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2013 (9) TMI 675 - AT - Income TaxDeduction u/s.80-IA(4)(iv) - Substantial expansion - electricity distribution company. - AO concluded in his assessment that the Assessee had just made budgetary allocation for proposed capital investments and has not made the actual investment. He held that budgetary allocation of funds does not tantamount to an increase in book value of assets unless the actual investment is made – Held that:- Reliance has been placed upon the judgment in the case of M/s.Bangalore Electricity Company Ltd [2012 (8) TMI 337 - ITAT, Bangalore], wherein Tribunal has already taken a view that the word ‘undertake’ in section 80-IV(4)(iv)(c) to mean that there should be an increase in the Plant and Machinery by at least 50% of the book value of such Plant and Machinery as on 1-4-2004 meaning thereby that there should be capitalization of the Plant and Machinery on completion of installation of Plant and Machinery. The Tribunal has taken the view that the purpose of introduction of the aforesaid provision was to achieve modernization in operation of electricity company consequent to undertaking substantial expansion and the benefit cannot flow to the assessee unless substantial expansion is completed which would result operational efficiency of the electricity company – Order of Commissioner(A) has been confirmed – Decided against the Assessee. Deduction u/s 80IA(4)(iv)(b) of the Income Tax Act – Held that:- Conditions are that the assessee should start transmission or distribution by laying a new network of new transmission or distribution line – No reference to the addition in the Network lines has been made before either A.O. or Commissioner(A) and not anything separate has been shown in the Balance- Sheet - The opening written down value (WDV) of the same was Rs.837,41,39,851/- and there were additions to the tune of Rs.48,03,76,632/-. As to whether these were additions because of laying of network of new transmission or distribution lines or simple additions to existing line cable network is not known - Claim made by the assessee without a sound basis and without proper facts available on record deserves to be rejected – Decided against the Assessee. Deprecation on on assets handed over to the appellant by consumers for their running and maintenance - Held that:- assessee can claim depreciation on an asset only to the extent that the actual cost of such asset was actually met by himself and not on the cost met by any other person. The assets in question here happen to be transformers which are installed at consumers’ premises at their own cost and the whole of the cost of the assets are met by them. - The cost of certain assets collected by the assessee from its consumer, can by no stretch of imagination, be considered as cost of asset on which depreciation can be claimed by the assessee. The fact that the assets are subsequently transferred by the consumer to the assessee and thereafter the assessee maintains the assets are all facts for which the assessee has not given any basis in the form of entries in the books of account. - Depreciation not allowed - Decided against the assessee.
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