Law: Income Tax Act, 1961

Section: 32

Section 32 of the Income-tax Act, 1961 - Depreciation - Rate/allowance of (Additional depreciation) - Assessment year 2008-09 - Assessee, an existing industrial undertaking, acquired and installed new plant and machinery after 1-10-2006 and before 31-3-2007 - As new machinery was put to use for business purpose for period of less than 180 days in assessment year 2007-08, assessee claimed 50 per cent of additional 20 per cent depreciation (i.e., 10 per cent additional depreciation) under section 32(1)(iia) in assessment year 2007-08 and allowance of balance 10 per cent depreciation in assessment year 2008-09 - Assessing Officer allowed claim of allowance of 10 per cent depreciation under section 32(1)(iia) in assessment year 2007-08 but disallowed balance 10 per cent depreciation in assessment year 2008-09 - Whether since benefit which is to be granted under section 32(1)(iia) is 20 per cent additional depreciation but by virtue of proviso to clause (ii) of section 32(1) only 10 per cent can be claimed in one year, if plant and machinery was put to use for less than 180 days in said financial year, this would necessarily mean that balance 10 per cent additional deduction can be availed in subsequent year - Held, yes - Whether therefore, assessee was entitled to deduction of balance 10 per cent additional depreciation in assessment year 2008-09 - Held, yes [Paras 8 to 10] [In favour of assessee] FACTS â–  The assessee was an existing industrial undertaking when it acquired and installed new plant and machinery in assessment year 2007-08. As admittedly the new machinery was acquired after 1-10-2006 and, thus, was put to use for the purpose of business for a period of less than 180 days, assessee claimed 50 per cent of additional 20 per cent depreciation (i.e., 10 per cent additional depreciation) under section 32(1)(iia) in the assessment year 2007-08 which was allowed by the Assessing Officer. The assessee claimed allowance of the balance 10 per cent depreciation in the assessment year 2008-09, so that the benefit of the total 20 per cent depreciation under section 32(1)(iia) was given. â–  The Assessing Officer disallowed the claim of balance 10 per…

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