Learned Senior Counsel Appearing For The Assessee Refers To And Relies On The Judgments In _Commissioner Of Income-Tax, Madurai v. > 1 (2017) 79 Taxmann.com 411 (Madras

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMASMONDAY, THE 2 DAY OF AUGUST 2021 / 11TH SRAVANA, 1943 ITA NO. 87 OF 2014 AGAINST THE ORDER IN ITA 616/2011 OF I.T.A.TRIBUNAL,COCHIN BENCH,ERNAKULAM APPELLANT/S: THE COMMISSIONER OF INCOME TAX-IICOCHIN. BY ADVS.SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENTSRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT RESPONDENT/S: M/S.APPOLO TYRS LTDCHERUPUZHPAM BUILDING, SHANMUGHAM ROAD, KOCHI-682 031. BY ADVS.SRI.V.ABRAHAM MARKOSSRI.V.ABRAHAM MARKOSSRI.ABRAHAM JOSEPH MARKOSSRI.BINU MATHEWSRI.ISAAC THOMASSRI.JOSEPH MARKOSE SR.SRI.NOBY THOMAS CYRIACSRI.TOM THOMAS KAKKUZHIYIL THIS INCOME TAX APPEAL HAVING COME UP FOR HEARING ON 02.08.2021,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J U D G M E N T S.V.Bhatti, J. Heard learned Standing Counsel Mr. Christopher Abraham andlearned Senior Counsel Mr. Joseph Markos for parties. 2. The Commissioner of Income Tax/Revenue is theappellant. M/s.Apollo Tyres Ltd., Kochi/Assessee is the respondent.The subject appeal is at the instance of Revenue from the order ofIncome Tax Appellate Tribunal (for short ‘the Tribunal') CochinBench in ITA No.616/Coch/2011 dated 20.12.2013. The controversiescanvassed in the appeal relate to the Assessment Year 2007-08. 3.The appeal deals with the controversy on availing 50% ofdepreciation, unavailed under Section 32(1)(iia) in the previousyear, whether could be allowed in the subsequent year or not; thecorrectness of the order of Tribunal in setting aside the dis-allowance of the balance investment of the assessee amounting to I.T.A. No.87/2014 Rs.51,80,000/- in Gujarat Perstop Electornics Ltd. (GPEL); and availing deduction under Section 80-IA for the DG Power Generation Units 1 and II, treating them as 'undertaking'. 4.Substantial question nos.1 and 2 read as follows: “1. Whether, on the facts and in the circumstances of the case andon an interpretation of Sec. 32(1)(iia) read with the second provisothe Tribunal is right in law in holding that "the balance 50% of thedepreciation has to be allowed in the subsequent year" and is notthe above finding against law and perverse? 2. Whether, on the Tribunal is right in law in holding that "thesecond proviso to section 32(1)(ii) is to mean that 10% should beallowed in the year in which the machinery is acquired and installedand the balance 10% has to be impliedly allowed in the subsequentyear" and is not the above interpretation against law and theintention of the legislature?” 4.1The circumstances leading to the disagreement between the Revenue and the assessee are not in dispute and the fact that the assessee at the first instance availed 50% of additionaldepreciation allowed under Section32(1)(iia) of the Act. Theassessee could avail 50% of the allowed depreciation on account of I.T.A. No.87/2014 the fact that the equipment for which depreciation was claimed wasnot used was not used for more than 180 days in the previous year2006-07. Thus, the assessee claimed 10% of permissible 20%depreciation in the previous year 2006-07 and claimed balance 50%,i.e., 10% of 20%, in the Assessment Year 2007-08. The Tribunal heldthat there is no restriction in the Income Tax Act that balance ofone-time-incentive in the form of additional sum of depreciationcannot be availed in the subsequent year. the Revenue and the assessee are not in dispute and the fact that the assessee at the first instance availed 50% of additionaldepreciation allowed under Section32(1)(iia) of the Act. Theassessee could avail 50% of the allowed depreciation on account of I.T.A. No.87/2014 the fact that the equipment for which depreciation was claimed wasnot used was not used for more than 180 days in the previous year2006-07. Thus, the assessee claimed 10% of permissible 20%depreciation in the previous year 2006-07 and claimed balance 50%,i.e., 10% of 20%, in the Assessment Year 2007-08. The Tribunal heldthat there is no restriction in the Income Tax Act that balance ofone-time-incentive in the form of additional sum of depreciationcannot be availed in the subsequent year. 4.2Learned Senior Counsel appearing for the assessee refersto and relies on the judgments in Commissioner of Income-tax, Maduraiv. T P Textiles (P) Ltd.