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2016 (1) TMI 609 - ITAT PUNE

2016 (1) TMI 609 - ITAT PUNE - TMI - Rate of depreciation to be applied on WDV of windmill installed by the assessee - assessee had claimed depreciation @ 80% on WDV of windmill, which was installed on 29.03.2006 - Held that:- Admittedly, such an asset was installed in earlier year, on which value of depreciation was claimed by the assessee, which in turn has been allowed by the Assessing Officer while completing assessment in the preceding year. The Assessing Officer is not empowered to disturb .....

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ind no merit in the order of Assessing Officer in bifurcating the cost of windmill into cost of Wind Turbine, cost of erection and installation of windmills and civil construction work vis--vis Wind Turbine No.1, which was installed in assessment year 2006-07.

Windmill installed by the assessee in the year under appeal - As per the Assessing Officer, cost of Wind Turbine entitles the assessee to the depreciation @ 80%. However, the cost of electrical installation would attract deprec .....

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larly, various electrical items installed, which in turn ensures the functioning of windmill, forms part of windmill and is entitled to the depreciation @ 80%. Accordingly, we hold that the assessee is entitled to the claim of depreciation @ 80% on cost of windmill at ₹ 90 lakhs. - Decided in favour of assessee - ITA No.814/PN/2011, ITA No.890/PN/2011, ITA No.1495/PN/2011, ITA No.2484/PN/2012 - Dated:- 9-11-2015 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Assessee : Shr .....

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ing to assessment years 2008-09 and 2009-10 passed against respective orders under section 143(3) of the Act. 2. The appeal in ITA No.814/PN/2011 was earlier heard exparte, which in turn was recalled vide order passed by the Tribunal in MA No.62/PN/2014, dated 13.06.2014. The appeal of the Revenue in ITA No.890/PN/2011 was also adjudicated by the Tribunal vide order dated 31.12.2012. However, the assessee moved Miscellaneous Application before the Tribunal pressing that the appeal of the assesse .....

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non-grant of depreciation on windmill as raised in assessment year 2007-08. Hence, all the appeals relating to the same assessee were heard together and are being disposed of by this consolidated order for the sake of convenience. Reference is being to the facts and issue in ITA No.814/PN/2011 to adjudicate the issues. 4. First, we shall take up cross appeals filed by the assessee and the Revenue vide ITA Nos.814/PN/ 2011 and 890/PN/2011. 5. The assessee in ITA No. 814/PN/2011 has raised the fo .....

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of depreciation @ 80% is wrongly rejected by the Assessing Authority and depreciation lesser than 80% is allowed on that machinery for A.Y.2007-08, hence the addition may be cancelled. 3) In the view of facts & circumstances, the Hon. Commissioner of Income Tax, (Appeals) erred in bifurcating the cost of Windmill and treating cost of ₹ 1917969 (Windmill I) and ₹ 467100 (Windmill II) as building and hence the same should be treated as cost of Windmill. 4) In the view of facts & .....

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iation rate of 80% and building cost with eligible depreciation rate at 10%, and hence the same should be treated as cost of Windmill. 6) Your petitioner prays leave to add, alter, amend, withdraw and clarify the grounds of appeal as and when occasion demands. 7) Your petitioner prays leave to adduce such further evidence to substantiate his case as occasion may demand. 6. The Revenue in ITA No.890/PN/2011 has raised the following grounds of appeal :- 1. On the facts and in the circum stances of .....

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your 0.60 MW wind mill or specifically designed devices which run on wind mills and as such at location No.G P-31, as integral part of wind mill when these items are not wind mill or specifically designed devices which run on mill wind mills and as such said items would not classify for depreciation @ 80% as per the depreciation schedule. 2. On the facts and in the circum stances of the case and in law, the CIT[A] erred observing that labour work related to installation of one wind turbine gene .....

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st and Agro Pvt. Ltd. (118 TTJ 68) as the decision is distinguishable on facts and does not considered the rate schedule of depreciation u/s 32C which provides for depreciation @ 80% only on wind mills and devices specially designed to run on wind mills. 4. On the facts and in the circumstances of the case and in law, the CIT[A] erred in allowing depreciation @ 80% on proportionate cost in MEDA charges of ₹ 6,28,750/- as the same does not form part of cost of windmill or any specifically d .....

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s opening WDV for the instant assessment year under appeal. Further, the assessee had purchased one windmill of ₹ 90 lakhs from M/s. Southern Wind Farm Ltd., during the year under consideration and had put the same for use on 24.02.2007. The depreciation was charged @ 80% for half year. The Commissioning certificate was issued by the prescribed authorities. The Assessing Officer during the course of assessment proceedings asked the assessee company to furnish the details of installation of .....

