TMI Blog2015 (11) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot get merged with the other businesses. In Sec. 80IA(2), for claiming deduction “undertaking” or “Enterprise” as such is to be considered. Sec.80IA(2) is charging sections for determining basic eligibility and there is no mention of word “business”. Sub-sec.(5) of Sec.80IA speaks of business but same is to be construed as business of “undertaking” or “Enterprise” as referred to in Sub-sec.(2) of Sec.80IA. It is well settled principle of interpretation of statutory provision that they are to be interpreted harmoniously to make workable to give intended results. Hence, as rightly held by Ld. CIT(A) term “business” used in sec.80IA(5) is to be construed and understood to mean “business” or “undertaking or enterprise”. In our opinion, the Ld. CIT(A) in his well reasoned order has rightly held that every unit constitute a separate undertaking engaged in the eligible business and losses from one unit cannot be set off against the profits. Another unit engaged in the same business for the purpose of computing the deduction u/s 80IA. We find no reason to interfere with the findings of the Ld. CIT(A) on this issue. Accordingly, the same are confirmed and grounds taken by the revenue are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to in sub-sec. (4) of sec. 80IA which in the context of the assessee company would imply that profit and gains earned by the assessee company from the eligible business of generation of electricity would be considered for allowing the deduction an not the profits earned by individual units engaged in the business of generating electricity. 5. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in interprting the provisions of sec. 80IA(2) of the I.T. Act, 1961 in respect of the assessee company's preogative to choose any consecutive period of 10 years from the first 15 years of its operation in context of substantiating his inference that the provision is intended to consider each unit of the eligible business as a seaprate profit centre for computing the allowable deduction as against the clear mandate of sub-sec. (1) of sec. 80IA of the I.T. Act to compute allowable deduction on the basis of profit of the eligible business and not individual units of eligible business. 2. The facts which revealed from the record are as under. The assessee company is engaged in the manufacturing of iron, steel, stainless steel and alloy steel ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Depreciation on addition for A.Y. 2009-10 on the sane basis 4,43,10,400 4,49,519 12,64,293 4,60,24,212 Total Depreciation allowable 5,25,05,727 Depreciation claimed in the return filed for A.Y. 2009-10 6,10,90,371 Depreciation to be disallowed 85,84,644 The Assessing Officer, accordingly, disallowed the depreciation to the extent of ₹ 85,84,644/- and added to the income of the assessee. 3. In sum and substance the Assessing Officer made the bifurcation of total cost of the Wind Mill and accordingly allowed the depreciation to the assessee. The assessee carried the issue before the Ld. CIT(A). The Ld. CIT(A) followed his order in the case of M/s. Chaphalkar Brothers in appeal No. SLI/330/10-11 dated 12-09-2011 for the A.Y. 2008-09 and partly allowed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Franking charges g) MEDA or equivalent charges 9. Thereafter I had directed the assessing officer in the above referred order to recompute the depreciation allowance according to the following: i)Cost of new windmill will be inclusive of all items mentioned at 1 to 5 above. ii) Cost of power evacuation facility and infrastructure will be apportioned between the rates applicable to building/roads and windmill in 60 : 40 ratio. iii) Cost of other miscellaneous expenses will be apportioned on prorate basis between windmill and infrastructure facilities. The assessing officer is directed to allow the depreciation as per my directions above in respect of the new wind mills installed. 10. However, in respect of wind mills installed earlier I have held in the case of M/s. Chaphalkar Brother that - 59. As far as the issue raised in ground no. 4 in respect of windmill located at Dhulia is concerned, my predecessor in office had given a finding that no details were made available which would establish the functionality and utility of the foundation in generating electricity from wind turbines. In fact, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvations in treating the cost incurred by the assessee on the foundation civil work for installation and erection of the wind mill. In their opinion, the expenditure is to be apportioned considering the nature of the said expenditure i.e. the foundation civil work and erection and commissioning. We find that issue is squarely covered in the favour of the assessee by the decision of the Tribunal in the case of M/s. Western Precicast Pvt. Ltd., Sangli (supra), the operative part of the finding of the Tribunal in the said case are as under: 7. We have carefully considered the rival submissions. In order to appreciate the dispute, the following break-up of expenses on account of erection and commission of windmill I i.e. windmill installed in the preceding assessment year 2006-07 would be necessary as contained in para 2.5 of order of the CIT(A):- S.No. Date Nature of work Expenditure Rs. 1. 30-03-2006 Towards supply and installation of HT electrical Yard with VCB, outdoor type CT PT and HT Transmission Line from Windmill to Grid interconnection point includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for depreciation at 80%. 6. Ld. Counsel has filed a chart giving details of civil work which has no relation with foundation or erection commissioning which are as under: Civil work (cost) 1. Wind Mill I II 5,76,303 (Installed in AY 2002-03 2006-07) (part of WDV) 2. Wind Mill IV (Installed in A.Y. 2007-08) 18,70,890 24,47,193 Hence, to extent of civil work cost, we uphold action of the A.O. to restrict depreciation @ 10%. We therefore, allow the grounds taken by the assessee protanto and direct the A.O. to allow the depreciation at 80%on the cost of foundation as well as cost incurred on erection and commissioning of the wind mill. Accordingly, grounds taken by the assessee are partly allowed. 7. Now we take up the revenue s appeal for the A.Y. 2007-08 being Income-tax Act, 1961 No.891/PN/2011. The revenue has taken the following effective grounds 1 to 4:- 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in classifying Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioning. We find that though the Ld. CIT(A) has referred to the decision of the ITAT Pune Bench, Pune in the case of Poonawala Finvest and Agro Pvt. Ltd V/s. ACIT (2008) 118 TTJ (Pune) 68. The said decision has not been applied but in fact distinguished for denying the claim of the assessee. Hence, ground no.3 taken by the revenue is infructuous. Accordingly, all the grounds of the revenue are dismissed. 5. In sum and substance the Tribunal upheld the action of the Assessing Officer to restrict the depreciation @ 10% on some items but allowed the depreciation @ 80% on the cost of foundation as well as cost incurred on erection and commissioning of the Wind Mill. The Tribunal also held that cost incurred on installation of Wind Mill is an integral part of the Wind Mill and the assessee should be allowed depreciation @ 80% on the cost of foundation as well as on erection and commissioning. As the issue is consequential in this year vis- -vis the allocation made by the Ld. CIT(A), we find no reason to take different view. Accordingly, confirm the order of the Ld. CIT(A) to the extent of allocation of the expenditure and rate of depreciation on foundation, erection and commissioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of undertaking or Enterprise as referred to in Sub-sec.(2) of Sec.80IA. It is well settled principle of interpretation of statutory provision that they are to be interpreted harmoniously to make workable to give intended results. Hence, as rightly held by Ld. CIT(A) term business used in sec.80IA(5) is to be construed and understood to mean business or undertaking or enterprise . In our opinion, the Ld. CIT(A) in his well reasoned order has rightly held that every unit constitute a separate undertaking engaged in the eligible business and losses from one unit cannot be set off against the profits. Another unit engaged in the same business for the purpose of computing the deduction u/s 80IA. We find no reason to interfere with the findings of the Ld. CIT(A) on this issue. Accordingly, the same are confirmed and grounds taken by the revenue are dismissed. 7.As the A.Y.2009-10 which is before us is a consequential, we find no reason to take different view. The Ground Nos. 3, 4 and 5 are dismissed and order of the Ld. CIT(A) on the issue of initial assessment order is confirmed. 8.In the result, the Revenue s appeal is dismissed. Pronounced in the open Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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