Section 32(1)(iia)

Section 32(1)(iia) — the law in short

What the courts have decided on section 32(1)(iia), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Brakes India Ltd v DCIT — balance additional depreciation in the next year, before the Finance Act 2015 proviso High CourtHelps taxpayerValidity unconfirmed
  My machine went into use after 30 September, so I got only half the additional depreciation. The assessment year is before AY 2016-17. Can I claim the balance half in the following year?
  Yes. On the unamended section the Madras High Court held there is nothing that confines additional depreciation under s.32(1)(iia) to the year of acquisition, so the balance fifty per cent of the additional depreciation is allowable in the immediately succeeding year; and it treated the Finance Act 2015 amendment as clarificatory of that position rather than as changing it. From AY 2016-17 the point is no longer arguable: the third proviso to s.32(1) inserted by s.10 of the Finance Act 2015, with effect from 1 April 2016, expressly allows the balance in the immediately succeeding previous year.
• ACIT v Lahari Holiday Homes (P) Ltd — the s.115BAA option can be exercised in a revised return, and the MAT credit then goes ITATHelps taxpayerValidity unconfirmed
  We filed the original return under MAT claiming MAT credit, then filed a revised return within the due date opting for s.115BAA. The Assessing Officer says that is a prohibited withdrawal of the option. Is it, and what happens to the MAT credit and our brought-forward losses?
  It is not a withdrawal. A revised return under s.139(5) substitutes the original return and assumes the character of a return under s.139(1), so an option exercised for the first time in a revised return filed within the due date is a valid first exercise — there was no earlier exercise capable of being withdrawn. But once the concessional regime is allowed, no MAT credit can be claimed for that year; and s.115BAA(2) bars set-off only of losses attributable to the deductions it specifies, not of ordinary brought-forward business and capital losses.
• CBDT Circular No. 29/2019 — MAT credit on opting into s.115BAA CBDT Circulars & InstructionsHelps departmentValidity unconfirmed
  My client company has a large MAT credit and wants the 22 per cent rate under s.115BAA. Does the credit survive the switch?
  No. The Board has clarified that because s.115JB itself ceases to apply to a domestic company that exercises the s.115BAA option, 'the tax credit of MAT paid by the domestic company exercising option under section 115BAA of the Act shall not be available consequent to exercising of such option'. The same circular carries the answer to the problem: since there is no time limit for exercising the option, a company holding MAT credit may exercise it after utilising the credit against regular tax under the pre-Ordinance regime.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.