Astha Chandra ORDER
Astha Chandra, Member (J)
1. The appeal of the Revenue is directed against the order dated 16.10.2018 of the Ld. Commissioner of Income Tax (Appeals)-4, New Delhi ("CIT(A)") pertaining to the assessment year ("AY") 2015-16.
2. The assessee is a company engaged in the business of manufacturing of sweets, namkeens and running of restaurants. It filed its return on 30.11.2015 for AY 2015-16 declaring income of Rs. 1,80,24,57,600/-. The case was selected for scrutiny. During assessment proceedings the Ld. Assessing Officer ("AO") found that the assessee has claimed depreciation of Rs. 1,46,75,508/- @ 10% on account of plant & machinery installed during the previous AY. Since the assessee had purchased these assets after 01.10.2013, it claimed 50% of normal depreciation and 50% on these assets in the immediate preceding AY. The Ld. AO required the assessee to justify why additional depreciation @ 10% in AY 2015-16 has been claimed when the new plant and machinery was neither purchased nor installed during the year. The assessee replied vide letter dated 11.12.2017 saying that during the year, the assessee has claimed balance additional depreciation of Rs. 1,46,75,508/- @ 10% on plant and machinery installed during the last Financial Year ("FY") 2013-14 between 1st October, 2013 to 31st March, 2014. Because during the previous year, the assessee has claimed only 50% of the additional depreciation, the assessee has claimed the balance additional depreciation of 10% during the current year. The assessee relied on the following decisions:-
(i) DCIT vs. Cosmo Films Ltd. 13 ITR (T) 340 (Delhi)
(ii) ACIT vs. SIL Investment Ltd. MANU/ID/0285/2012 : (2012) 54 SOT 54 (Delhi)
(iii) MITC Rolling Mills P Ltd. vs. ACIT ITA No. 2789/MUM/2012
3. The explanation of the assessee was not acceptable to the Ld. AO. According to him, before amendment from 1st April, 2016 the claim of the assessee on additional depreciation on plant and machinery purchased in AY 2014-15 of Rs. 1,46,75,508/- is not allowable at all as per existing provisions of law. He therefore made the impugned disallowance.
4. The assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the impugned disallowance of additional depreciation by observing as under:-
"5.2. Examination of the issue and decision:
5.2.1 I have perused the assessment order as well as written and oral arguments put forward by the AR of the appellant company during the instant proceeding. I have also gone through case laws relied upon by the appellant.
5.2.2 The AO in the assessment order stated that there is no provision in the Act and nor Section 32(i)(iia) of the Act provides for claiming the balance additional Depreciation in second year of installation of machinery.
5.2.3 In terms of the facts of the matter, the appellant company has purchased certain machinery in the FY 2013-14 in the last half of the year. Since the plant and machinery was installed and used for less than 180 days, the appellant claimed additional depreciation at the rate of 10% instead of 20% in immediately preceding assessment year. In the instant FY relevant to the captioned assessment year, the appellant claimed the balance 10% of the additional depreciation amounting to Rs. 1,46,75,508/-.
5.2.4 I have considered the observations of the AO and the submissions of the appellant and the position of law. In terms of the provisions of the Act as interpreted by the Hon'ble Courts from time to time, the additional depreciation, if claimed at the rate of 10% in one year, being the machinery installed for less than 180 days, the balance 10% of the additional depreciation can be claimed in the next year. Reliance in this regard is placed on following judicial
• Commissioner of Income-tax, Madurai v. Shri T.P. Textiles (P.) Ltd.