACHINERY WAS PUT TO USE THE ASSE SSEE IS ENTITLED FOR 50% ADDITIONAL DEPRECIATION SINCE THE MACHINERY WAS PUT TO USE FOR LESS THAN 180 DAYS AND THE BALAN CE 50% SHALL BE ALLOWED IN THE NEXT YEAR SINCE THE ELIGIBI LITY OF THE ASSESSEE FOR CLAIMING 20% OF THE ADDITIONAL DEPRECI ATION CANNOT BE DENIED BY INVOKING SECOND PROVISO TO SECT ION 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 ADDITIONAL DE PRECIATION TO BE ALLOWED IN THE SUBSEQUENT ASSESSMENT YEAR. TH E DELHI BENCH OF THIS TRIBUNAL AFTER CONSIDERING THE PROVIS IONS OF SECTION 32(1)(IIA) AND PROVISO TO SECTION 321)(II) OF THE ACT FOUND THAT WHEN THERE IS NO RESTRICTION IN THE ACT TO DENY THE BENEFIT OF BALANCE 50%, THE ASSESSEE IS ENTITLED FO R THE BALANCE ADDITIONAL DEPRECIATION IN THE SUBSEQUENT A SSESSMENT YEAR. IN FACT, THE DELHI BENCH OF THIS TRIBUNAL HAS OBSERVED AS FOLLOWS AT PAGES 641 AND 642 OF THE ITD: ' THUS, THE INTENTION WAS NOT TO DENY THE BENEFIT T O THE ASSESSEES WHO HAVE ACQUIRED OR INSTALLED NEW MACHIN ERY OR 7 I.T.A. NO.862/MDS/2016 PLANT. THE SECOND PROVISO TO SECTION 32(1)(II) REST RICTS THE ALLOWANCES ONLY TO 50% WHERE THE ASSETS HAVE BEEN ACQUIRED AND PUT TO USE FOR A PERIOD LESS THAN 180 DAYS IN THE YEAR OF ACQUISITION. THIS RESTRICTION IS ONLY O N THE BASIS OF PERIOD OF USE. THERE I NO RESTRICTION THAT BALAN CE OF ONE TIME INCENTIVE IN THE FORM OF ADDITIONAL SUM OF DEPRECIATION SHALL NOT BE AVAILABLE IN THE SUBSEQUE NT YEAR. SECTION 32(2) PROVIDES FOR A CARRY FORWARD SET UP O F UNABSORBED DEPRECIATION. THIS ADDITIONAL BENEFIT IN THE FORM OF ADDITIONAL ALLOWANCE U/S 32(1)(IIA) IS ONE TIME BENEFIT TO ENCOURAGE THE INDUSTRIALIZATION AND IN V IEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F BAJAJ TEMPO LTD. V. CIT [1992] 196 ITR 188 , THE PROVISIONS RELATED TO IT HAVE TO BE CONSTRUED REASO NABLY, LIBERALLY AND PURPOSIVE TO MAKE THE PROVISION MEANI NGFUL WHILE GRANTING THE ADDITIONAL ALLOWANCE. THIS ADDIT IONAL BENEFIT IS TO GIVE IMPETUS TO INDUSTRIALIZATION AND THE BASIC INTENTION AND PURPOSE OF THESE PROVISIONS CAN BE REASONABLY AND LIBERALLY HELD THAT THE ASSESSEE DES ERVES TO GET THE BENEFIT IN FULL WHEN THERE IS NO RESTRIC TION IN THE STATUTE TO DENY THE BENEFIT OF BALANCE OF 50% W HEN THE NEW MACHINERY AND PLANT WERE ACQUIRED AND USED FOR LESS THAN 180 DAYS. ONE TIME BENEFIT EXTENDED TO AS SESSEE HAS BEEN EARNED IN THE YEAR OF ACQUISITION OF NEW MACHINERY AND PLANT . IT HAS BEEN CALCULATED @15% B UT RESTRICTED TO 50% ONLY ON ACCOUNT OF USAGE OF THESE PLANT & MACHINERY IN THE YEAR OF ACQUISITION. IN SECTION 32(1)(IIA), THE EXPRESSION USED I 'SHALL BE ALLOWED '. THUS, THE ASSESSEE HAD EARNED THE BENEFIT AS SOON AS HE H AD PURCHASED THE NEW MACHINERY AND PLANT IN FULL BUT I T IS RESTRICTED TO 50% IN THAT PARTICULAR YEAR ON ACCOUN T OF PERIOD USAGES. SUCH RESTRICTIONS CANNOT DIVEST THE 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 I NCENTIVE WHICH HAS BEEN EARNED AND CALCULATED IN THE YEAR OF ACQUISITION BUT RESTRICTED FOR THAT YEAR TO 50% ON ACCOUNT 8 I.T.A. NO.862/MDS/2016 OF USAGE. THE SO