TMI Blog2014 (9) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible for the depreciation at the rate 180% or the rate which is applicable to the wind mill as it is integral part of cost of wind mill erection - Same way, the cost for commission and erection cannot be said to be separate from the wind mill as it is directly related to the functioning of wind mill - CIT(A) has rightly allowed the depreciation on the pro rata basis on the cost of foundation to the extent of the civil work - also in Assistant Commissioner of Income Tax (OSD) Versus Parry Engineering & Electronics P. Ltd. [2012 (10) TMI 224 - ITAT, AHMEDABAD] it has been held that the foundation is a part of the turbine and is eligible for the rate of depreciation which is applicable to the wind mill – the order of the CIT(A) is upheld – Decided against Revenue. - ITA No. 1505/PN/2011 - - - Dated:- 12-12-2012 - Shri G. S. Pannu And Shri R. S. Padvekar,JJ. For the Appellant : Smt. Vinita Menon For the Respondent : None ORDER Per R. S. Padvekar, JM In this appeal, the Revenue has challenged the impugned order of the Ld CIT(A), Kolhapur dated 22nd September 2011 for the A.Y. 2008- 09. The Revenue has taken the following effective Grounds in the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne to install the wind mill and the commission charges are part of the plant machinery i.e. wind mill and the assessee is entitled to 80% depreciation. The assessee also stated that the decision in the case of Poonawala Finwest Agro (P) Ltd. (Supra) specifically deals with allowable depreciation on the cost incurred for civil work of the control room and site development and internal roads adjacent to the wind mill. In sum and substance, the assessee contended that the decision in the case of Poonawala Finwest Agro (P) Ltd. (Supra) is not applicable to the extent of cost of foundation and erection installation and commissioning and the cost incurred is entitled for 80% depreciation as both are very much necessary to run the wind mill. The A.O was not impressed with the submission of the assessee and rejected the same by giving the following reasons : 6. (a) First and foremost objection is regarding the reliance of the decision of A Bench of the ITAT, Pune in the case of Punawala Finvest Agro Pvt. Ltd. Vs ACIT 118 TTJ 68. The objection raised is not acceptable for the simple reason that, that the earth work and the foundation is nothing but civil work and depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills requires heavy drilling and earth work. As the wind mills have been installed in the hilly area, much above the sea level / position and the foundation work road development to facilitate the transportation and movement for installation etc. constitute the expenses under the block of building asset and depreciation is allowable @ 10%. Similarly, for erection and commissioning of work the same constitutes the block of plant and machinery entitled for depreciation @15% and on the rest of the cost of the wind mill depreciation would be allowable @80%. Finally, the A.O allowed depreciation at the rate of 10% on the civil work (consisting of civil work, foundation and allied work) and at the rate of 15% on the cost of installation and commission. The assessee challenged the action of the A.O for restricting the depreciation on the cost of civil construction and installation and commission of the wind mill. The Ld CIT(A) followed his own decision in the case of M/s Chaphalkar Brothers, Appeal No. SLI/330/10-11 dated 12/09/2011 (A.Y. 2008-09). He further observed that in the said decision, examining in that the technical as well as functional aspects of the wind turbine, it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... energy production (through wider spacing) and maintaining reasonable turbine interconnection costs, which increase with wider spacing. Experience, mathematical analysis, and cost considerations are employed to determine the optimum configuration given all of the existing site conditions and proposed turbine equipment. 21. The majority of civil and electrical work required to design and construct a wind power plant is similar to the same activities for other power plants. In addition to the wind turbines and towers, Wind power plants contain other components that are necessary for proper operation: Electrical Power Collection System Energy produced from the turbines is collected in a medium-voltage (approximately 25-35 kV) power collection system consisting of below-ground cabling within the turbine rows land above-ground power lines from the turbine rows to the main substation (see figure 6). The interconnection point to the utility line can be co-located in the substation or it can be physically separated and located adjacent to the utility line. In general, wind energy projects are positioned Within such distance from the high- voltage transmission line so as to minimiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turbine. Operation and Maintenance (O M) Facility O ;M facilities for wind power plants generally consist of an office and maintenance shop. These spaces can be located on site or off site and in some cases may be in separate locations. An office is necessary for plant management staff, control computers, and communication systems. The maintenance shop is used to store vehicles and spare parts, and provides a work space for the repair of turbine components. STRUCTURE OF A WIND TURBINE GENERATOR SYSTEM (WTGS) Most of the wind farms involve the usage of Danish concept turbine configuration. This configuration uses a horizontal axis, three-bladed rotor, an upwind orientation, and an active yaw system to keep the rotor oriented into the wind. The drive train consists of a low-speed shaft connecting the rotor to the gearbox, a 2- or 3-stage speed- increasing gearbox, and a high-speed shaft connecting the gearbox to the generator. Generators are typically asynchronous, induction, and operate at 550 - 690 V (AC). Some turbines are equipped with an additional small generator to improve production in low wind speeds. The second generator can be separate or integrated into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturers are factored loads comprising of Axial load of 250 kips, Shear load of 800 kips, and Moment up to 50,000 kip-ft. Foundation Stiffness. 25. The foundation must be able to withstand these loads. The max foundation stiffness moment required to create a 1 degree rotation cannot exceed the foundation stiffness provided by the manufacturer. Avoiding Plate Uplift Condition 26. The wind turbines base sits on high strength grout. The base of the wind turbines have 160 holes on the in the inside and outside edge. In construction of a WTGS the bolt cage (160 bolts with top and bottom plates) is placed on site. Concrete is poured and allowed to harden. After the concrete hardens, the tower shell is placed and the bolts are pretensioned so that the tension in the bolts is 1 10 kips. The bolts are not bonded to the concrete. During extreme wind conditions, windward side of the tower can experience uplift as shown in Figure 5. The footing must be designed such that the plate must not loose contact of the pedestal. 