IN HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 791 of 2019 PRINCIPAL COMMISSIONER OF INCOME TAX Versus KALPATARU POWER TRANSMISSION LTD. Appearance: MRS MAUNA M BHATT(174) for Appellant(s) No. 1 for Opponent(s) No. 1 CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 06/01/2020 ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. This Tax Appeal under Section 260A of Income Act, 1961 (for short Act ) at instance of Revenue and is directed against order dated 10.05.2019 passed by Income Tax Appellate Tribunal, Ahmedabad C Bench, Ahmedabad in ITA No.1463/Ahd/2016 for assessment year 2011 2012. 2. Revenue has proposed following substantial questions of law in its Memorandum of Appeal. 2(A) Whether Appellate Tribunal has erred in facts and circumstances of case and in law, in upholding order of CIT(A) for deleting addition of Rs.4,26,95,758/ in holding carbon receipts as capital receipt? (B) Whether Appellate Tribunal has erred in facts and circumstances of case and in law, in upholding order of CIT(A) for Page 1 of 6 Downloaded on : Fri Jan 10 10:55:38 IST 2020 C/TAXAP/791/2019 ORDER deleting addition of Rs.7,91,352/ on account of assessee's claim of additional depreciation? 3. Question No.2(A) is already considered by us in Tax Appeal No. 790 of 2019 by order of even date and accordingly, appeal stands dismissed so far as Question No.2(A) is concerned. 4. With regard to Question No.2(B), facts in brief are that assessee had acquired and installed new plant and machinery in Financial Year 2009 10. Since plant and machinery were used for less than 182 days, claim of additional depreciation under Section 32(1)(iia) of Act during assessment year 2010 11 was restricted to 50%. During assessment proceedings for assessment year 2011 12, assessee made additional claim before Assessing Officer for allowing balance 50% of additional depreciation vide letter No.933 dated 17.03.2014. Detailed submissions were made before Assessing Officer during course of assessment, however, Assessing Officer was not convinced with submissions made by assessee, and therefore, did not entertain claim of balance additional depreciation. Assessing Officer was of view that additional depreciation can be allowed only in year in which assets are acquired and installed and not in subsequent year. Assessing Officer, therefore, disallowed claim made by assessee. assessee carried matter before CIT (Appeal). CIT (Appeal) allowed appeal of assessee holding that Section 32(1) (iia) clearly says that in case when new machinery Page 2 of 6 Downloaded on : Fri Jan 10 10:55:38 IST 2020 C/TAXAP/791/2019 ORDER or plant was acquired and installed after 31.03.2005 by assessee, who is engaged in business of manufacture or production of article or things, sum equal to 20% of actual cost of machinery and plant shall be allowed as deduction. It is not in dispute that assessee has acquired and installed machinery after 31.03.2005. Therefore, CIT(Appeal), after considering submissions and facts of case of assessee, allowed additional depreciation of 10% for assessment year 2011 12 adopting purposive approach to issue. 5. Revenue preferred Tax Appeal before Income Tax Appellate Tribunal C Bench, Ahmedabad and Tribunal, after considering findings given by CIT(Appeals), dismissed appeal filed by Revenue. 6. In view of above facts, it would be germane to refer relevant provisions of Section 32(1) of Act which reads as under: 32. (1) In respect of depreciation of (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after 1st day of April, 1998, owned, wholly or partly, by assessee and used for purposes of business or profession, following deductions shall be allowed (i) in case of assets of undertaking engaged in generation or Page 3 of 6 Downloaded on : Fri Jan 10 10:55:38 IST 2020 C/TAXAP/791/2019 ORDER generation and distribution of power, such percentage on actual cost thereof to assessee as may be prescribed; (ii) in case of any block of assets, such percentage on written down value thereof as may be prescribed: Provided that no deduction shall be allowed under this clause in respect of a) any motor car manufactured outside India, where such motor car is acquired by assessee after 28th day of February, 1975 but before 1st day of April, 2001, unless it is used (i) in business of running it on hire for tourists ; or (ii) outside India in his business or profession in another country ; and (b) any machinery or plant if actual cost thereof is allowed as deduction in one or more years under agreement entered into by Central Government under section 42 : Provided further that where asset referred to in clause (i) or clause (ii) or clause (iia) or first proviso to clause (iia), as case may be, is acquired by assessee during previous year and is put to use for purposes of business or profession for period of less than one hundred and eighty days in that previous year, deduction under this sub section in respect of such asset shall be restricted to fifty per cent of amount calculated at percentage prescribed for asset under clause (i) or clause (ii) or clause (iia), as case may be : Provided also that where asset referred to in clause (iia)or first proviso to clause (iia), as case may be, is acquired by assessee during previous year and is put to use for purposes of business for period of less than one hundred and eighty days in that previous year, and deduction under this sub section in respect of such asset is restricted to fifty per cent of amount calculated at percentage prescribed for asset under clause (iia)for that previous year, then, deduction for balance fifty per cent of amount calculated at percentage prescribed for such asset under clause (iia)shall Page 4 of 6 Downloaded on : Fri Jan 10 10:55:38 IST 2020 C/TAXAP/791/2019 ORDER be allowed under this sub section in immediately succeeding previous year in respect of such asset: Provided also that where asset being commercial vehicle is acquired by assessee on or after 1st day of October, 1998 but before 1st day of April, 1999 and is put to use before 1st day of April, 1999 for purposes of business or profession, deduction in respect of such asset shall be allowed on such percentage on written down value thereof as may be prescribed..... (iia) in case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after 31st day of March, 2005, by assessee engaged in business of manufacture or production of any article or thing or in business of generation, transmission or distribution of power, further sum equal to twenty per cent of actual cost of such machinery or plant shall be allowed as deduction under clause (ii) :.... 7. On perusal of aforesaid provision of Section 32(1) of Act and proviso thereto read with Section 32(1)(iia) of Act, it is clear that assessee can claim additional depreciation at rate of 20% of actual cost of plant and machinery purchased during financial year. However, such allowance of depreciation can be claimed only to extent of 10%, if plant and machinery purchased by assessee is used for less than 182 days. Accordingly, assessee has claimed additional depreciation to extent of 10% only for Assessment Year 2010 11, and therefore, claim of remaining 10% additional depreciation is made for Assessment Year 2011 12. 8. We are, therefore, of opinion that assessee can claim remaining additional depreciation Page 5 of 6 Downloaded on : Fri Jan 10 10:55:38 IST 2020 C/TAXAP/791/2019 ORDER of 10% in assessment year 2011 12. legislature has also thought it fit to clarify situation by inserting third proviso to Section 32(1) by Finance Act, 2015 with effect from 01.04.2016. According to third proviso to Section 32(1) of Act, assessee can claim remaining additional depreciation in subsequent assessment year. 9. Thus, both authorities below have rightly held that assessee is entitled to remaining additional depreciation of 10% in assessment year 2011 12 and there is no infirmity in impugned orders passed by CIT(Appeal) as well as Tribunal. 10. In view of foregoing reasons, no question of law much less any substantial questions of law arises out of impugned orders. appeal is, therefore, dismissed qua Question No.2(B) also. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) GIRISH Page 6 of 6 Downloaded on : Fri Jan 10 10:55:38 IST 2020 Principal Commissioner of Income-tax v. Kalpataru Power Transmission Ltd