TMI Blog2013 (5) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... e past alone is entitled to the claim of additional depreciation. There is no other contrary decision in existence on the issue. Further, the assessee is not engaged in the business of manufacture or production of an article or thing prior to the manufacture of the electricity using the impugned 'windmill'. Thus, assessee is not entitled to the claim of additional depreciation according for the above said decisions. - Decided against the assessee. - I.T.A. NO. 6422/M/2011 - - - Dated:- 1-5-2013 - Shri I. P. Bansal And Shri D. Karunakara Rao,JJ. For the Appellant : Shri K.Gopal, Jitendra Singh Satyendra pandey For the Respondent : Shri Rajesh Dwivedy, Sr. DR ORDER Per D. Karunakara Rao, AM:- This appeal filed by the assessee against the order of the CIT (A)-22/Mumbai dated 11.8.2011 for the assessment year 2007-08. 2. Grounds are as under: 1. The CIT(A) has erred confirming the income as assessed by the AO at Rs. 1,67,43,760/- instead of Rs. 90,03,758/- as returned by the appellant. 2. The CIT(A) has erred in confirming with the order of the AO by not allowing the additional depreciation U/s 32(1)(iia) as claimed by the appellant on windmills purchased du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the physical object or article or and, in the instant case qua the electricity generated, no new and distinct object or article or a thing has been brought into existence by using the windmill. Therefore, the generation of electricity by use of windmill does not amount to manufacturing activity by the assesee. Regarding the date of amending to Section 2(29BA) of the Act, the CIT(A) held that the amended provisions apply to all the pending proceedings. He does not agree with the assessee's contention that the electricity is an article or a thing on par with the other goods. Accordingly, he denied the claim of additional depreciation on windmill. 5. Aggrieved with the above decision of the CIT(A), assessee filed the present appeal before us with the grounds extracted above. Before us, Ld. Counsel for the assessee, Shri K. Gopal brought our attention to the text of the provisions of Section 32(1)(iia) of the Act and section 2(29BA) of the Act. Further, he also filed a copy of order of the Tribunal in the case of Shiva Cargo Movers Ltd. (23 taxmann.com 184)(Chennai) and mentioned that the electricity generated by the windmill constitutes an article or a thing resulted out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the construction activity and the windmill based generation of electricity does not constitutes industrial undertaking. Therefore, he is not entitled for additional depreciation under the provisions of Section 32(1)(iia) of the Act. In this regard Ld. DR relied on the contention of para-7 of the said order of the Tribunal. 8. We heard both the parties, perused the orders of revenue, cited decisions of the Tribunal and the Paper Book filed before us. The core issue for adjudication relates to allowability of additional depreciation on the windmill, which was purchased and used by the assesee for the first time in this year and when the assesee were not engaged in this line of business of manufacture and production of a thing or good or article in the past. Assessee is undisputedly engaged in the construction activity which does not amount to production of an article or good or thing in the past. Otherwise, there is no dispute on the facts. 9. In this regard, we perused the provisions of Section 32(1)(iia) of the Act as well as the newly inserted provisions of Section 2(29BA) of the Act. These new provisions are not applicable to the AY 2007-08 under consideration and said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction, and becomes eligible for grant of additional depreciation on the windmill undertaking. In this regard, we have perused the paragraph 7 and 8 and find that the additional depreciation is allowable only in respect of any new machinery plant acquired and installed by an assessee, who is engaged in the business of production or manufacture of an article or thing or good already in existence. It is notices that the Chennai Bench Tribunal examined the relevant provisions of Section 32(1)(iia) and its explanations 1 2 and held that the assessee is entitled for additional depreciation only when is already engaged in the past in the business of manufacturing and production of an article or thing. If the assessee is not engaged in the same line of business, the assessee is not entitled for additional depreciation. Relevant extracts of the said paragraph from the decision in the case of Shiva Cargo Movers Ltd. (supra) read as follows:- "7. ..........It is clearly mentioned in the enacting part that new machinery or plant has to be acquired by an assesee engaged in the business of manufacture or production. No doubt first proviso mentions that such additional depreciation shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36 /(2010) 187 Taxman 319 (Mad.), where the questions raised were whether generation of power by windmill would amount to manufacture or production of any article or thing and whether Tribunal was right in allowing the claim of additional depreciation on windmill, held as under at para 5 of the judgment:- "5. In the case on hand, the assesee is stated to have set up a windmill at a cost of Rs. 5,85,60,000. It is true that the assesee is a company engaged in the business of manufacture of textile goods. As far as application of s. 32(1)(iia) of the Act, is concerned, what is required to be satisfied in order to claim the additional depreciation is that the setting up of a new machinery or plant should have been acquired and installed after 31st March, 2002 by an assesee, who was already engaged in the business of manufacture or production of any article or thing. The said provision does not state that the setting up of a new machinery or plant, which was acquired and installed upto 31st March, 2002 should have any operational connectivity to the article or thing that was already being manufactured by the assesee. Therefore, the contention that the setting up of a windmill has noth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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