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Asstt. Commissioner of Income Tax Versus M/s Associated Engineers Industrial Ltd.

2016 (3) TMI 457 - ITAT JAIPUR

Additional depreciation U/s 32(1)(iia) on wind mill - Held that:- The assessee produced the electricity through windmill and claimed additional depreciation U/s 32(1)(iia) of the Act. The assessee had acquired new machine, which comes under manufacturing and produce. Accordingly, the assessee has claimed additional depreciation following the decision [2009 (10) TMI 140 - MADRAS HIGH COURT ]. The ld DR has not controverted the finding given by the ld CIT(A). Accordingly, we uphold the order of th .....

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(A) has erred in allowing additional depreciation of ₹ 58,14,792/- U/s 32(1)(iia) on wind mill. (ii) Whether on the facts and in circumstances of the case and in law the ld CIT(A) has erred in allowing depreciation U/s 32(1)(iia) on wind mill even though the wind mill was not purchased in the context of core business of manufacturing of cables/conductors/parts and spare parts of machines." 2. The ld Assessing Officer observed that the assessee filed return on 27/11/2006 at NIL Income. .....

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90,73,958/- in respect of wind mill. The ld Assessing Officer observed that the cost of machinery was 5,81,47,916/-. The depreciation claimed thereon included normal depreciation of ₹ 2,32,59,166/- @ 80% of written down value and additional depreciation U/s 32(iia) of ₹ 58,14,792/- @ 20% on windmill installed if business of manufacturing. The Assessing Officer after giving reasonable opportunity, has held that the case law i.e. Praful Chunilal Patel Vs. M.J. Makwana, ACIT 236 ITR 832 .....

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xplain the true spirit of provisions of the Act, which is evident from the facts that the provisions regarding generation or generating has been separately dealt with in Section 32(1)(ii)(i) wherein it is stated that in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage of actual cost thereof to the assessed as may be prescribed. The Assessing Officer further held that manufacture or produce is entirely different from generation. M .....

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sell them to end users. After considering the assessee's reply, he allowed the depreciation U/s 32(1)(iia) of the Act @ 15% on plant and machinery and 80% on windmill. Thus, he made addition of ₹ 32,82,608/- in the income of the assessee. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal by observing as under:- "3.3 I have considered the facts of the case, assessment order and appellant's .....

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uce article or thing. If assessee is engaged in the activityof producing articles or things, it is sufficient to allow additional depreciation on new machine acquired. Since appellant is engaged in producing machineries which are articles or things, appellant is entitled to additional depreciation. Respectfully following the decision of Madras High Court relied upon by the appellant, appellant is allowed additional depreciation on Windmill." 4. Now revenue is in appeal before us. The ld DR .....

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