Additional depreciation not eligible on capitalization of forex loss

Daeseung Autoparts India Pvt.Ltd Vs ACIT (OSD) (ITAT Chennai)

We have gone through reasons given by the Assessing Officer to reject additional depreciation on capitalization of forex loss in light of provisions of section 32(1)(iia) of the Act, and we ourselves do not subscribe to the arguments advanced by the learned counsel for the assessee for simple reason that as per plain reading of section 32(1)(iia) of the Act, additional depreciation is allowed to an assessee, in case, any new plant & machinery which has been acquired and installed after 31^st day of March, 2005 by an assessee engaged in the business of manufacture or production of any article or thing in the year of acquisition of said additional plant and machinery. In this case, the assessee has claimed additional depreciation as per provisions of section 32(1)(iia) of the Act, on capitalized value of forex loss incurred on acquisition of plant & machinery during earlier financial years by taking clue from provisions of section 43A of the Act. In our considered view, arguments of the assessee is misplaced, because as per provisions of section 32(1)(iia) of the Act, the assessee is entitled for additional depreciation only in the year of acquisition and installation of new plant & machinery, but not for subsequent financial years. Although, provisions of section 43A of the Act allows capitalization of forex loss incurred on acquisition of plant & machinery outside India to cost of assets, but said additional cost can only be eligible for normal depreciation as per provisions of section 32(1) of the Act, but not for additional depreciation as contemplated under section 32(1)(iia) of the Act. Therefore, we are of the considered view that the assessee is not entitled for additional depreciation on capitalized portion of forex loss incurred on plant & machinery acquired and installed during earlier financial year for the impugned assessment year. The Assessing Officer as well as the learned CIT(A), after considering relevant facts has rightly rejected additional depreciation claimed on capitalized portion of forex loss. Hence, we are inclined to uphold findings of the learned CIT(A) and dismiss appeal filed by the assessee.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

This appeal filed by the assessee is directed against order of the learned Commissioner of Income Tax (Appeals)-1, Chennai, dated 30.01.2019 and pertains to assessment year 2010-11.

2. The assessee has raised following grounds of appeal:-

Please become a Premium member. If you are already a Premium member, login here to access the full content.