EARNED INCENTIVE MUST BE MADE AVAI LABLE IN THE SUBSEQUENT YEAR. THE OVERALL DEDUCTION OF DEPRECIATION U/S 32 SHALL DEFINITELY NOT EXCEED THE TOTAL COST OF MACHINERY AND PLANT . IN VIEW OF THIS MATTE R, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND D IRECT TO EXTEND THE BENEFIT. WE ALLOW GROUND NO.2 OF THE ASSESSEE'S APPEAL. SINCE WE HAVE DECIDED GROUND NO. 2 IN FAVOUR OF ASSESSEE, THERE IS NO NEED TO DECIDE THE ALTERNATE CLAIM RAISED IN GROUND 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 FOLLOWS: '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 DEPRECIATIO N STANDS ADMITTED, SINCE 50 PER CENT THEREOF HAD ALREADY BEE N 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 VERIFICATION OF THE CONTENTIONS OF THE ASSESSEE AND TO ALLOW THE BALANC E ADDITIONAL DEPRECIATION AFTER SUCH FACTUAL VERIFICA TION. 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). IN VIEW OF THE ABOVE DECISIONS OF THE CO-ORDINATE BENCHES OF THIS TRIBUN AL ON IDENTICAL SET OF FACTS THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT THE BALANCE 50% OF THE DEPRECIATION HA S TO BE ALLOWED IN THE SUBSEQUENT YEAR, THEREFORE, THE ORDE RS OF THE LOWER AUTHORITIES ON THIS ISSUE ARE SET SIDE AND TH E ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF BALANCE 5 0% ADDITIONAL DEPRECIATION IN THE YEAR UNDER CONSIDERA TION. 9 I.T.A. NO.862/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 10 I.T.A. NO.862/MDS/2016 FROM 01.0.2006. THE GRANT OF ADDITIONAL DEPRECIATION, UNDER THE AFORESAID PROVISION, IS FOR THE BENEFIT OF 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 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 11 I.T.A. NO.862/MDS/2016 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, 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 RIGHTLY HELD, THAT ADDITIONAL DEPRECIATION ALLOWED UNDER SECTION 32(1)(IIA) OF THE ACT IS A ONETIME 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 A ND THE ASSESSING OFFICER IS DIRECTED TO ALLOW BALANCE 50% OF DEPRECIATION, NAMELY, 10% OF ADDITIONAL DEPRECIATIO N DURING THE YEAR UNDER CONSIDERATION. 4. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL DEPREC IATION OF 10% OF THE YEAR UNDER CONSIDERATION. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY 12 I.T.A. NO.862/MDS/2016 REASON TO INTERFERE WITH THE ORDER OF THE CIT (A) A ND ACCORDINGLY, THE SAME IS CONFIRMED. 5. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DEPR ECIATION OF UPS AND ICD MONITORS AT THE RATE OF 60%. SHRI SAHADEVAN , THE LD.DR SUBMITTED THAT THE UPS AND ICD MONITORS CANNOT BE C ONSIDERED AS PART OF THE COMPUTER SYSTEM AND THEREFORE, NOT ELIGIBLE FOR HIGHER DEPRECIATION AT THE RATE OF 60%. 6. HOWEVER, SHRI R.VIJAYARAGHAVAN, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT UPS AND ICD MONITORS ARE PA RTS OF THE SYSTEM AND THEY CANNOT PERFORM ANY INDEPENDENT FUNCTION. T HEREFORE, UPS AND ICD MONITORS ARE NECESSARILY TO BE TREATED AS PART OF THE COMPUTER SYSTEM. