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2022 (4) TMI 1071 - AT - Income TaxDisallowance of additional depreciation - Extending benefit of initial depreciation to the power sector - HELD THAT:- We find that in terms of the provisions of Sec. 32(1)(iia), in case of any new machinery or plant (other than ships and aircrafts) which has been acquired and installed after 31.03.2005 by an assessee engaged in the business of any article or thing, a further sum equal to 20% of actual cost of such machinery or plant shall be allowed as deduction. However, the benefit of such provisions has been extended to power sector by Finance Act, 2012 by insertion of the words "or in the business of generation or generation and distribution of power" under these provisions with effect from 01.04.2013 As decided in MR. M. SATISHKUMAR, [2012 (11) TMI 215 - ITAT CHENNAI] we are of the considered opinion that generation of electricity is a manufacturing activity. The assessee is involved in the manufacturing activity and fulfils the conditions as laid down under section 32(1)(iia). The Government vide Finance Act, 2012 has amended the provisions of section 32(1)(iia) to include the business of generation or generation and distribution of power, eligible for benefit under section 32(1)(iia). Although the said amendment is with effect from April 1, 2013 but it gives impetus to the view that generation of electricity is a manufacturing process and qualifies for the benefits under section 32(1)(iia). In view of the above, the order of the Commissioner of Income-tax (Appeals) is upheld and the appeal of the Revenue is dismissed being devoid of merit. The revenue has relied upon the decision of coordinate bench of Tribunal in assessee’s own case for AY 2011-12 wherein the coordinate bench has confirmed the stand of Ld. CIT(A) on the ground that the business of generation, transmission or distribution of power was brought within the ambit of Section 32(1)(iia) of the Act, by the Finance Act, 2012 w.e.f. 01.04.2013 i.e., from the assessment year 2013-14. Another finding as rendered by the bench is that it is not the case of the assessee that the assessee is claiming the additional depreciation with respect to its manufacturing activities. We find that so far as the first finding is concerned, the same is not in accordance with the cited decisions of Hon’ble High Court of Madras M/S. VTM LIMITED [2009 (9) TMI 35 - MADRAS HIGH COURT]. However, the second finding is vital one and the same would require concrete findings by the lower authorities. It has been observed by the bench that it is not the case of the assessee that the assessee is claiming the additional depreciation with respect to its manufacturing activities. If this finding is correct, the assessee would certainly be not eligible to claim additional depreciation in view of the fact that the assessee is engaged in manufacturing and selling of windmills. On the other hand, if the same run contrary, the assessee would be eligible to claim the depreciation in terms of aforesaid decisions. Therefore, we set aside the impugned order and restore the matter back to the file of Ld. AO to render a finding on the aspect that the additional depreciation was with respect to assessee’s manufacturing activities. If this fact is established, the assessee would be eligible to claim the additional depreciation otherwise not. The assessee is directed to file requisite details and substantiate its case. Appeal stand allowed for statistical purposes
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