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2016 (2) TMI 1284 - SC - Indian LawsDetermination of tariff for procurement of power by the Distribution Licensees in Gujarat from Solar Energy Projects - benefit of the accelerated depreciation - case of the 1st respondent is that notwithstanding the fact that it entered into a PPA during the “control period” specified in the 1st tariff order, it is not obliged to sell power to the appellant for the price specified in Article 5.2 of the PPA and is legally entitled to seek (from the 2nd respondent) fixation of a separate tariff - HELD THAT:- It is admitted on all hands that the “benefit of accelerated depreciation” mentioned in the 1st Tariff Order and the PPA is the stipulation contained in Section 32 (1)(i) of the Income Tax Act read with Rule 5(1A) of the Income Tax Rules. They provide for the method and manner in which depreciation of the assets of an assessee is to be calculated - an undertaking engaged in generation of power has an option to claim depreciation on its assets in accordance with the scheme under Section 32(1)(i) of the Income Tax Act. Such an option could be exercised at the relevant point of time as indicated in the said proviso. What is the point of time at which the power producer can exercise such right to seek the determination of a separate tariff? - HELD THAT:- The Income Tax Act gives an option to the producers of power either to avail the ‘benefit of the accelerated depreciation’ or not. It also specifies the point of time at which such an option could be exercised. The right to exercise such option at a point of time specified in the 2nd proviso to Rule 5(1A) is limited only for the purpose of availing the benefits flowing from the Income Tax Act. The PPA does not make any reference to the “benefits of accelerated depreciation” - Whether the availability of the AD Scheme is beneficial to the power producer or not in a given case depends on various factors the details of which we do not propose to examine. It is for the power producer to make an assessment whether the availing of the AD is beneficial or not will take a decision if the scheme under Section 32 IT Act should be availed or not. The 1st respondent created enough confusion. While on one hand the 1st respondent asserted a right to seek determination of a separate tariff independent of the tariff fixed under the 1st Tariff Order in view of the stipulation contained in the 1st Tariff Order that “for a project that does not get such benefit, the Commission would, on a petition in that respect, determine a separate tariff taking into account all the relevant facts” did not seek a relief before the 2nd respondent to determine a separate tariff but claimed the benefit of the 2nd Tariff Order. Assuming for the sake of argument that the petition filed by the 1st respondent (1270/2012) is to be treated as an application for determination of separate tariff which would be identical with the tariff fixed under the 2nd Tariff Order, whether the 1st respondent would be entitled for such a relief depends, if at all he is entitled to seek such a determination, on a consideration of “all the relevant facts” but not by virtue of the operation of the 2nd Tariff Order. The impugned order cannot be sustained and the same is therefore set aside - Appeal allowed.
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