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2015 (10) TMI 1759 - ITAT MUMBAI

2015 (10) TMI 1759 - ITAT MUMBAI - TMI - Depreciation on Wind Mills – WEG - Held that:- Whether the installed Wind Mill was new or old would not affect the claim of depreciation as per the provisions of the law. Further we find that the report of the DDIT, Unit-II Coimbatore is self speaking report wherein the Revenue authorities have made a detailed investigation in respect of the erection of Wind Mill Energy in the State of Tamil Nadu. We have no hesitation to hold that the assessee’s claim fo .....

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and Since the assessee does not owned the land, assessee cannot be considered as owner of the WEG - Held that:- A perusal of the record shows that the said land has been taken on lease by M/s. Pioneer Windcon Pvt. Ltd., for a period of 30 years. We also find that The Karnataka Renewable Energy Development Ltd., has approved the power project and there is an agreement between the Department of Energy of Government of Karnataka and the assessee for the installation and supply of electricity to the .....

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thorised Representative, there is no documentary evidence to suggest that the assessee has incurred cost outside the books of account. Merely on the basis of an unsubstantiated submission cannot lead to the addition u/s. 69C of the Act. The assessee has purchased the land for ₹ 58,500/- and therefore to this extent, the assessee is not entitled for the claim of depreciation. While deleting the addition of ₹ 2,41,500/-, we direct the AO to withdraw the depreciation on the amount of &# .....

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Priority= 39 QFormat= true Name= TOC Heading /> SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND RAM LAL NEGI, JUDICIAL MEMBER For The Assessee : Shri Nitin Waghmode For The Revenue : Shri Shekhar Gupta ORDER PER N.K. BILLAIYA, AM: ITA No. 4157/M/13 and C.O. No. 164/M/2014 are appeal and cross objection by the Revenue and the assessee against the very same order of the Ld. CIT(A)-24 Mumbai dated 28.2.2013 pertaining to A.Y. 2007-08. ITA .....

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venience and brevity. 2. The grievance of the Revenue is same in all the assessment years under appeal though the quantum may defer. The Revenue is aggrieved by the decision of the Ld. CIT(A) in allowing depreciation on Wind Mills -WEG. 3. At the very outset, representatives of both the sides agreed that facts involved in the issues under consideration are identical for all the years therefore we heard the appeal of assessment year 2007-08 and on the basis of the facts of A.Y. 2007-08, these app .....

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ssioned during the previous year relevant to assessment year 2007-08. 4.1. While scrutinizing the return of income for A.Y. 2007-08, the Assessing Officer noticed that the WEG in Tamilnadu was supplied, erected and commissioned by M/s. Southern Wind Farms Ltd (SWFL), a Chennai based company. The cost of the WEG as per the commercial invoice is ₹ 90 lakhs. The WEG in the State of Karnataka was supplied erected and commissioned by M/s. Pioneer Windcon Ltd, another Chennai based company. The .....

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e was asked to produce the complete details regarding the erection and commissioning of both the WEG. The assessee filed copies of commercial invoice No. SWL/WEG/055 DATED 31.02.2007 for the WEG in Tamil Nadu. It was explained that the amount of ₹ 90 lakhs paid to Southern Wind Farms Ltd. includes the erection and commissioning charges. The assessee also produced the Commercial Invoice No. PWPL/KA/02/06-07 dated 9.3.2007 in respect of WEG installed in Karnataka State. The assessee also sup .....

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Shri Anil Sharma in his letter dated 23.12.2009 had admitted that the said land was procured by Southern Wind Farms Ltd., and Pioneer Windcon Pvt. Ltd., and the assessee has paid ₹ 3 lakhs towards the cost of land. The AO was of the firm belief that the assessee has incurred unexplained expenditure in the purchase of land at ₹ 2,41,500/-. The AO added the same to the income of the assessee. The AO then proceeded by examining the cost of WEG and after elaborate discussion in his asse .....

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how new assets have come into existence in the name of the assessee. The AO denied depreciation in respect of WEG at Tamil Nadu for want of documentary evidences. 4.5. In so far as the claim of depreciation on WEG erected in the State of Karnataka, the AO denied the claim of depreciation because the owner of the land was not the assessee. 5. Aggrieved by this, the assessee carried the matter before the Ld. CIT(A) and reiterated its claim of depreciation. The Ld. CIT(A) at para 4.3.4 at page-16 h .....