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d installation of windmill and its civil construction work. However, in respect of bill for assessment year 2007-08, a composite bill of ₹ 90 lakhs was received by the assessee. The assessee was asked to furnish the details of various expenses incurred for acquiring the windmill for both the assessment years. In reply, the assessee submitted that there is no merit in segregation of windmill cost into cost of windmill, cost on civil work consisting of foundation / work for transformer and p .....

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rious heads as proposed by the Assessing Officer. It was further pointed out that the supplier in assessment year 2007-08 had charged consolidated price of ₹ 90 lakhs without giving any break-up and thereafter, no division of cost on any assumption should be made. The Assessing Officer rejecting the submissions of assessee noted that from the details filed relating to assessment year 2006-07, the expenditure could be bifurcated into the cost of Wind Turbine and expenditure on foundation an .....

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ding, on which depreciation was to be allowed @ 10%. The Assessing Officer thus, re-computed the depreciation to be allowed to the assessee in respect of Wind Turbine Generator No.1 purchased in assessment year 2006-07 and Wind Turbine Generator No.2 purchased in assessment year 2007-08. The Assessing Officer allowed depreciation of ₹ 2,46,05,486/- in respect of Wind Turbine Generator No.1 and in respect of Wind Turbine Generator No.2, the Assessing Officer allowed depre ciation of ₹ .....

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epreciation on the component of cost relating to erection and commissioning of windmills, the CIT(A) allowed partial relief of ₹ 25,54,815/- relating to both windmills, on such relief, the Revenue is in appeal before us. The assessee is in appeal on two accounts i.e. in respect of the windmill installed in assessment year 2006-07, the assessee is entitled to the balance claim of depreciation @ 80% on the WDV. The assessee is further aggrieved by the order of CIT(A) in bifurcating the cost .....

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plied. In respect of addition of ₹ 90 lakhs, the learned Authorized Representative for the assessee drew our attention to the copy of bill placed at page 29 of the Paper Book and pointed out that the same was a consolidated bill issued by the supplier. He further argued that the Assessing Officer had bifurcated the figures by comparing the same with the bill of bigger windmill installed in the preceding year, where separate bills were given by the supplier. The learned Authorized Represent .....

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r the Revenue further pointed out that the Department was aggrieved by the order of CIT(A) in allowing 80% depreciation on electrical items, on which depreciation was to be allowed only to the extent of 15%. 11. We have heard the rival contentions and perused the record. The first issue arising in the present appeal is in respect of rate of depreciation to be applied on WDV of windmill installed by the assessee in assessment year 2006-07. Admittedly, the first major windmill was installed by the .....

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for half of the year, which was allowed in the hands of assessee. During the year under consideration i.e. in the next succeeding year, the assessee had claimed depreciation @ 80% on WDV of windmill, which was installed on 29.03.2006. The first issue which has to be addressed is whether while completing the assessment in succeeding year, is the Assessing Officer authorized or empowered to disturb the WDV of an asset, which is brought forward from the preceding year. Admittedly, such an asset was .....

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the Hon ble High Court of Madras in Ace Investments (P.) Ltd. Vs. CIT (supra). However, in the absence of any fresh evidence being brought on record by the Revenue authorities, the Assessing Officer cannot re-work the depreciation allowable on WDV of an asset. Thus, we hold that the Assessing Officer is not empowered to disturb the claim of depreciation on WDV of an asset, which was installed in the earlier years. We find no merit in the order of Assessing Officer in bifurcating the cost of wind .....

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on record. The Invoice does not bifurcate between cost of windmill and the allied expenses to be incurred for the erection and installation of the windmill and other construction thereof. In the absence of these requisite details being available on record, we find no merit in the order of Assessing Officer in bifurcating the cost of windmill into different heads of expenses, against which the Assessing Officer held that the assessee was entitled to the claim of depreciation at different rates. A .....

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nery, then the same is to be considered as an integral part of cost of windmill, which in turn is entitled to higher rate of depreciation @ 80%. Similarly, various electrical items installed, which in turn ensures the functioning of windmill, forms part of windmill and is entitled to the depreciation @ 80%. Accordingly, we hold that the assessee is entitled to the claim of depreciation @ 80% on cost of windmill at ₹ 90 lakhs. The grounds of appeal raised by the assessee are thus, allowed. .....

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