TMI Blog2017 (5) TMI 1712X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the product remained very same. In the circumstances, we are of the opinion that the CIT (Appeals) was justified in taking a view that the windmills were put to use for a period more than 180 days during the relevant previous year and allowing the full claim of depreciation. Electrical installation for the windmill and cost of civil works for windmill - whether considered as part of the cost of the windmill and allowed depreciation at the rates prescribed for windmill? - HELD THAT:- When specified civil structures and specified electrical installation work are necessary for installation of a windmill, in our opinion such items cannot be considered as independent pieces of machinery or plant or building. In these circumstances, we ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indmill cost of D6,92,00,000/-. These windmills where acquired by the assessees from M/s. Suzlon Energy Limited. Assessee had claimed depreciation @80% being the rate of depreciation applicable to windmills vide item number (8) (xiii) of Serial number III of New Appendix I to Income Tax Rules. Ld. Assessing Officer was of the opinion that windmills bearing No. KER 448 449 installed by first assessee and bearing No. KER 429 440 installed by second assessee, though connected to Kerala State Electricity Board (KSEB) grid before 30.09.2010, commercial production had started only on 23.10.2010. For coming to this conclusion ld. Assessing Officer relied on the response given by KSEB to a commission issued to it u/s. 131(1) (d) of the Act. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which the machinery were put to use. According to her, ld. Commissioner of Income Tax (Appeals) fell in error in holding that assessee was eligible for full claim of depreciation. 7. Per contra, ld. Authorised Representative supporting the order of the ld. Commissioner of Income Tax (Appeals) submitted that Sec. 32 of the Income Tax Act, 1961 (in short the Act ) did not use the word commercial production anywhere. According to him, only requirement was that machinery should be put to use. 8. We have considered the rival contentions and perused the orders of the authorities below. There is no dispute that the windmills were connected to the grid on 17.07.2010. This is mentioned by the ld. Assessing Officer in the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d depreciation at the rates prescribed for windmill. 10. Ld. Departmental Representative submitted that assessee had considered expenses incurred for transformer /electrical work of the windmills and cost of civil works incurred for installing the windmills, as part of windmill for claiming depreciation . As per ld. Departmental Representative, there were separate depreciation rates for electrical installation work and civil works, in the New appendix I, prescribing the depreciation rates. As per ld. Departmental Representative for electrical installation work rate of depreciation was only 15% and for civil works the rate of depreciation was only 10%. Contention of the ld. Departmental Representative was that assessee could not claim en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the rival contentions and perused the order. There can be no dispute that a wind mill is an apparatus that harnesses wind power, for a variety of uses like pumping water, driving of saw mill. grinding cone and/or driving electrical turbines. A typical wind mill, as installed by the assessee, which is of Suzlon Corporation. would consist of a specialized foundation, on which the wind blades are attached through a post. The Blades connected in the top is a revolving apparatus to which different numbers of arms are attached. When it is used for producing electricity, these are called wind turbines and serves as a significant source of electrical energy. Being a nonconventional source of energy with renewable inputs and which is nature friend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical requirement, it would qualify to be treated as a plant. In our opinion, the expenses relating to the land and foundation specially incurred with a view to serve the technical requirements would also become a part of the plant in a case that of a wind mill Similarly, in the case of CIT v. Herdilia Chemicals (216 ITR 742), Hon'ble jurisdictional High Court held that huge land measuring 360 acres taken on lease for the purpose of erection of plant and machinery where the entire factory was to be constructed in this land and expenses incurred for the foundation meant for fixing the machinery and for the purpose of leveling the land, formed a part of the cost of the plant. If we look at Appendix I to the Income-tax Rules, prescribing th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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