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The Commissioner of Income Tax Versus M/s. DCW Ltd.

2016 (5) TMI 42 - BOMBAY HIGH COURT

Depreciation on the new Turbine Generator (TG) set - Tribunal allowed claim at full rate i.e. 80% by relying on the internal minutes of the meeting between the assessee and the erectors i.e. TEIL Ltd. - Held that:- We find that the impugned order of the Tribunal has on the basis of the minutes of the meeting held on 17th November, 2006 found that the TG set is running smoothly and satisfactorily at a load of 1100KW. Further the log sheets maintained by the respondent-assessee for the period from .....

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100KW for want of sufficient generation of steam. This does not detract from the finding of fact that it has been put to use to the extent of load of 1100KW for the purposes of the respondent-assessee's business. Needless to state that extent of user is not the basis of allowing depreciation under Section 32 of the Act. The view taken by the Tribunal is a finding of fact on the basis of the evidence before it. The same has not been shown to us to be either arbitrary and/or perverse in any manner .....

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). The impugned order is in respect of Assessment Year 2007-08. 2. This appeal raises the following question of law for our consideration : Whether on the facts and circumstances of the case and in law, the Tribunal is justified in allowing depreciation on the new TG set at full rate i.e. 80% by relying on the internal minutes of the meeting between the assessee and the erectors i.e. TEIL Ltd.? 3. During the subject assessment year, the respondent-assessee had purchansed and set up a 2.2 MW Turb .....

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TG set to conclude that the TG set was not put to use at full capacity before 30th September, 2006. Thus not entitled to the benefit of the full depreciation at 80% but only at 40%. This disallowance of 40% depreciation resulted in addition of ₹ 1.54 crorres to the taxable income. 4. Being aggrieved the respondent-assessee carried the issue in appeal to the Commissioner of Income Tax (Appeals) (CIT(A)). By an order dated 27th January, 2011 the CIT(A) dismissed the respondent's appeal .....

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Ltd. and M/s. Triveni Engineering held on 17.09.06 at M/s. DCW, Dhrangadhra Following parameters are checked for T.G. Set commissioning: 1. ................. 2. ................ 3. The Turbine Generator with coupled condition, taken full speed slowly up to 8325 rpm. Voltage build up manually as well as auto through AVR Panel 8.09.06. The TG Set loaded up to 500KW, observed all parameters related to Electrical & mechanical, working satisfactorily 8.09.06. The TG Set tripped manually due to ex .....

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provided spare temp. scanner. 6. On 16.09.06, TG set started & turbine was loaded up to 1100 KW & checked all parameters working satisfactorily & stopped TG set due to boiler problem. 7. Here with we are adding annexure of operating parameter of mechanical & Electrical at various Elect. Load, which indicates that turbine behavior is satisfactory. However, we observe by comparing steam consumption curve, 1 ton/hr. steam consumption is more. TEIL inform to DCW that further flow tra .....

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contact TEIL for taking full load & performance curve as soon as boiler get ready. 12. TG set could not run continuous due to boiler problem. TG Set is running smoothly and satisfactorily. 13. All tools and tackles are handed over to DCW as per list. 14. TEIL engineer Mr. H.V. Desai leaving 17.09.06 at night & Mr. U.K. Singh will leave on 18.09.06 night." 6. In the context of the aforesaid clauses the impugned order came to the conclusion that the TG set had admittedly a rated capa .....

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t lower levels of load and it was only on account of steam not being sufficiently generated by the boilers that the TG set was not able to perform beyond the load of 1100KW. In the above circumstances, the Tribunal rendered a finding that the TG set had been 'put to use' on or before 30th September, 2006 and thus entitled to the benefit of depreciation at 80% as claimed by the respondent-assessee. This resulted in deletion of the disallowance of ₹ 1.54 crores. 7. Mr. Malhotra, the .....

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