Case Number: ITA 448/DEL/2019
Appellant: DCIT, Circle-11(1), New Delhi
Respondent: Haldiram Snacks Pvt. Ltd., New Delhi
Assessment Year: 2015-16
Case Filed On: 2019-01-22
Order Type: Final Tribunal Order
Date of Order: 2022-08-23
Pronounced On: 2022-08-23
The case of DCIT vs Haldiram Snacks Pvt. Ltd. focuses on the issue of additional depreciation claimed by the assessee, Haldiram Snacks Pvt. Ltd., on plant and machinery. The central issue is whether the additional depreciation can be claimed in the subsequent year when the plant and machinery were installed and used for less than 180 days in the previous year.
Haldiram Snacks Pvt. Ltd. is a company engaged in the business of manufacturing sweets, namkeens, and running restaurants. For the assessment year 2015-16, the company claimed additional depreciation on plant and machinery that was installed in the previous financial year but used for less than 180 days. The company claimed 50% of the allowable additional depreciation in the previous year and the balance 50% in the current year.
The appellant, DCIT, argued that the additional depreciation claimed by Haldiram Snacks Pvt. Ltd. in the subsequent year was not allowable under the existing provisions of the law before the amendment effective from 1st April 2016. The appellant contended that there was no provision in the Income Tax Act that allowed the balance additional depreciation to be claimed in the subsequent year.
The respondent, represented by its legal counsel, argued that the additional depreciation claimed was in accordance with the provisions of the Income Tax Act and supported by various judicial precedents. The respondent cited decisions from different courts and tribunals which held that balance additional depreciation can be claimed in the subsequent year if the machinery was used for less than 180 days in the year of acquisition.
The Income Tax Appellate Tribunal (ITAT) considered the submissions of both parties and reviewed the relevant judicial precedents. The Tribunal noted that the issue of claiming balance additional depreciation in the subsequent year had been consistently held in favor of the assessee by various high courts and tribunals.
The Tribunal referred to the decisions in the cases of Cosmo Films Ltd. (Delhi Tribunal), Rittal India (P) Ltd. (Karnataka High Court), and T.P. Textiles (P) Ltd. (Madras High Court), where it was held that balance additional depreciation can be claimed in the subsequent year if the machinery was used for less than 180 days in the year of acquisition.
The Tribunal observed that the provision for additional depreciation was introduced to encourage industrial investment and expansion. The intent of the legislation was to provide an incentive for new investments, and the restriction on claiming only 50% of the depreciation in the first year should not deny the assessee the benefit of the remaining depreciation in the subsequent year.
Based on these observations, the Tribunal upheld the order of the CIT(A) and dismissed the appeal of the Revenue.
The ITAT’s decision in the case of DCIT vs Haldiram Snacks Pvt. Ltd. clarifies the position on claiming balance additional depreciation in the subsequent year. The ruling emphasizes that the legislative intent behind the provision for additional depreciation is to incentivize industrial investment, and the benefit should not be denied if the machinery is used for less than 180 days in the year of acquisition.
This decision has significant implications for companies engaged in manufacturing and industrial activities. It provides clarity on the treatment of additional depreciation and ensures that the benefit of additional depreciation can be availed in the subsequent year, promoting further investment in industrial assets.
The ITAT’s decision in this case provides valuable guidance for the treatment of additional depreciation in tax filings. It highlights the importance of understanding the legislative intent behind tax provisions and ensures that companies can fully benefit from incentives aimed at promoting industrial growth and investment.
DCIT vs Haldiram Snacks Pvt. Ltd: Additional Depreciation Claim – ITA 448/DEL/2019
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