Issue: Additional depreciation under section 32(1)(iia): Whether allowance is mandatory

The assessee purchased and installed certain new plant and machinery in financial year 2011-12 corresponding to Assessment Year 2012-13. Since, the new assets were put to use for a period less than 180 days in Assessment Year 2012-13, the additional depreciation allowable at 20% to the assessee was restricted to 50% as per Second Proviso to section 32(1)(iia). In Assessment Year 2012-13 the assessee purchased new plant and machinery on which additional depreciation @20% is allowable. However, since the plant and machinery were put to use for a period of less than 180 days in Assessment Year 2012-13, the additional depreciation was restricted to 50% of the admissible amount. In other words, depreciation was allowed @10%. The balance unclaimed additional depreciation was claimed by the assessee in the impugned assessment year. The law is fairly well settled that the balance unclaimed amount of additional depreciation has to be allowed to the assessee in the immediately succeeding assessment year.