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE UPS AND ICD MONITORS CA NNOT PERFORM ANY INDEPENDENT FUNCTION WITHOUT THE AID OF COMPUTER. T HEREFORE, UPS AND ICD MONITORS HAVE TO BE NECESSARILY TREATED AS A PA RT OF THE COMPUTER SYSTEM. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY RE ASON TO INTERFERE WITH THE ORDER OF THE CIT (A) AND ACCORDINGLY, THE SAME IS CONFIRMED. 8. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE OF DEVELOPMENT CHARGES ON LEASED LAND TO THE EXTENT OF RS.9,81,191/. SHRI 13 I.T.A. NO.862/MDS/2016 SAHADEVAN, THE LD.DR SUBMITTED THAT THE ASSESSEE IS PAYING RS.1/- AS LEASE CHARGES. THEREFORE, AT THE BEST, THE REVENUE EXPENDITURE WOULD BE ONLY RS.1/-. THE SUBJECT LAND WAS ON A LONG LEAS E FOR A PERIOD OF 99 YEARS. ACCORDING TO THE LD. REPRESENTATIVE, THE TRA NSACTION OF LEASE IS IN THE NATURE OF TRANSFER OF PROPERTY. THEREFORE, THE EXPENDITURE HAS TO BE NECESSARILY TREATED AS CAPITAL. THE PERIOD OF 99 YE ARS CLEARLY INDICATES THAT THE ASSESSEE USING THE LAND AS A CAPITAL ASSET . THEREFORE, ANY EXPENDITURE ON THE CAPITAL ASSET HAS TO BE TREATED AS CAPITAL IN NATURE, HENCE, THE CIT (A) IS NOT JUSTIFIED IN ALLOWING THE ASSESSEE. 9. ON THE CONTRARY, SHRI R.VIJAYARAGHAVAN, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE ENTERED INTO A N AGREEMENT WITH SIPCOT FOR TAKING ON LEASE THE PROPERTY AT IRUNGATT UKOTTAI FOR THE PERIOD OF 99 YEARS. IN RESPECT OF LEASE RENT FOR THE ENTIR E PERIOD WERE CHARGED AT RS.1,93,23,800/-, THE ASSESSEE CLAIMED 5% OF THE SAID AMOUNT TO THE EXTENT OF RS.9,81,191/- AS DEVELOPMENT CHARGES DURI NG THE YEAR UNDER CONSIDERATION. THE LD. REPRESENTATIVE FURTHER SUBMI TTED THAT THE DEVELOPMENT CHARGES ARE ONLY TO DEVELOP THE LAND. T HEREFORE, IT HAS TO BE ALLOWED AS IT IS REVENUE IN NATURE. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE TOOK THE LAND ON LEASE FOR THE PERIOD OF 9 9 YEARS FROM SIPCOT. THE ASSESSEE HAS ALSO PAID THE DEVELOPMENT CHARGES. THIS 14 I.T.A. NO.862/MDS/2016 DEVELOPMENT CHARGES WAS PAID O SIPCOT. THE CIT (A) FOUND THAT THE ASSESSEE CLAIMED ONLY 5% OF THE DEVELOPMENT CHARGES PAID AS REVENUE EXPENDITURE. THE DEVELOPMENT CHARGES WERE NOT CONNE CTED WITH ESTABLISHMENT OF ANY CAPITAL ASSET. IT IS ONLY FOR THE PURPOSE OF DEVELOPING THE COMMON AMENITIES. THE AGREEMENT BETW EEN THE ASSESSEE AND SIPCOT CLEARLY SHOWS THAT THE DEVELOPM ENT CHARGES ARE TOWARDS AMENITIES THAT MAY BE ESTABLISHED BY SIPCOT . SINCE THESE AMENITIES ARE TO BE COMMONLY ENJOYED BY THE ASSESSE E WITH OTHERS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE PAYM ENT OF DEVELOPMENT CHARGES HAS TO BE TREATED AS REVENUE EXPENDITURE. T HEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE CIT (A) AND ACCORDINGLY, THE SAME IS CONFIRMED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED ON 05 TH AUGUST, 2016 AT CHENNAI. SD/- SD/- ( . ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) ' /ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, / /DATED, THE 05 TH AUGUST, 2016. SP. 15 I.T.A. NO.862/MDS/2016 * (-01 21%- /COPY TO: 1. &' /APPELLANT 2. ()&' /RESPONDENT 3. , 3- ( )/CIT(A) 4. , 3- /CIT, 5. 14 (- /DR 6. 5$ 6 /GF.