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2015 (10) TMI 1899 - ITAT MUMBAI

2015 (10) TMI 1899 - ITAT MUMBAI - TMI - Additional depreciation - generation of power - Held that:- As decided in CIT vs. Hi Tech Arai Ltd. [2009 (9) TMI 60 - MADRAS HIGH COURT] where the assessee has set up windmill in addition to some other existing business, and is engaged in the generation of electricity, the assessee is entitled to claim additional depreciation on the same

We find that the claim made by assessee on account of additional depreciation is allowable, no interference .....

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of learned Commissioner of Income-Tax (Appeals)-21, Mumbai, dated 03.11.2011 for A.Y. 2007-08 passed against the assessment order u/s.143(3) dated 24.12.2009. 2. Following grounds are raised by the Revenue in the appeal memo: "(i) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the facts of the case with respect to section 80I which was introduced by the Finance (No.2) Act, 1991 w.e.f. 1.4.1991. In this section legislature included gene .....

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or goods, big and small but they are never employed to denote the activity of the generation of power. As per Oxford Dictionary the word "article" is defined as a "commodity", a piece of goods or property. Power generation does not fit within the definition of the word article. (ii) The ld. CIT(A) relied on the citation submitted by the assessee which was the decision rendered in the content of the language of particular statue as such this meaning cannot be extended to the .....

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classified as "goods" for the purpose of sale of goods Act. 3. The Revenue has also filed one additional ground of appeal, as under: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the depreciation to assessee particularly in view of the fact that the generation of power has been added in section 32(1)(iia) only after 1/4/2013. Therefore, even if for the sake of argument it is accepted that assessee is engaged in the business of g .....

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ermal Power Co. Ltd. vs CIT 229 ITR 383 (SC) , we admit the additional ground filed by the Revenue. 5. During course of hearing, Learned Departmental Representative stated that with regard to both of the grounds raised by the Revenue with the appeal memo, he would simply rely upon order of the AO, whereas, the additional ground is to be contested seriously by the Revenue. We now proceed to adjudicate all the grounds, including the additional ground, as admitted above. 6. In the additional ground .....

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ssessee is not eligible to get the benefit of additional depreciation in the impugned assessment year, because it falls prior to 01.04.2013. He has supported the order of Assessing Officer and requested to uphold the action of Assessing Officer in denying the claim of depreciation of ₹ 1,54,80,000/-, being additional depreciation on the wind mill. On the other hand, learned Authorized Representative has vehemently supported the order of ld. CIT(A). In addition to that she has placed relian .....

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ubmissions made by both the sides and gone through the orders of lower authorities as well as material placed before us for our consideration. The brief facts are that assessee was having a wind mill division. The claim of depreciation made by the assessee in the return of income included depreciation of wind mill @ 80% and additional depreciation @ 20% as per Section 32(1)(iia) of the Income Tax Act, 1961. The assessee's claim of additional depreciation was disallowed by the Assessing Offic .....

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nd commercially tradable and therefore, it was "article or thing" within the meaning of section 32(1)(iia). He held that only material things can qualify for being "article or thing", it should be tangible. Electromagnetic field could not be said to be "article or thing" and that it should be capable of storage and the electricity could not be stored. He held that the wind mill could not be said to be indirectly used in manufacturing activity. Thus the windmill was .....

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sured and traded in units known as 'kilowatts'. The electricity is an actively traded good, and there was even an exchange specifically for this purpose. As regards the contention of A.O. that electricity was not an "article or thing" the assessee relied upon following decisions, to show that this contention was erroneous: - CIT vs Geo Tech Foundations & Constructions 241 ITR 90 (Ker) - Airfreight Ltd. vs. State of Karnataka (1999) 6 SCC 561 - Aspinwall and Co. Ltd. vs. CIT .....

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or thing" within the meaning of section 32(1)(iia). The assessee argued that it was entitled to claim additional depreciation and the said claim had been accepted by the tax department in the earlier years, and there being no change in facts during the year under consideration vis-a-vis earlier years, the aforesaid finding could not be disturbed by the A.O. On this issue, the assessee relied on the decision of Radhasoami Satsang vs. CIT 193 ITR 321 and other decision as mentioned in writte .....

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Court held that the electricity has to be considered as (goods) for the purpose of application of Sales Tax Laws. In the case ofState of A.P. vs National Thermal Power Corporation Ltd. (2002) 5 SCC 203 , M. P. Cement Manufacturers Association vs. State of Madhya Pradesh (2004) 2 SCC 249 referred to in Tata Consultancy Services vs. State of A.P. (2004) 271 ITR 401 , it was held that the electricity was capable of abstraction, consumption and use which, if done dishonestly was punishable u/s 39 of .....

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(1)(iia) of the Act and therefore, the assessee would be entitled for additional depreciation @ 20%. 8.2. It is further seen by us that Assessing Officer himself has allowed this claim to the assessee in the assessment order passed by him for immediately preceding assessment year i.e. A.Y. 2006- 07 in the order dated 29.12.2011 u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961. The relevant para of said assessment order is reproduced for the sake of ready reference as under: "3. The electri .....

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Pradesh (2004) 2 SSC 249 referred to in Tata Consultancy Services Vs. State of A.P. (2004) 271 ITR 401 , that the electricity was capable of abstraction, consumption and use which, if done dishonestly was punishable u/s. 39 of the Indian Electricity Act, 1910. It was held that electric energy could be transmitted, transferred, delivered, stored and possessed, etc. in the same way as any other movable property. It was held that electricity was thus "goods" within the meaning of Sales T .....

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