Tax case appeal on carry-forward of balance additional depreciation under Section 32(1)(iia). The court held the issue was already answered in favour of assessees by its earlier Division Bench decision and followed it, allowing the appeal.
Appeal allowed in favour of the assessee and against the Revenue; no costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
T.C.A.No.455 of 2015
I N THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 13.08.2024
CORAM
THE HON'BLE MR.JUSTICE R.SURESH KUMAR AND THE HON'BLE MR.JUSTICE C.SARAVANAN
Tax Case Appeal No.455 of 2015
M/s.Sabari Industries Ltd., 37A, Laxmanampatti, Nallur P.O Kulathur Taluk, Pudukkottai District 622 504.
... Appellant
Vs.
The Assistant Commissioner of Income Tax Company Circle I, Trichy.
... Respondent
Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai, dated 19.12.2014 made in I.T.A.No.1828/Mds/2013.
For Appellant : Mr.A.S.Sriraman for M/s.S.Sridhar
For Respondent : Mr.S.Rajesh, Junior Standing Counsel for Mr.J.Narayanaswamy Senior Standing Counsel
J U D G M E N T
(Delivered by R.SURESH KUMAR, J.)
The substantial questions of law raised in this appeal have already been considered by a Division Bench of this Court in T.C.A.No.551 of 2013 in the
T.C.A.No.455 of 2015
matter of M/s.Brakes India Limited -vs- The Deputy Commissioner of
Income Tax, Chennai dated 14.03.2017.
order.
" 5.In order to appreciate the aforesaid submissions, the following facts are required to be noticed:
5.1.The Assessee had claimed additional depreciation under Section 32(1)(iia) amounting to Rs.1,89,67,159/- during the relevant assessment year, i.e., AY 2006-07.
5.2.The additional depreciation was claimed at the rate of 7.5% being 50% of the prescribed rate, which was 15%.
5.3.The depreciation was claimed at the said rate as the subject asset was used for less than 180 days.
5.4.The said depreciation was claimed in the preceding assessment year, i.e., AY 2005-06, which is, when the asset was installed and put to use.
5.5.In the relevant assessment year i.e., AY 2006-07, the Assessee sought to claim the balance depreciation equivalent to 7.5%. The Assessing Officer, however, rejected the claim made by the Assessee qua the balance additional depreciation.
T.C.A.No.455 of 2015
5.6.Being aggrieved, the Assessee carried the matter in appeal to the Commissioner of Income Tax (Appeals) [in short, CIT(A)]. The CIT(A) sustained the order of the Assessing Officer. The Tribunal, did likewise and therefore, the Assessee, is in appeal, before us.
6.As indicated right at the outset, the issue is covered in favour of the Assessee, by virtue of our judgment in the matter of Commissioner of Income Tax, Madurai Vs. M/s.Shri T.P.Textiles Private Limited. As noticed above, the Karnataka High Court in CIT V. Rittal India (P.) Ltd., [2016] 66 taxmann.com 4 (Karnataka), has also taken the same view.
6.1.We are informed that the Revenue has not assailed the judgment of the Karnataka High Court.
6.2.In our judgment in the matter of Commissioner of Income Tax, Madurai Vs. M/s.Shri T.P.Textiles Private Limited, we have noticed the aforementioned judgment of the Karnataka High Court.
7.In so far as the first submission advanced by Mr.Ravi is concerned, according to us, the same is completely untenable.
7.1.The judgment of the Division Bench of this Court in M.M.Forgings Limited Vs. Additional Commissioner of Income Tax, did not deal the issue, which is at hand.
7.2.The issue, in hand, is as to whether balance additional depreciation could be carried forward to the year, following the previous year, in which, additional depreciation was claimed.
T.C.A.No.455 of 2015
7.3.The Division Bench in M.M.Forgings case the said case
was not concerned with the issue, with which, we are faced, that is, the right to carry forward the balance additional depreciation. Therefore, the judgment is completely distinguishable.
8.The second submission of Mr.Ravi, that Circular no.8 of 2002 dated 27.08.2002 and Circular no.281 dated 29.11.1979, have not been taken note of, in our judgment rendered in Commissioner of Income Tax, Madurai Vs. M/s.Shri T.P.Textiles Private Limited, according to us, will not impact, either the reasoning or the conclusion reached by us, in the said matter.
8.1.It is pertinent to note that the Circular no.281 dated 29.11.1979, pre-dates the insertion of the relevant provision, i.e., second clause to Section 32 (1) (iia). The said clause (iia), admittedly, was inserted by virtue of the Finance (No.2) Act, 2002, with effect from 01.04.2003.
8.2.In so far as the second Circular is concerned, i.e, Circular no.8 of 2002 dated 27.08.2002, in our view, in no way, helps the case of the Revenue. The Circular does not dwell on the point which we are confronted with.
8.3.In any case, according to us, the Circulars are not binding on the Court, though, they may be binding on the Revenue. [See CIT V. Hero Cycles Pvt. Ltd., (1997) 228 ITR 463 (SC)].
9.The last submission that Mr.Ravi advanced, was, in fact, predicated on the reasoning given by the Assessing Officer, which, according to us, is misconceived, as the manner of calculation of
T.C.A.No.455 of 2015
depreciation, cannot, to our minds, impede the claim of the Assessee for balance additional depreciation, in the year following the previous year, in which, the said asset is installed and put to use.
10.Therefore, for the aforesaid reasons, we find no merit in the submissions advanced by the Revenue. "
Hon'ble Supreme Court in Commissioner of Income Tax, Chennai -vs- Aztec Auto (P) Ltd., [2020] 119 taxmann.com 215 (Madras) , which was also dismissed by the Supreme Court by order dated 24.09.2018.
(R.S.K.,J.) (C.S.N.,J.) 13.08.2024
NCS : Yes/No Index : Yes/No KST
To
The Income Tax Appellate Tribunal 'C' Bench, Chennai.
R.SURESH KUMAR, J.
T.C.A.No.455 of 2015
AND C.SARAVANAN, J.
KST
T.C.A.No.455 of 2015
13.08.2024
1 issue framed by the court
Whether the balance additional depreciation under Section 32(1)(iia) for an asset used less than 180 days can be claimed in the year following installation, given prior decisions in favour of assessee
Colour shows how this judgement treated each authority
M/s.Brakes India Limited -vs- The Deputy Commissioner of Income Tax, ChennaiFollowed¶1
T.C.A.No.551 of 2013
Commissioner of Income Tax, Chennai -vs- Aztec Auto (P) Ltd.Relied on¶3
[2020] 119 taxmann.com 215 (Madras)
1 provisions across 1 enactments
M/s.Sabari Industries Ltd.
The Assistant Commissioner of Income Tax Company Circle I, Trichy
R.Suresh Kumar
C.Saravanan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