[1] and Commissioner of Income-tax, Bangalore v.Rittal India (P) Ltd[2] for sustaining the view taken by the Tribunal. Itis also argued that the clarificatory amendment made to Section32(1)(ii) with effect from 01.10.2016 supports the deduction claimedby the assessee. The amendment, no doubt, was introduced witheffect from 01.10.2016, is a clarificatory amendment. The decisions 1(2017) 79 taxmann.com 411 (Madras) 2(2016) 66 taxmann.com 4 (Karnataka) I.T.A. No.87/2014 relied on by the assessee are directly on the point and we are in fullagreement with the view taken by the Madras and Karnataka High Courts. The propositions stated in the reported judgment applies inall fours. By following the reasons and principles laid down in T PTextiles (P) Ltd. and Rittal India (P) Ltd (supra), question nos.1 and 2are answered against the Revenue and in favour of the assessee. 5.Counsel appearing for the parties, after taking note ofsubstantial question nos.3(a) and 3(b), suggested to the Court forreframing the questions and the reframed question reads as follows: “3.Whether on the facts and circumstances of the case the Appellate Tribunal is right in setting aside the Order of the Assessing Officer disallowing the balance investment of the Appellant amounting to Rs.51,80,000/- in Gujarat Perstop Electronics Ltd. (GPEL)" 5.1The reframed question has bearing on the viewexpressed by this Court on a similar question stated in theAssessment Year 2002-03 and the judgment is reported in I.T.A. No.87/2014 Commissioner of Income-Tax v. Apollo Tyres Ltd[3]. Point no.3 in thereported judgment deals with these aspects of the matter and byfollowing the judgment in Apollo Tyres Ltd (supra), the question isanswered in favour of the assessee and against the Revenue. 6.Substantial question nos.4 and 5 read thus: “4. Whether on the facts and in the circumstances of the case theTribunal is right in law and fact in holding that DG PowerGeneration Units 1 and II constituted an "undertaking" under Sec.801A of the Income tax Act? 5. Whether DG Power Generation units I and II are entitled to thebenefit of Sec. 801A of the Income Tax Act?” 6.1It is also stated, as a matter of fact, that the questionsraised in this appeal, namely question nos.4 and 5 are similar to the questions raised by the Revenue in ITA No. 69/2011 and ITANo.70/2011 for the Assessment Year 2002-03. On 27.02.2019 the appeals filed by the Revenue were dismissed. Our attention hasbeen drawn to the reasoning and conclusion recorded by this Courton similar questions framed in ITA Nos.69 and 70 of 2011. I.T.A. No.87/2014 By following the reasoning and conclusion recorded in ITANos.69 and 70/2011, the substantial questions of law raised asquestion nos.4 and 5 are answered in favour of the assessee andagainst the Revenue. The appeal is dismissed. No order as to costs. Sd/- S.V.BHATTIJUDGESd/- BECHU KURIAN THOMASJUDGE jjj I.T.A. No.87/2014 PETITIONER ANNEXURE ANNEXURE A ANNEXURE B APPENDIX OF ITA 87/2014 questions raised by the Revenue in ITA No. 69/2011 and ITANo.70/2011 for the Assessment Year 2002-03. On 27.02.2019 the appeals filed by the Revenue were dismissed. Our attention hasbeen drawn to the reasoning and conclusion recorded by this Courton similar questions framed in ITA Nos.69 and 70 of 2011. I.T.A. No.87/2014 By following the reasoning and conclusion recorded in ITANos.69 and 70/2011, the substantial questions of law raised asquestion nos.4 and 5 are answered in favour of the assessee andagainst the Revenue. The appeal is dismissed. No order as to costs. Sd/- S.V.BHATTIJUDGESd/- BECHU KURIAN THOMASJUDGE jjj I.T.A. No.87/2014 PETITIONER ANNEXURE ANNEXURE A ANNEXURE B APPENDIX OF ITA 87/2014 COPY OF THE ASSESSMENT ORDER U/S.143(3) RWS 144C DATED 21/10/2011 PASSED BY THE ASSESSING OFFICER FOR AY 2007-08. COPY OF THE ITAT'S ORDER NO.616/COCH/2011 DATED 20/12/2013.