Tuesday, 28 August 2012

Additional depreciation is statutory allowance, can't be limited to 50% by condition of usage of asset for 180 days

During preceding assessment year, the assessee bought some assets on which it was eligible for additional depreciation. However, it claimed only 50 per cent of additional depreciation in the preceding assessment year because assets were put to use in second half of the year. Accordingly, the balance additional depreciation was claimed by the assessee in succeeding assessment year, i.e., instant assessment year. The AO denied the claim of assessee and made addition accordingly. On appeal, the CIT(A) confirmed the action of AO.
On appeal, the Tribunal held in favour of assessee as under:
1) There is no such restriction that balance of one time incentive in the form of additional sum of depreciation shall not be available in the subsequent year; and
2) The assessee is entitled to the benefit of additional depreciation as soon as he purchases the new eligible assets.
Therefore, the unclaimed additional depreciation in the preceeding year was allowed in instant assessment year - DCIT v. COSMO FILMS LTD. [2012] 24 taxmann.com 189 (Delhi - Trib.)

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