27. In certain site conditions, it is possible to have Nooding and extreme wind conditions simultaneously. The footing must be designed to withstand the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pth in order to determine subsurface characteristics within the foundation infiuence zone. For shallow foundations, exploration is to a minimum depth at least equal to the foundation base width. If refusal is encountered at shallower depths in high strength soils, not all explorations need always be continued to the full depth. For deep foundations, exploration should be at least the maximum anticipated foundation depth, plus an additional 20 percent. In-situ exploration methods, including cone penetration testing, Nat plate dilatometer testing, vane shear testing, and other in-situ methods should be supplemented by an appropriate amount of soil borings in order to correlate in-situ data with laboratory testing. Groundwater Considerations. 31. Effects of groundwater is accounted for in the turbine foundation design, which may require relatively long term monitoring of groundwater levels at the specific foundation locations during the geotechnical investigation. Long term groundwater level is incorporated into stability, bearing capacity and other pertinent foundation design evaluations. Seasonal Nuctuation is also considered while designing the foundation. The foundation desi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d nuts. The bolts are commonly designed with post-tensioning and the Nange is typically of a tee configuration that is welded to the tower shell. The tee rests atop a bed of grout which is used not only to level the tower during erection, but also to accommodate the very high stresses imparted by the tower base Nange as a means of transition to the lower strength concrete in the foundation below. Spreader plates have been used to transition stresses from the tower base Nange to the grout. Anchorage shear and moment load transfer to the remainder of the foundation is ensured for ultimate and fatigue loading. The regions of pre-stressed and non-prestressed concrete and reinforcing are identified and designed accordingly. 4. Shear / Pullout Pullout refers to the state when the tower structure, amalgamated to the platform by anchorage, can break free from the foundation. The foundation structure is specially designed to prevent such pedestal pullouts. The structure is designed to provide adequate moment and shear transfer at pedestal/ slab junction, keep bearing stress in the concrete and grout at the tower Nange/ foundation interface, to withstand bursting forces in the post-ten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the following considerations are included: Eccentricity of the foundation / Effective foundation area Design Groundwater Level Drained conditions Undrained conditions Bearing capacity factors Ultimate limit state approach (ultimate strength or Load and Resistance Factor Design) can be used for evaluation of foundation soil bearing capacity if it is permitted by the applicable building code. 4. Overturning Resistance The foundation is designed to provide adequate resistance to overturning due to loads imposed by the wind turbine and other conditions such as earthquakes. The factor of safety (Resisting Forces/ Unfactored Overturning Forces) should not be less than 1.5. Under unfactored permanent or normal operating loads, contact pressure should be compressive under the entire foundation; i.e., no ground gap or zero pressures should occur. This ensures that the foundation stiffness remains adequate during normal operation loads and contributes to reducing the cyclic degradation of the foundation bearing materials. Under un-factored extreme loads, the ground gap shall extend no further than the centre of gravity of the foundation. 5. Slid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the capacity of windmill and rotor sizes as well as structural size has gone up considerably. The generation capacity of WTGS has increased from 3-OKW capacity in the 1980s to SOOKW in 2005. The length of the towers has increased from 40 mtrs. To 150 mtrs. and the size of a rotor blade has gone up from a mere 20 mtrs. to 40 mtrs. Combined effect of the increased dead weight and wind adds to the load on the structure and subjects it to various circumstances caused by vibrations and resonance. This load component is static as well as dynamic or eccentric. The entire load is transferred to the foundation which has to also withstand various sub-soil pressures. These aspects makes designing of windmill foundation very complex and problematic. Different foundation structures which are technically called footing have been designed for on-shore and off-shore installations. The on- shore wind turbine generating system are founded on massive cast in situ, reinforced concrete slabs or combined slab and pile system depending on various factors. The footing of a WTGS cannot be made by using the same method and suppositions as a simple column footing found in buildings. The foundations or foo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it is a civil construction. In that case the 100% depreciation was allowed to components, transformer, transmission line, DP structure, cabling etc.. While dealing with civil construction, the cost of control room, site development etc., by applying functional test, the same was treated as building. In the instant case the appellant submitted that the attendant facts in its case are different because the expenses on civil construction was incurred to lay the foundation and therefore was for the purposes of installation of windmill only. It was submitted that in the case of Poonawala Finvest (supra), the Tribunal, while dealing with civil construction, considered it is necessary to establish that on the touchstone of functional test the control room or site development expenditure or even internal roads were so designed that they can only be used for power generation as done by the wind mill and meant for no other use. 41. In Poonawala Finvest case the disallowance of claim of extra depreciation was upheld because the assessee was unable to prove that the civil constructions passed the functional test in the following words: The emphasis for granting higher rate of depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed as under : So the emphasis for granting higher rate of depreciation as per BD construction is concerned the necessity is to examine the functional test of the structure, a categorical evidence has to be placed that the structure is not a building, but it is an integral part of plant machinery. Such an evidence and foundation is absent in this appeal. However, in the case of CIT v. Abad Hotels Pvt. Ltd., 251 ITR 2004 (SC), the Hon ble Supreme Court has held that the hotel building was not a building, was not a plant and so the assessee was not entitled to extra depreciation allowance. In the present appeal, nothing is on record to establish on the touch stone of functional test, the control room and site development expenditure or even internal roads were so designed that they can only be used for power generation as done by the wind mill and meant for no other use. There is nothing on record such as the report from the qualified persons to establish that the site construction of control room, internal roads etc., were designed in such manner to facilitate the power generation and distribution of the wind mill. Naturally, a machinery does not require protection, so in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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