RR Donnelley Publishing India Private Limited, Sriperambudur V. DCIT, CHENNAI

ITA 909/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8697 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Keywords: Reopening of assessment; Depreciation; Additional depreciation; Unabsorbed depreciation
• Section: 143(3); 32; 148; 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . . . , . , % BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.909/MDS/2016 ( / ASSESSMENT YEAR: 2008-09) M/S. RR DONNELLEY PUBLISHING INDIA PVT.LTD. C-10 & 11, SIPCOT INDUSTRIAL PARK, IRUNGATTUKOTTAI, SRIPERUMBUDUR TK. VS THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-V(4) CHENNAI - 34. PAN:AADCR2569R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SAROJ KUMAR PARIDA, ADVOCATE /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 20 TH JUNE, 2016 /DATE OF PRONOUNCEMENT : 24 TH AUGUST, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 3, CHENNAI DATED 28.01.2016 IN ITA NO.75/CIT(A)-3 /2014- 15 PASSED UNDER SECTION 143(3) R.W.S 147 & 250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS A PPEAL, HOWEVER, THE CRUXES OF THE ISSUES ARE AS FOLLOWS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE ORDER OF THE LEARNED ASSESSING OFFICER WITH RESPECT TO 2 ITA NO.909/MDS/2016 REOPENING OF ASSESSMENT UNDER SECTION 147 & 148 OF THE ACT. II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER IN DISALLOWING THE ADDITIONAL DEPRECIATION OF ` 2,04,88,781/- UNDER SECTION 32(1)(II) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF PRINTING OF BOOKLETS, CATALOGUES, BROCHURES AND USER MANUAL S FOR MOBILE PHONES FILED ITS RETURN OF INCOME ON 30.09.2 008 FOR THE ASSESSMENT YEAR 2008-09 DECLARING INCOME OF ` 82,62,94,244/- WHICH WAS SUBSEQUENTLY REVISED TO ` 83,40,80,783/- ON 25.03.2009. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE LEARNE D ASSESSING OFFICER THAT THE ASSESSEE HAD CLAIMED DEP RECIATION OF RS.15,74,35,569/- WHICH INCLUDED ADDITIONAL DEPR ECIATION OF RS.6,48,72,265/-. IT WAS FURTHER NOTICED BY THE LEA RNED ASSESSING OFFICER THAT AMONGST THE CLAIM OF ADDITIO NAL DEPRECIATION DURING THE RELEVANT ASSESSMENT YEAR AN AMOUNT OF RS.2,04,84,781/- PERTAINED TO THE PRECEDING PRE VIOUS YEAR BECAUSE THE ASSET WAS PUT TO USE FOR LESS THA N 180 DAYS IN THAT YEAR AND HENCE NOT ALLOWED AS DEDUCTIO N IN THAT 3 ITA NO.909/MDS/2016 YEAR. THE LEARNED ASSESSING OFFICER OPINED THAT AS PER THE 3 RD PROVISO TO SECTION 32 THE ADDITIONAL DEPRECIATION MENTIONED IN CLAUSE (II)(A) OF SECTION 32 IS TO BE RESTRICTED TO 10% OF THE ASSET PUT TO USE FOR LESS THAN 180 DAYS AND THERE IS NO PROVISION IN THE ACT FOR CLAIMING THE BALANCE DEPRECIATION IN THE SUBSEQUENT YEARS. HENCE, THE EX CESS ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE FOR RS. 2,04,84,781/- WAS DISALLOWED. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY OBSERVING AS UNDER:- DURING THE RELEVANT ASSESSMENT YEAR APPELLANT HAD C LAIMED DEPRECIATION OF RS.15,74,35,569 WHICH INCLUDES ADDI TIONAL DEPRECIATION OF RS. 6,48,72,265. AO HAD FURTHER BIF URCATED THE ADDITIONAL DEPRECIATION PERTAIN TO RELEVANT ASSESSM ENT YEAR AND EARLIER ASSESSMENT YEARS. AO HAS NOTED THAT AN AMOU NT OF RS. 4,43,83,484 PERTAIN TO THE RELEVANT ASSESSMENT YEAR 2008-09 AND THE REMAINING OF RS. 2,04, 88,781IS NOT PERTAIN THIS A.Y BUT EARLIER A.Y I.E PRIOR TO A.Y. 2008-09. AT THIS JUNC TURE, IT IS RELEVANT TO MENTION PROVISO TO SECTION 32. 