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2010 (8) TMI 26 - DELHI HIGH COURTDepreciation – effective ownership - assessee has set up a power plant in the premises of NTPC for its own captive consumption. Since the expenditure for creating some facilities such as coal handling, water treatment etc. was very substantial, assessee decided to use NTPC facilities for these purposes. Rs. 22.62 crores was paid by the respondent-assessee to the NTPC for this and capitalized in its books, on which depreciation was claimed. - The Assessing Officer observed that since the effective ownership and control belonged to NTPC, depreciation could not be allowed to the assessee – Held that: - we are of the view that as the Captive Power Plan is not owned by the respondent-assessee, no fixed capital of enduring nature has come into existence. It is pertinent to mention that expenses were incurred wholly and exclusively for the purposes of business. Moreover, as pointed out by the CIT(A), had the respondent-assessee not incurred the expenditure in question, it would have to pay for use of the facilities and such payment would have been allowed as revenue expenditure. In the present case, the advantage consists in facilitating the assessee’s business and trading operations leaving the fixed capital untouched. Consequently, in our view, the expenditure will be on revenue account even though the advantage may endure for an indefinite future - though the expenditure had been loosely termed as depreciation it was revenue expenditure which was allowed every year at the rates on which depreciation had been allowed.
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