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2016 (1) TMI 663 - ITAT DELHI

2016 (1) TMI 663 - ITAT DELHI - TMI - Entitlement for claim of depreciation - assessee claimed deprecation at 15% as per the provisions of Section 32(1) as well as additional depreciation at 20% as per the provisions of Section 32(1) (iia) on the electric installations - Held that:- It is pertinent to note that the assessee company has submitted all the details related to the electrical installation and its co-relation with the business activities of the assessee. The said installation was withi .....

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der consideration. The CIT (A) has given a detailed finding to this aspect. Therefore, the CIT (A) has rightly set aside the findings of the Assessing Officer and allowed the deprecation to the assessee. - Decided in favour of assessee - ITA No.4238/Del/2010 - Dated:- 15-12-2015 - SV MEHROTRA, AM & SUCHITRA KAMBLE, JM For the Petitioner : Shri Om Prakash Meena, Sr. DR For the Respondent : Shri Ajay Wadhwa, Adv. ORDER PER: SUCHITRA KAMBLE: This appeal is filed by the revenue against the order .....

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e do not have the ownership right on the assets on which depreciation has been claimed. 3. The first ground is in general and not pressed by the Ld. AR, hence dismissed. 4. The assessee had applied for the sanction of electric load of 3,200 KVA for running its induction furnace. The electric connection of the desired load had to be applied well in advance, since large number of formalities is involved in the sanction and installation of the power connection. On an application made to the Uttar P .....

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was drawn exclusively by the assessee for running its induction furnace. The payment was deposited with the Uttar Pradesh Power Corporation Limited, after the deposit of the amount as directed by the Department, the transformer and electric distribution system was installed in the premises of the assessee and the assessee alone had an exclusive right to draw power out of the distribution station installed in the factory premises of the assessee. The Uttar Pradesh Power Corporation Limited mainta .....

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5. The Assessing Officer in his order observed that during the year under consideration the assessee claimed deprecation at 15% as per the provisions of Section 32(1) as well as additional depreciation at 20% as per the provisions of Section 32(1) (iia) on the electric installations of ₹ 69,61,944/-. As per the fixed asset schedule, the electric installations of ₹ 48,44,910/- were purchased prior to 1/4/2005 and installation of ₹ 21,17,034/- was purchased during the year. The .....

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on the deprecation claimed. The assessee was asked to furnish relevant bills in respect of the investment made. As per the details submitted, it was observed that the said expenditure pertains to payment made to Electricity Department in the form of security and other charges for installation of power connections for the assessee. 7. The Assessing Officer further observed that by making the above expenditure the assessee has not acquired any ownership rights on the said asset for claiming deprec .....

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ot the owner of the said electrical installations and accordingly the Assessing Officer disallowed the depreciation claim by the assessee. 8. Aggrieved by the said order, the assessee preferred appeal before the Ld. CIT (A). The Ld. CIT(A) held in para 4 as under: "I have carefully considered the submissions made by the counsel as also the order passed by the A.O and the observations made by him. I have gone through the documents filed by the appellant at the time of assessment as well as c .....

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m the letter dated 7/4/2005 it is clear that the agreement for the sanction and installation of the machinery to provide power connection of 3200 KVA was signed by the appellant only on 7/4/2005. The installation process was subsequently under taken and completed by the UPPCL during the period April 2005 to June 2005. This finds support from the statement of electrical installations placed on file by the A.R where it is seen that expenses to the tune of ₹ 21,17,034/- were incurred during t .....

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/6/2005. I have also considered the submission of the A.R that the entire system is installed in the premises of the appellant company and that the appellant alone is entitled to draw power out of the said power distribution machinery. It is observed that in electrical installation of such nature the Power Corporation Ltd exercises control over such system for the limited purpose of maintaining regular supply and to avoid power theft and safely of the equipment which could turn hazardous in self .....

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ddar Cement P. Ltd 226 ITR 625; Mysore Minerals Ltd. 239 ITR 775; Fazilka Dabwali Transport Co. 270 ITR 398 and several other decisions of Hon'ble High Court viz. CIT vs. Gaekwad & Co. 277 ITR 553; CIT vs. Sarabhai Chemicals P. Ltd. 254 ITR 625; CIT vs. Parthas Trust 249 ITR 120. The sum and substance of these decisions are that the term "ownership" as occurring in S. 32 of IT Act should be assigned a wider meaning. That anyone in possession of property in his own right and enj .....

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, CIT Vs. Tamil Nadu Agro Industries Corporation 192 ITR 108, Ram Kumar Mills P. Ltd. Vs. CIT 180 ITR 464 are concerned, in view of the an aforesaid recent decisions including that of the apex court the decisions cited by the A.O may not be applicable now. Further the submission of the appellant regarding treating expenditure for business purpose either under revenue or capital can be examined from a different perspective also. There is no denying the fact that the impugned expenditure has been .....

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unit, transformer and loose accessories, crane structure and others. Now these plant and machinery would be of no use, if electrical installation/connection is not done. Rather the business operation itself cannot operation-lize. Therefore, expenditure made by the appellant on electrical installations can in the alternative be capitalized with Plant and Machinery and normal depreciation and additional deprecation can be allowed on both the items taken together. The decisions in CIT Vs. Tata Mill .....

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ed by the assessee company. The Ld. DR further stated that the ownership lies with the Uttar Pradesh Power Corporation Limited. He relied upon the Assessing Officer's order. He stated that the CIT (A) has not taken the Assessing Officer's order in proper spirit hence pleaded that the present appeal to be allowed and Ld. CIT(A) order should be set aside. 10. The Ld. AR submitted that the assessee company has installed induction furnace and the same was reflected in the details of addition .....

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