July 2013
MITC Rolling Mills P. Ltd. vs ACIT ITAT “B” Banch, Mumbai Before D. Manmohan, (V.P.) and Rajendra, (A. M.) ITA No.2789/Mum/2012 Assessment Year: 2009-10. Decided on 13.05.2013 Counsel for Assessee/Revenue: T. M. Gosher / Mohit Jain
By Jagdish D. Shah, Jagdish T. Punjabi, Chartered Accountants
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Section 32(1)(iia) – Additional depreciation on Plant and Machinery – Where the plant and machineries were put into use for less than 180 days in the year of installation and hence, disentitled the assessee to the 50% of the additional amount of depreciation, the assessee was entitled to the balance 50% of the additional depreciation in the subsequent year.
Facts: The assessee was engaged in the business of manufacture and sale of iron and steel. Assessee installed certain new plant and machinery after September, 2007. For the previous year relevant to A. Y. 2008-09 the plant and machinery having been put to operation for less than 180 days the assessee claimed only 50% of the additional depreciation and the balance 50% was claimed in the previous year relevant to A. Y. 2009-10, which is the year under appeal. The AO as well as the CIT(A) were of the opinion that the assessee was not entitled to claim balance 50% deprecation in the subsequent year u/s. 32(1)(iia) of the Act. The case of the assessee was that it is a onetime incentive allowed to the assessee under the Act where the object was to encourage establishment of industries and hence, balance 50% was allowable in the year under consideration.
Held:
The tribunal placed reliance upon the following decisions of the Delhi tribunal:
i. DCIT vs. Cosmo Films Ltd. 139 ITD 628
ii. ACIT vs. Sil Investment Ltd. 54 SOT 54
The tribunal noted that as per the Delhi tribunal, there was no restriction on allowing balance of one time incentive in the subsequent year if the provisions are constructed reasonably, liberally and in a purposive manner. According to it, the additional benefit was intended to give impetus to industrialisation and in that direction the assessee was entitled to get the benefit in full when there was no restriction in the statute to deny the benefit of balance 50% when the new plant and machinery was acquired and put to use for less than 180 days in the immediately preceding year. Accordingly, it was held that the assessee was entitled to depreciation in the subsequent year if the entire depreciation was not allowed in the first year of installation.
