TMI Blog2014 (4) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is dismissed. - ITA. No. 484/Hyd/2013, Assessment Year: 2009-2010 - - - Dated:- 9-4-2014 - Chandra Poojari, and Saktijit Dey, For the Appellant/Petitioner/Plaintiff: Mr. S. Rama Rao For the Respondents/Defendant: Mr. P. Somasekhar Reddy ORDER Saktijit Dey, Member (J) 1. This appeal filed by the assessee is against the Order of the CIT(A)-II, Hyderabad dated 04.01.2013 for the assessment year 2009-2010. The assessee has raised four grounds. Ground Nos. 1 and 4 being general in nature are not required to be adjudicated. In ground No. 2 the assessee has challenged the action of the department in restricting the claim of depreciation on coal fired pressure boiler to 50%. Facts in brief are, the assessee a company is engaged in manufacturing of bulk drugs. For the A.Y. under consideration the assessee filed its return of income on 26.09.2009 declaring income of ₹ 5,12,94,807/- under the normal provisions and book profit of ₹ 20,11,65,124/- under MAT. During the scrutiny assessment proceedings, the A.O. noticed that the assessee has shown addition of WIP-Boiler and Turbine worth ₹ 12,73,96,254/-. The assessee stating that the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diesel and electricity. The A.O. noted that visit of Mr. Lojet, a technical expert of Siemens, in February, 2009 proved that the cogeneration plant commenced operation only in February 2009. The A.O. also held that assessee's claim that turbines were operated manually is also not acceptable as they are microprocessor controlled. On the aforesaid basis, the A.O. concluded that cogeneration power plant did not commence operation in September 2008 but started operation only during February 2009. Accordingly, the A.O. restricted the claim of depreciation to 50% i.e., ₹ 6,36,98,127/-. 2. Being aggrieved of the assessment order so passed, the assessee preferred an appeal before the CIT(A). In course of hearing of appeal before CIT(A), the assessee contended that for operating cogeneration plant, the turbine, the alternator and the boiler are required, which were available much prior to September 2008. The only instrument which was not installed is the control panel. However, control panel is not an instrument required in the process of generation of power but is used for maintaining the bearing temperatures of turbine, oil temperature, exhaust pressure and live steam pressur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso is not relevant here, what is relevant is when was turbine erected. Unless turbine is erected, the question of trial turn or commercial production of power does not arise. The clinching evidence that the turbine was erected and installed only in the month of February can be gathered from the copy of the ledger account filed which clearly showed that on 02.03.2009 there were two cash debits on account of Mr. Lojet - cash H.O - towards boarding and lodging charges paid (at Novotel Hyderabad Airport) for visit reg turbine erection 20.01.2009 to 21.01.2009 as per bill enclosed for an amount of ₹ 7,030/- and again on 02.03.2009 - cash - H.O.-Rs. 7,593/- - Mr. Lojet-boarding and lodging charges paid (Novotel Hyderabad Airport) for visit reg turbine erection from 18.02.2009 to 19.02.2009 as per bill enclosed. This clearly shows that the work on turbine erection was done only in the month of January February and not before 30th September, 2008 as claimed by the appellant. Therefore, the AO is justified in restricting the depreciation and additional depreciation to 50% of the depreciation claimed by the x and hence, the addition is confirmed. 3. The Learned A.R. mostly reiter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e merits of the rival contentions it is to be borne in mind that as per Sec. 32 of the Act, for claiming depreciation two conditions have to be satisfied. Firstly, the asset on which depreciation is claimed must be owned wholly or partly by the assessee and secondly it must be used for the purpose of assessee's business. If the asset is acquired and put to use for more than six months, the assessee would be eligible for full depreciation and if it is acquired and put to use for a period of less than six months then assessee will be eligible for 50% of the total depreciation. Therefore, the emphasis is not only on the acquisition of the asset but on its actual use. In the light of the aforesaid legal principles let us examine the facts of the assessee's case. It is not disputed that all major components of the cogeneration plant like, boiler, alternator and turbines were acquired by the assessee prior to September 2008. Even the A.O. has accepted this fact in the assessment order. Only thing missing is the control panel which according to the assessee's own admission, reached its premises in October 2008. It is the claim of the assessee that even in the absence of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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