INCOME TAX ACT, 1961

Section 32(1)(iia)

Depreciation - Additional depreciation - Whether assessee would be eligible to carry forward unabsorbed additional depreciation -

Assessee-company acquired new plant and machinery in 2nd half of financial year 2007-2008, for which, additional depreciation at 10% was allowed under section 32(1)(iia) in corresponding assessment year 2008-2009. Since the said plant and machinery was put to use in the financial year 2007-2008 for less than 180 days, thus, only 10% depreciation was claimed in that year and accordingly, the assessee claimed the balance unabsorbed additional depreciation in the next assessment year i.e., 2009-10. AO disallowed such claim of the assessee on the ground that there was no provision under the Act permitting balance depreciation to be allowed in succeeding year. However, Tribunal allowed the claim of the assessee. Held: Additional depreciation allowed under section 32(i)(iia) is a one-time benefit to encourage industrialization, and the provisions related to it have to be construed reasonably, liberally and purposively to make the provision meaningful while granting additional allowance. Therefore, the additional depreciation to the extent not claimed by assessee in earlier year ought to be allowed in succeeding year. Tribunal was right in holding that the assessee was eligible to carry forward the unabsorbed additional depreciation as per provisions of section 32(1)(iia).

REFERRED : CIT v. Rittal India Pvt. Ltd. (No. 1) (2016) 380 ITR 423 (Karn-HC) : 2016 TaxPub(DT) 0148 (Karn-HC)

FAVOUR : In assessee's favour

A.Y. : 2009-10

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