2015 (5) TMI 1044 - AT - Income Tax

Disallowance of depreciation claimed by the assessee 80% on Windmill Project - Held that - After considering the rival submissions we find that Hon ble Punjab & Haryana High Court has clearly held in case of CIT-I Vs. M/s Maxwel Inc. (2014 (12) TMI 1238 - PUNJAB AND HARYANA HIGH COURT) that contribution towards evacuation of power would constitute a capital asset relating to renewable energy and was entitled for depreciation @ 80% annually therefore following this decision we decide this ground against the Revenue. Insurance premium paid for life of the partners as Keyman in the firm - Held that - In similar circumstances in the case of cvs. DCIT (2013 (11) TMI 115 - ITAT CHANDIGARH ) by following the decision of the Hon ble Bombay High Court in case of CIT Vs. B.N. Exports 2010 (3) TMI 186 - BOMBAY HIGH COURT has held that premium paid on insurance of Keyman is allowable expenditure. - Decided in favour of assessee Interest income treated as income from other sources - Held that - In one of the group cases in case of CIT-I Ludhiana vs. M/s. Eastman Industries Ludhiana (2010 (2) TMI 408 - PUNJAB AND HARYANA HIGH COURT ) such income was accepted as income from business.- Decided in favour of assessee

Summary

Issues:
1. Whether power evacuation facility constitutes a device for renewable energy and qualifies for depreciation at 80%.
2. Allowability of insurance premium paid for life of partners as Keyman Insurance.
3. Treatment of interest income from money lending business as business income.

Issue 1 - Power Evacuation Facility and Depreciation:
The appeal addressed the question of whether the power evacuation facility qualifies as a renewable energy device for depreciation at 80%. The AO allowed depreciation at 7.5%, while the CIT(A) allowed it at 40%. The Tribunal referred to a decision by the Hon'ble Punjab & Haryana High Court in a similar case and ruled in favor of the assessee, allowing depreciation at 80% annually for the entire year.

Issue 2 - Insurance Premium for Life of Partners:
The AO disallowed the deduction of an insurance premium paid for the life of partners as Keyman Insurance. However, the CIT allowed the claim citing a decision of the Hon'ble Bombay High Court. The Tribunal, following precedence set by the Chandigarh Bench in similar cases, decided in favor of the assessee, allowing the deduction of the insurance premium as an allowable expenditure.

Issue 3 - Treatment of Interest Income from Money Lending Business:
The AO treated interest income from money lending as income from other sources, but the CIT(A) ruled in favor of the assessee, considering it as business income. The Tribunal noted a decision by the Hon'ble Punjab & Haryana High Court in a related case and decided against the Revenue, allowing the interest income to be assessed under the head of income from business and profession.

In conclusion, the Tribunal dismissed the appeal of the Revenue, upholding the decisions in favor of the assessee regarding the depreciation of the power evacuation facility, the deduction of insurance premium for partners, and the treatment of interest income from the money lending business as business income.