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2014 (6) TMI 922 - AT - Income TaxDeduction u/s. 80IA(4)(iv)(a) - Held that:- Deduction u/s.80-IA of the Act is first claimed and thereafter for a period of 10 years from the initial assessment year. The initial assessment year is not the year in which the Assessee begins to make profits in the eligible business but the year in which deduction is claimed from eligible business. In respect of period prior to such claim loss/depreciation if they remain absorbed cannot fictionally be reduced from the profits on which deduction is to be allowed. In the light of the aforesaid judgment of the Hon’ble High Court of Karnataka in the case of CIT v. Anil H. Ltd. (2011 (1) TMI 1047 - ITAT, Bangalore ), we are of the view that there is no merit in this appeal by the revenue and consequently the same is dismissed. - Decided in favour of assessee. Rejection of claim of the assessee for depreciation on the value of lease rent paid by including it as part of the plant (windmill) - Held that:- There is no evidence on record to show that there is a technical requirement of erecting the windmills at high altitudes. We will, however, proceed on the assumption that such a technical requirement exists. Even then, in our view, the lease rent paid for acquiring leasehold rights over the land can never be treated as cost of the plant (windmill). The functional test cannot be extended to a case of lease rent for acquiring leasehold rights over the land, whatever be the technical requirement of erecting a plant. The law is well settled that no depreciation is to be allowed on land. By placing reliance on the functional test, it is not possible to allow depreciation on land indirectly. If such a claim were to be allowed, then it could be extended to a case of a land over which a shopping mall is constructed. A shopping mall requires a good area/location, main road for good business. Can it be said that the rent paid for the land over which the shopping mall is constructed is part of the building on which depreciation is to be allowed? In our view, by applying the functional test, it is possible to contend in all the cases that the land is a tool of trade and has to be regarded as plant or building. We therefore decline to accept the proposition canvassed on behalf of the assessee. With regard to the alternative claim made by the assessee, the claim cannot fall within the parameters of section 30 of the Act, because that section covers only rent paid on building. The claim has therefore to be considered u/s. 37(1) of the act. On this aspect, we find that the Hon’ble High Court of Karnataka in the case of HMT Ltd. (1992 (11) TMI 37 - KARNATAKA High Court ), has considered the premium for acquiring leasehold rights as nothing but rent paid in advance. The rent paid in advance was for acquiring leasehold rights over the land. Such payment had been considered by the Hon’ble Court as revenue expenditure. In view of the aforesaid decision of the Hon’ble High Court which is in pari materia with the facts of the present case, we are of the view that the lump sum rent paid for the entire period of 30 years has to be considered as revenue expenditure. The CIT(A) wrongly distinguished this decision as a case of lease of factory building. We therefore accept the alternative prayer of the assessee. Thus, the relevant grounds of appeal in all the three assessment years are treated as allowed on the alternative ground. - Decided in part in favour of assessee Disallowance of depreciation on Windmill installed at Kolahalu Village on the ground that the Windmill was not actually put to use - Held that:- Admittedly the value of the windmills on which depreciation was claimed by the Assessee entered the block of assets on which depreciation was claimed. The windmills had been installed and acquired by the Assessee. In such circumstances, we are of the view that the decision of the Hon’ble Delhi High Court in the case of Bharat Aluminium Co. Ltd. (2009 (10) TMI 505 - DELHI HIGH COURT) will squarely apply. - Decided in favour of assessee
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