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nd report, the Ld. CIT(A) further asked the AO to carry out further enquiries. After considering the enquiry report and the remand report and the submissions made by the assessee during the course of the assessment proceedings, the observations and the findings of the Ld. CIT(A) read as under: In this regard, the report of the DDIT is perused wherein it is mentioned that there is a wind mill and erected by M/s Swani Corporation and the same was commissioned during the F.Y. 2006-07. Further, DDIT .....

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t; it is mentioned as 6) It should be ensured before commissioning of the WEG that the WEG erected is a new machine and not a second hand machine by certifying the supporting documents. Similarly, letter dt. 21/02/2007 issued by Executive Engineer Operation and Maintenance Udumalpet to the Superintendent Engineer Udumalpet wherein it is also mentioned that M/s Swani Corporation, Mumbai have completed the 225 KV link line works for the energize ion of the WEG and further mentioned in paragraph No .....

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batore the WEG is a new one and erected by the assessee during the financial year 2006-07 relevant to A.Y. 2007-05. 4.3.9 From the above findings, in my opinion, the assessee has satisfied all the conditions for claiming depreciation. In order to claim depreciation the assessee has to satisfy the conditions of ownership existence of machinery put to use and particularly in this case it should be a new machine. The provisions of sec. 32(1) read as under :- "32(1) In respect of depreciation o .....

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on the windmills. It is also seen from the facts of the case, the Assessing Officer has nowhere disputed the payment made by the assessee to the supplier, the existence of the WEG and the operation of the wind mill. The above facts have also been ascertained during the remand proceedings by the DDIT, Investigation Unit-II, Coimbatore. The relevant portion of the report has already been reproduced in the earlier paragraphs. The Ld. CIT(A) finally being convinced with the claim of depreciation di .....

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e have also gone through the relevant documentary evidences brought on record. In our understanding of the facts, the AO has declined the claim of depreciation for the following reasons: i) There is no agreement for erection and commissioning. ii) There is inconsistency in respect of the cost of land iii) No break-up of individual machineries have been given in respect of the WEG. iv) There are no identification No. of the wind mill v) The assessee has not proved that the Wind Mill has been inst .....

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in his order from para 4.3.7 onwards and a gist of which is exhibited elsewhere and the report of DDIT (supra). We have no hesitation to hold that the assessee s claim for purchasing a Wind Mill, erecting the same and generating electricity are fully substantiated. Therefore, the assessee is entitled to the claim of depreciation as per the provisions of the law. We, accordingly decline to interfere with the findings of the Ld. CIT(A). 9.2. In so far as the claim of depreciation on the Wind Mill .....

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iod of 30 years. We also find that The Karnataka Renewable Energy Development Ltd., has approved the power project and there is an agreement between the Department of Energy of Government of Karnataka and the assessee for the installation and supply of electricity to the Government. These facts conclusively established the claim of the assessee for depreciation merely because the assessee is not the owner of the land and the land is a leasehold land would not itself disentitled the assessee with .....

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assessee admitted that the assessee has paid ₹ 3 lakhs towards cost of land. On the basis of this admission, the AO made an addition of ₹ 2,41,500/- u/s. 69C of the Act as unexplained expenditure. 13. The assessee carried the matter before the Ld. CIT(A) but without any success. 14. The Ld. Counsel for the assessee stated that what the Authorised Representative wanted to convey was that the assessee has wrongly claimed the depreciation on the cost of land and in admitting so he has .....

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st that the assessee has incurred cost outside the books of account. Merely on the basis of an unsubstantiated submission cannot lead to the addition u/s. 69C of the Act. The assessee has purchased the land for ₹ 58,500/- and therefore to this extent, the assessee is not entitled for the claim of depreciation. While deleting the addition of ₹ 2,41,500/-, we direct the AO to withdraw the depreciation on the amount of ₹ 58,500/-. Ground No. 1 is partly allowed. 17. Ground No. 2 r .....

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