Additional Depreciation not Claimed in Preceding year can be allowed to TVS Pvt Ltd: ITAT directs AO to Calculate Correct Amount [Read Order]

The revenue raised question regarding the action of CIT(A) in deleting an addition of Rs.16,71,32,882/- made by the AO on the claim of additional depreciation. As per the brief factual matrix, the AO noted that the assessee had claimed additional depreciation qua remainder amount which could not be claimed in the earlier year.

The AO held that additional depreciation is allowable only in respect of plant and machinery purchased and put to use in a year. The AO further held that assessee’s reliance upon a favourable decision in its favour delivered by this tribunal for AY-2011-12 cannot be considered since the department is in appeal before the Jurisdictional High Court. The Counsel for the assessee argued before us that this tribunal has also allowed the issue in its own case for AY-2012-13 vide ITA no.672/Mds/2011 dated 24.01.2025. Accordingly, the AR argued in favour of the order of the CIT(A).

Want a deeper insight into the Income Tax Bill, 2025? Click here

The assessee that correct amount of additional depreciation was only Rs.1,64,60,585/- and not Rs.. 16,71,32,882/- as wrongly held by the AO. It was stated that the balance of Rs.15.07 Crores is the current year’s depreciation. The CIT(A), while giving relief, noted the argument of the assessee that the assessee was entitled for 50% additional depreciation since it had only partly claim the amount in the preceding assessment year. It is the case of the assessee that it had only claimed half of its entitlement in the preceding assessment year given the fact it had used the asset for less than 180 days.

The Coordinate Bench of the tribunal in assessee’s own case, while considering order of the Karnataka High Court in the case of Rittal (India) Limited and of Jurisdictional High Court in assessee’s own case for AY-2004-05 in TCA No.294 of 2016 dated 14.03.2017 held that the assessee is entitled for its claim of additional depreciation qua amounts not claimed in the preceding year.

Master the Latest Amendments in Income Tax Act Click here

A two member tribunal bench of Shri Aby T Varkey, Judicial Member and Shri Amitabh Shukla, Accountant Member held that the assessee is entitled for its claim of the additional depreciation made during the year. The AO has made an addition of Rs.. 16,71,32,882/- whereas the assessee has stated that its claim of additional depreciation was only half an amount of Rs.1,64,60,585/-. The tribunal observed that the AO has indicated in his order that the assessee had made a mistake in calculation of its claim of additional depreciation to an extent of Rs.74,50,227/-.

The tribunal remitted the matter to the file of the AO for the limited purpose of calculating and allowing the correct amount of additional depreciation available for being claimed in this year by the assessee. The assessee is entitled to submit any details deemed necessary in this regard and shall be entitled to due opportunity of being heard. Accordingly, the grounds of appeal raise by the Revenue was dismissed.

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates