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2022 (3) TMI 459 - AT - Income TaxDisallowance of depreciation on electric installation - whether the items of electrical installation listed are eligible as plant and machinery? - HELD THAT:- Onus is on the assessee to explain whether each item perform the function of manufacturing. On perusal of the list of the items, we find that items include transformer, panel switchgear, cable, electric Control Panel etc. Item at serial No. 25, 26, 30, 31, 32 and 33 of the list for assessment year 2007-08 has been mentioned as “supply of electrical items”. There is no detail of such items available on record. Item at serial No. 34 is transformer oil and item at 36, 37 and 44 is diesel for DG set. The assessee has not explained how these items are qualified as capital expenditure. Further, item at serial No. 40 to 43 is rent for DG set. No specific explanation for qualifying the same as capital expenditure, has not been provided by the assessee. Similarly, in the list for assessment year 2008-09 items are mainly transformer, electrical capacitor panel, DG set, split AC, pumphouse panel, window AC etc and the assessee has not provided function performed by these items in the process of manufacturing. No details of their place or location of installation has been provided before us. No doubt, if any split AC is integral part of machinery itself, the assessee may be entitled for depreciation at the rate of the plant and machinery, however, if a split AC is provided in the chamber of a person in the factory as ancillary item, same will not be entitled for rate of depreciation applicable in the case of plant and machinery. Assessee has not complied the direction of the Hon’ble High Court and not furnished function performed by each item separately. Further, no such information is available on record. Though the appeal is very old, but in the facts and circumstances and in the interest of the substantial justice, we feel it appropriate to restore this issue to the file of the Assessing Officer for deciding in the light of the direction of the Hon’ble Delhi High Court with the direction to the assessee to provide functions performed by each and every item of the list provided in para 4 and para 5 of the Hon’ble High Court and then the AO shall decide the issue in accordance with law. Accordingly, the grounds of disallowance of depreciation on electric installation in both the assessment years are allowed for statistical purposes.
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