'PROVIDED FURTHER THAT WHERE AN ASSET REFERRED TO IN CLAUSE (I) OR CLAUSE (II) [FOR CLAUSE [IIIA] [OR TH E FIRST PROVISO TO CLAUSE (IIA) , AS THE CASE MAY BE, IS ACQUIRED BY THE ASSESSE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS OR PROFESSION FOR A PERIOD OF LESS THAN ON HUNDRED AN D EIGHTY DAY IN THAT PREVIOUS YEAR, THE DEDUCTION UNDER THIS SUB SECTION IN RESPECT OF SUCH ASSET SHA LL BE RESTRICTED TO FIFTY PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR AN ASSE T UNDER CLAUSE (I) OR CLAUSE(II) [FOR CLAUSE (IIA)], AS THE CASE MAY BE :] 4 ITA NO.909/MDS/2016 IT IS ALSO IMPORTANT TO MENTION NEW PROVISO INSERTE D IN FINANCE ACT, 2015 W.E.F. 1.4.2016. 'FOLLOWING THIRD PROVISO SHALL BE INSERTED AFTER TH E SECOND PROVISO TO CLAUSE (II) OF SUB SECTION (1) OF SECTION 32 BY THE FINANCE ACT, 2015, W.E.F 1-4-2016: PROVIDED ALSO THAT WHERE AN ASSET REFERRED TO IN CLAUSE (IIA) OR THE FIRST PROVISO TO CLAUSE (IIA), AS THE CASE MAY BE, IS ACQUIRED BY THE ASSESSE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS FOR A PERIOD OF LESS THAN ONE HUNDRED AND EIGHTY DAY IN THAT PREVIOUS YEAR, AND THE DEDUCTION UNDER THIS SUB SECTION IN RESPECT OF SUCH ASSET IS RESTRICTED TO FIFTY PER CENT OF THE AMOUNT CALCULAT ED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET UNDER CLAUSE (IIA) FOR THAT PREVIOUS YEAR, THEN THE DEDUCTION FO R THE BALANCE FIFTY PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR SUCH ASSET UNDER CLAUSE (IIA) SHALL BE ALLOWED UNDER THIS SUB SECTION IN TH E IMMEDIATELY SUCCEEDING PREVIOUS YEAR IN RESPECT OF SUCH ASSET: IN THE APPELLANT'S CASE UNABSORBED ADDITIONAL DEPRE CIATION AMOUNTING TO RS.2,04,88,781 BELONGED TO THE PREVIOU S YEAR PRIOR TO THE PREVIOUS YEAR TO THE RELEVANT ASSESSMENT YEA R 2008-09, WHICH HAS BEEN CLAIMED ALONG WITH CURRENT ADDITIONA L DEPRECIATION FOR THE RELEVANT ASSESSMENT YEAR. AS IS SEEN IN THE FIRST PROVISO TO SECTION 32 MENTIONED HEREIN ABOVE THAT A DDITIONAL DEPRECIATION ON THE ASSETS ACQUIRED DURING THE RELE VANT PREVIOUS YEAR WHICH WERE PUT TO USE LESS THAN 180 DAYS CAN B E CLAIMED ONLY 50% OF THE ENTITLED DEPRECIATION AS PER CLAUSE (IIA) OF SECTION 32. THERE IS NO PROVISION IN THE ACT TO CAR RY FORWARD THE BALANCE 50% OF ADDITIONAL DEPRECIATION TO THE SUCCE EDING YEAR. IN THE APPELLANT'S CASE AO HAS ALLOWED ADDITIONAL DEPR ECIATION CLAIMED DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2 008-09 BUT DISALLOWED ADDITIONAL DEPRECIATION PERTAIN TO PREVI OUS YEAR PRIOR TO THE PREVIOUS YEAR RELEVANT YEAR 2008-09. ON PERUSAL OF THE PROVISO RELEVANT TO A.Y. 2008-09, THERE IS NO SCOPE TO ALLO W UNABSORBED ADDITIONAL DEPRECATION OF AN EARLIER YEAR IN THE SU CCEEDING A.Y. IT IS ALSO PERTINENT TO NOTE THAT THE FINANCE ACT 2015 HAS INTRODUCED NEW PROVISO TO SECTION 32 W.E.F. 1.4.2016. IT CLEAR LY SAYS THAT THE BALANCE 50% OF DEPRECATION WHICH COULD NOT BE ALLOW ED BY VIRTUE OF PROVISO TO SECTION 32 SHALL BE ALLOWED IN SUCCEE DING PREVIOUS YEARS. THE SUBMISSIONS MADE BY THE AR OF THE APPELL ANT ARE LACKING FORCE AND ALSO NOT SUPPORTED BY THE PROVISI ONS OF INCOME TAX ACT. IN VIEW OF THE AMENDMENT WHICH INSERTED AN OTHER PROVISO, BALANCE 50% OF ADDITIONAL DEPRECIATION IS ALLOWED I N THE SUCCEEDING YEAR