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M/s.Titanium Equipment v. The Deputy . Commissioner of Income-tax - T.C.No.1194 of 2005  RD-TN 776 (9 November 2005)
IN THE HIGH COURT OF JUDICATURE AT MADRAS
THE HON'BLE MR. JUSTICE P.D.DINAKARAN
THE HON'BLE MR. JUSTICE T.V.MASILAMANI
T.C.No.1194 of 2005
and T.C.No. 1195 and 1196 of 2005
and Anode Mfg. Co. Ltd.,
Team House, GST Road, Vandalur, Chennai. .. Appellant -Vs-
The Deputy . Commissioner of Income-tax,
Special Range VII, Chennai. .. Respt. in TC.1194/2005 The Asst. Commissioner of Income-tax,
Co. Circle II (1), Chennai.
.. Respt. in TC.1195/2005 The Asst. Commissioner of Income-tax,
Co. Circle V(1), Chennai.
.. Respt. in TC.1195/2005 Tax Case Appeals under Section 260A of the Income Tax Act 1961 against the orders of the Income Tax Appellate Tribunal, Madras `C' Bench dated 29.5.2001 in ITA No.2795/Mds/1992 for the assessment year 1985-86, dated 20.5.2001 in ITA No.2802/Mds/1992 for the assessment year 1 983-84 and dated 30.5.2001 in ITA.No.2803/Mds/92 for the assessment year 1984-85. For appellant : Mr.P.P.S.Janarthana Raja
For respondent : Mrs.Pushya Sitaraman, Sr.SC for IT :J U D G M E N T
(Delivered by P.D.DINAKARAN,J.)
The above tax case appeals are against the orders of the Incometax Appellate Tribunal in ITA No.2795/Mds/1992, ITA No.2802/Mds/1992 and ITA.No.2803/Mds/92.
2. The assessee is the appellant. The assessment years with which we are concerned are 1985-86, 1983-84 and 1984-85. During the previous years relevant to the assessment years in question, the assessee leased out certain assets of the company and claimed extra-shift allowance and additional depreciation, which was turned down by the assessing officer. The Commissioner of Income-tax (Appeals), on appeal, confirmed the order of the assessing officer for the assessment year 19 85-86. In so far as the assessment years 1983-84 and 1984-85 are concerned, the Commissioner of Income-tax (Appeals) held that extrashift allowance is only an extension of depreciation allowable as per Rules and when the assessing officer granted depreciation on leased assets, extra-shift allowance should also be allowed after verification of fact that the leased assets actually worked for extra shifts. The Commissioner (Appeals) also held that additional depreciation on new plant, machinery. Etc. is available equal to one half of the amount admissible under section 32(1)(ii) of the Income-tax Act in respect of previous year in which the said plant or machinery was installed or first put to use and there is nothing in the section indicating that where a previous year relates to a period of more than 12 months, such additional depreciation should be at variance from the amount of depreciation allowable. The Commissioner (Appeals) directed the assessing officer to allow additional depreciation as claimed by the assessee. On appeals by the assessee and the Revenue, the Appellate Tribunal, following the decision of this Court in First Leasing Company of India Ltd. v. Commissioner of Income-tax (No.1) (244 ITR 234), held that the assessee could not be entitled to claim extra-shift allowance and additional depreciation in respect of leased assets.
3. Aggrieved by the same, the assessee has preferred the above Tax Case Appeals raising the following common substantial question of law: "Whether on the facts and in the circumstances of the case, the Tribunal was right in upholding the order of the CIT (A) disallowing extra-shift allowances and additional depreciation on leased assets?"
4. Mrs.Pushya Sitaraman, learned Senior Standing Counsel takes notice for the department.
5. Mr.P.P.S.Janarthana Raja, learned counsel for the assessee submitted that the issue raised in the question is covered in favour of the assessee in the assessee's own case reported in 278 ITR 565 ( TITANIUM EQUIPMENT v. DEPUTY CIT). Learned Standing counsel appearing for the Department also does not dispute the same.
6. In TITANIUM EQUIPMENT v. DEPUTY CIT (278 ITR 565), this Court, following the decision of this Court in Parkside Explosives and Industries Limited v. CIT (278 ITR 561), held that the lessor is entitled to the extra-shift and additional depreciation allowance on the assets leased out.
7. In PARKSIDE EXPLOSIVES AND INDUSTRIES LTD. v. CIT (278 ITR 561), a similar question arose before the Division Bench of this Court. This Court, following the decision of Karnataka High Court in C.I.T. v. Maharashtra Apex Corporation Ltd. (234 ITR 484), as affirmed by the Supreme Court in 254 ITR 98, held that the assessee is entitled to claim extra-shift allowance on the plant and machinery leased out.
8. In C.I.T. v. MAHARASHTRA APEX CORPORATION LTD. (234 ITR 484), the Karnataka High Court held as follows:-
" So far as the claim of the extra-shift allowance is concerned, as already noticed by us, section 32(ii) of the Act provides for grant of depreciation. This section, inter alia, provides that in respect of depreciation of machinery, plant, etc., owned by the assessee and used for the purpose of business or profession certain deduction will be admissible. The basic requirement for claiming this deduction as is the same as for claiming the investment allowance dealt with by us in the foregoing paragraphs. Therefore, for those very reasons, we hold that the assessee is entitled for extra-shift allowance as well".
9. The Karnataka High Court also held that the basic requirement for claiming extra-shift depreciation is the same as for claiming the investment allowance and where the assessee has given its plant and machinery for lease, the assessee is entitled to claim extra-shift allowance.
10. The decision of the Karnataka High Court, cited supra, was taken on appeal before the Supreme Court and the Supreme Court upheld the judgment of the Karnataka High Court in Maharashtra Apex Corporation case (234 ITR 484).
11. In view of the settled proposition of law, we are of the considered opinion that the assessee is entitled to the extra-shift allowance and additional depreciation on the assets leased out.
12. In so far as assessment years 1983-84 and 1984-85, we find that the question raised has not been properly framed and accordingly, we reframe the same as under:-
"Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is not entitled to extra-shift allowance and additional depreciation on the assets leased out?"
13. Accordingly, we hold that the assessee is entitled to extrashift allowance and additional depreciation on the assets leased out and answer the question in the negative, against the Revenue and in favour of the assessee. The appeals are allowed. No costs.
(P.D.D.,J.)(T.V.M.,J.) 9.11.2005 Index: Yes
1. The Assistant Registrar,
Income-tax Appellate Tribunal,
Rajaji Bhavan, Besant Nagar,
Chennai 600 090 (five copies with records)
2. The Secretary,
Central Board of Direct Taxes, New Delhi (3 copies) 3. The Commissioner of Income-tax (Appeals) VII, Madras.
4. The Deputy Commissioner of Income-tax,Spl.Range VII, Madras.
5. The Commissioner of Income-tax, TN II, Madras.
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