Income Tax Authorities Fails to Appreciate Amended Provision of S. 36(1) ( iia ) of Income Tax Act, Denies Additional Depreciation Claim:  ITAT allows claim of Rs. 49.5 cr [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) allowed a claim of Rs. 49.5 crore after finding that the Income Tax Authorities failed to appreciate the amended provision of Section 36(1)(iia) of the Income Tax Act, 1961, resulting in the denial of an additional depreciation claim.

The Assessing Officer ( AO ) disallowed the claim of additional depreciation ₹.49,52,66,000 on the ground that the assessee failed to submit the details and establish the genuineness of the expenditure.

The Commissioner of Income Tax ( Appeals ) [ CIT(A) ], held that that the assessee has given sample copies of bills before the AO, however, it is seen that the assessee is in the business of distribution of power, which is covered under Section 32(1)(iia) of the Income Tax Act.

There are certain other conditions, which are required to be satisfied for claiming additional depreciation. Additional depreciation is not allowable on the items which are used for repairs and replacement, used machinery within or outside India.  The assessee failed to file the required details as per Section 32(1)(iia) of the Income Tax Act, therefore the assessee is not entitled for the claim of additional depreciation.

M.K. Patel representing the assessee pleaded that the assessee was entitled for additional depreciation on post amendment to Section 32(1)(iia) of the Income Tax Act.

The bench of Waseem Ahmed ( Accountant member ) and T.R.Senthil Kumar ( Judicial member ) observed that the lower authorities failed to consider the amended provisions of law and denied the claim of additional depreciation to the assessee. Therefore, in the interest of Principle of Natural Justice, ITAT set aside this issue to the file of the Jurisdictional Assessing Officer to verify the claim of additional depreciation and allow the same in accordance with the provisions of amended law. Accordingly, the ground raised by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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Dakshin Gujarat Vij Co. Ltd vs The DCIT , 2024 TAXSCAN (ITAT) 506 , Shri M.K. Patel , Shri Kamlesh Makwana