W.E.F 1.4.2016. THE APPELLANT'S CAS E FALLS PRIOR TO 1.4.2016, THEREFORE NO ADDITIONAL DEPRECIATION IS A LLOWED IN VIEW OF THE CLEAR CUT PROVISIONS OF THE INCOME TAX ACT. THE CASE LAWS RELIED BY THE AR OF THE APPELLANT ON THIS ISSUE ARE NOT APPLICABLE IN VIEW OF THE AMENDMENT IN THE SECTION 32 BY INSERTIN G ANOTHER PROVISO W.E.F 1.4.2016. IN VIEW OF THE STATED POSIT ION OF THE LAW AS ON DATE, I HOLD THAT APPELLANT COMPANY IS NOT ENTIT LED TO CLAIM ADDITIONAL DEPRECIATION PRIOR TO PREVIOUS YEAR RELE VANT TO A.Y. 5 ITA NO.909/MDS/2016 2008-09. HENCE, THE ADDITION MADE BY THE AO OF RS.2 ,04,88,781 IS CONFIRMED. ALL THE GROUNDS ON THIS ISSUE ARE DISMISSED. 5. BEFORE US, AT THE OUTSET THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF AUTOMOTIV E COACHES & COMPONENTS LTD. VS. DCIT IN ITA NO.1789/MDS/2014 VIDE ORDER DATED 12.02.2016, WHEREIN IT WAS HELD THAT TH E ASSESSEE IS ENTITLED TO CLAIM FOR THE REMAINING 10% OF THE DEPRECIATION DURING THE RELEVANT ASSESSMENT YEAR. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NO T CONTROVERT TO THE SUBMISSIONS OF THE LEARNED AUTHOR IZED REPRESENTATIVE. 7. AFTER HEARING BOTH SIDES, WE FIND MERIT IN THE CONTENTIONS OF THE LEARNED AUTHORIZED REPRESENTATIV E. ON THE EARLIER OCCASION AS POINTED OUT BY THE LEARNED AUTH ORIZED REPRESENTATIVE IN THE CASE OF AUTOMOTIVE COACHES & COMPONENTS LTD. VS. DCIT CITED SUPRA, THIS BENCH O F THE TRIBUNAL HELD THE ISSUE AS FOLLOWS:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECO RD. SECTION 6 ITA NO.909/MDS/2016 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 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 INSTALLATION BY THE ASSESSEE, WAS USED EITHER WITHIN OR OUTSIDE INDIA BY ANY OTHE R PERSON; OR (B) ANY MACHINERY OR PLANT INSTALLED IN ANY OFFICE PREMIS ES OR ANY RESIDENTIAL ACCOMMODATION, INCLUDING ACCOMMODATION IN THE NATURE OF A GUEST-HOUSE; OR 7 ITA NO.909/MDS/2016 (C) ANY OFFICE APPLIANCES OR ROAD TRANSPORT VEHICLES; OR (D) ANY MACHINERY OR PLANT, THE WHOLE OF THE ACTUAL COST O F WHICH IS ALLOWED AS A DEDUCTION (WHETHER BY WAY OF DEPRECIATI ON OR OTHERWISE) IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PR OFITS 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 FOL LOWS: 'PROVIDED FURTHER THAT WHERE AN ASSET REFERRED TO C LAUSE (I) OR CLAUSE (II) OR CLAUSE (IIA), AS THE CASE MAY BE, I S 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 AND EIGHTY DAYS IN THAT PREVIOUS Y EAR, THE DEDUCTION UNDER THIS SUB-SECTION IN RESPECT OF SUCH AS SET SHALL BE RESTRICTED TO FIFTY PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET UNDER CLAUS E (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 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 8 ITA NO.909/MDS/2016 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 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 T O THE ASSESSEES WHO HAVE ACQUIRED OR INSTALLED NEW MACHINE RY OR PLANT. THE SECOND PROVISO TO SECTION 32(1)(II) RESTR ICTS THE ALLOWANCES ONLY TO 50% WHERE THE ASSETS HAVE BEEN AC QUIRED AND PUT TO USE FOR A PERIOD LESS THAN 180 DAYS IN T HE YEAR OF ACQUISITION. THIS RESTRICTION IS ONLY ON THE BASIS O F PERIOD OF USE. THERE I NO RESTRICTION THAT BALANCE OF ONE TIME INCENTIVE IN THE FORM OF ADDITIONAL SUM OF DEPRECIATION SHALL NOT BE AVAILABLE IN THE SUBSEQUENT YEAR. SECTION 