INCOME TAX ACT, 1961

Section 32(1)(iia), Proviso

Depreciation - Additional depreciation - Asset put to loss than 180 days - Allowability of balance 10% additional depreciation in succeeding year

Assessee installed certain plant and machinery in assessment year 2010-11 and had used the same for less than 180 days during that year. The assessee claimed 50% of additional depreciation eligible during assessment year 2010-11. The remaining 50% portion claimed in assessment year 2011-12 was sought to be disallowed by AO on the ground that unclaimed 50% of additional depreciation pertaining to earlier assessment year could not be claimed as an allowance in the year under consideration.Held: The language used in clause (iia) of section 32(1) clearly provides that 'a further sum equal to 20% of actual cost of 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 to section 32(1)(iia), only 10% can be claimed in one year, if plant and machinery is put to use for less than 180 days in the said financial year. This would necessarily mean that balance 10% additional deduction can be availed of in the subsequent assessment year, otherwise the very purpose of insertion of clause (iia) would be defeated because it provides for 20% deduction which shall be allowed: AO was directed accordingly.

Followed:CIT v. T.P. Textiles (P) Ltd. (2017) 394 ITR 483 (Mad) ; 2017 TaxPub(DT) 1337 (Mad-HC)>

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 37(1)

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