Wheels India Limited Vs DCIT (Madras High Court)
Summary: The Madras High Court allowed Wheels India Limited’s appeal concerning the balance 50% of additional depreciation for assessment year 2006-07. The assessee challenged the Income Tax Appellate Tribunal’s order dated 14 March 2014. The three substantial questions of law, admitted on 27 October 2015, concerned entitlement to the remaining additional depreciation on assets acquired in the preceding year and put to use for less than 180 days; whether the second proviso to Section 32(1) could curtail the investment incentive available under Section 32(1)(iia); and whether the restriction governed only the quantum allowable in the first year rather than the total eligible deduction.
The central issue was whether the balance additional depreciation could be claimed in the subsequent year after 50% had been claimed in the first year. The Court noted that this issue had already been decided in the assessee’s favour in Wheels India Ltd. v. Asstt. CIT (LTU Appeals). Following that decision, the Court answered the substantial questions of law in favour of the assessee and allowed the appeal without costs.
Cases Discussed
- Wheels India Ltd. v. Assistant Commissioner of Income-tax (LTU Appeals) — (2026) 310 Taxman 168 (Madras High Court). Followed as the assessee’s own-case decision accepting the claim for balance additional depreciation in the subsequent year.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This is an appeal at the instance of the assessee challenging order dated 14.03.2014 of the Income Tax Appellate Tribunal (Tribunal) for the assessment year 2006 – 07. The substantial questions of law admitted on 27.10.2015 are as follows:-
1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that assessee is not entitled for balance 50% of additional depreciation in the current assessment year in respect of assets acquired in previous year and put to use for less than 180 days?
2.Whether on the facts and in the circumstances of the case and in law the entitlement to additional depreciation u/s.32(iia) which is vested as incentive for investments in new plant and machinery can be divested by the second proviso to Sec.32(1) which restricted it to 50 per cent?
3.Whether on the facts and in the circumstances of the case and in law the Tribunal ought to have appreciated that second proviso to Sec.32(1) only restricts the quantum of depreciation allowable in the first year of use but in no way restricts or reduces the total amount of Additional depreciation allowable in respect of eligible plant and machinery?
2. The issue relates to whether the balance of additional depreciation of 50% of which 50% had been claimed in the first year, may be carried forward to the subsequent year. This issue has been answered in the assessee’s own case in Wheels India Ltd. v. Asstt. CIT (LTU Appeals) (Madras) accepting the claim. Hence, the questions of law are answered in favour of the assessee.
3. This Tax Case (Appeal) is allowed. No costs.