32(2) PROV IDES FOR A CARRY FORWARD SET UP OF UNABSORBED DEPRECIATION. THI S ADDITIONAL BENEFIT IN THE FORM OF ADDITIONAL ALLOWA NCE U/S 32(1)(IIA) IS ONE TIME BENEFIT TO ENCOURAGE THE INDUSTRIALIZATION AND IN VIEW OF THE DECISION OF HON 'BLE 9 ITA NO.909/MDS/2016 SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. V. CIT [1992] 196 ITR 188 , THE PROVISIONS RELATED TO IT HAVE TO BE CONSTRUED REASONABLY, LIBERALLY AND PURPOSIVE TO MA KE THE PROVISION MEANINGFUL WHILE GRANTING THE ADDITIONAL ALLOWANCE. THIS ADDITIONAL BENEFIT IS TO GIVE IMPETUS TO INDUS TRIALIZATION AND THE BASIC INTENTION AND PURPOSE OF THESE PROVISI ONS CAN BE REASONABLY AND LIBERALLY HELD THAT THE ASSESSEE DES ERVES TO GET THE BENEFIT IN FULL WHEN THERE IS NO RESTRICTIO N IN THE STATUTE TO DENY THE BENEFIT OF BALANCE OF 50% WHEN T HE 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 PLAN T . IT HAS BEEN CALCULATED @15% BUT RESTRICTED TO 50% ONLY ON A CCOUNT OF USAGE OF THESE PLANT & MACHINERY IN THE YEAR OF A CQUISITION. IN SECTION 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 BUT I T IS RESTRICTED TO 50% IN THAT PARTICULAR YEAR ON ACCOUNT OF PERIOD USAGES. SUCH RESTRICTIONS CANNOT DIVEST THE STATUTOR Y 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 EARN ED AND CALCULATED IN THE YEAR OF ACQUISITION BUT RESTRICTED F OR THAT YEAR TO 50% ON ACCOUNT OF USAGE. THE SO EARNED INCENT IVE MUST BE MADE AVAILABLE IN THE SUBSEQUENT YEAR. THE OVERALL DEDUCTION OF DEPRECIATION U/S 32 SHALL DEFINITELY NO T EXCEED THE TOTAL COST OF MACHINERY AND PLANT . IN VIEW OF TH IS MATTER, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AN D DIRECT 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 FOLLOW S: '40. THERE IS NOTHING ON RECORD TO SHOW THAT THE DI RECTIONS GIVEN BY THE LEARNED CIT(A) ARE NOT PROPER. THE ELI GIBILITY FOR DEDUCTION OF ADDITIONAL DEPRECIATION STANDS ADMITTED, SINCE 50 PER CENT THEREOF HAD ALREADY BEEN ALLOWED BY THE AO IN THE ASST.YR.2005-06, I.E. THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THEREFORE, OBVIOUSLY, THE BALANCE 5 0 PER CENT OF THE DEDUCTION IS TO BE ALLOWED IN THE CURREN T YEAR, I.E. ASST. YR. 2006-07. THE LEARNED CIT(A) HAS MERELY DI RECTED THE VERIFICATION OF THE CONTENTIONS OF THE ASSESSEE A ND TO ALLOW THE BALANCE ADDITIONAL DEPRECIATION AFTER SUCH FACTUAL 10 ITA NO.909/MDS/2016 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. 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 11 ITA NO.909/MDS/2016 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 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 12 ITA NO.909/MDS/2016 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. 8. FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, WE HEREBY HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM THE REM AINING 10% OF THE ADDITIONAL DEPRECIATION OF RS. 2,04,84,781/- FOR THE RELEVANT ASSESSMENT YEAR 2008-09 IN THE CASE OF THE ASSESSEE. IT IS ORDERED ACCORDINGLY. SINCE WE HAVE DECIDED THE ISSUE ON MERITS, WE DO NOT FIND IT NECESSARY TO ADJUDICATE THE ISSUE WITH RESPECT TO REOPENING OF ASSESSMENT S INCE IT WOULD BE ONLY ACADEMIC. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 24 TH AUGUST, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 24 TH AUGUST, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .