TMI Blog2016 (5) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... vely for running and maintenance of windmill installed and proper functioning of windmill. No infirmity in the order of CIT(A) in allowing the claim of higher depreciation to the assessee - Decided in favour of assessee. Revenue v/s capital expenditure - expenditure on account of mobiles written off - Held that:- We find that the Tribunal in Inductotherm (India) Ltd. Vs. DCIT (1999 (6) TMI 45 - ITAT AHMEDABAD-C) had held that unless and until scrap value of the machinery which has been discarded, demolished or destroyed during the previous year is ascertained the same cannot be reduced for the purpose of computing depreciation. In the instant case, the machinery in question was only scraped during the year, that meant it had not been used during the previous year. The scrap value of the same had not been ascertained as yet which would be possible only after selling the same. Therefore, nothing could be reduced at present from the written down value of the block assets and the Tribunal thus, directed the Assessing Officer to allow depreciation as claimed by the assessee on the aforesaid assets. The issue arising before us is similar to the issue before the Ahmedabad Bench of Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% was to be applicable only in respect of windmill and that there was no mention of depreciation to be applicable at the same rate with respect to the civil work for erection of windmill. 5. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal during the course of appellate proceedings. 3. The assessee in CO No.11/PN/2016 has raised the following grounds of cross-objections:- 1. On facts and circumstances prevailing in the case and as per provisions Scheme of the Act it be held that, disallowance/addition made by AO and that upheld by the first appellate authority on account of capital expenditure of ₹ 3,00,000/- is improper, unjustified and contrary to the facts and provisions of law. The addition / disallowance of ₹ 3,00,000/- be deleted. The respondent be granted just and proper relief as per provisions of law and facts prevailing in the case. 2. On facts and circumstances prevailing in the case and as per provisions scheme of the Act it be held that, addition/disallowance made by the AO and that upheld by the first appellate authority pertaining to the claim of interest made by the respondent of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered in the case of Poonawalla Finvest and Agro Pvt. Ltd., (Supra) and has distinguished the same. The Tribunal after detailed discussion on the issue finally concluded that Civil work comprising of foundation of the windmill is an integral part of windmill erection. Therefore, the same is eligible for depreciation at the same rate as is applicable in the case of windmill. Similarly, the cost of commissioning and erecting windmill cannot be said to be separate from the windmill as it is directly related to the functioning of the windmill. Therefore, the same rate of depreciation will apply on the cost of commissioning of the windmill. The relevant extract of the order of the Tribunal in the case of DCIT Vs. Aminity Developers and Builders (Supra) is as under:- 4. In the present case, the functional test of the foundation has been explained by the Ld CIT(A). The Ld CIT(A) has also explained, more particularly, in the case of M/s. Chaphalkar Brothers (Supra) how the foundation is the integrated part of the wind mill as the same is to be erected having technical expertise to sustain the load of the turbine. In the case of Poonawala Finvest Agro (P) Ltd. (Supra), the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and maintenance of windmill installed and proper functioning of windmill. The Assessing Officer on the other hand, had allowed depreciation on the cost of windmill of ₹ 5,52,04,508/- and had not allowed higher depreciation on ancillary cost of ₹ 81,86,126/- incurred for erection of windmill. Accordingly, following the same parity of reasoning of coordinate Bench of Tribunal and the Hon ble Bombay High Court (supra), we find no infirmity in the order of CIT(A) in allowing the claim of higher depreciation to the assessee and in view thereof, we dismiss the grounds of appeal raised by the Revenue. 11. Now, coming to the Cross Objection filed by the assessee. 12. The first issue raised is against disallowance of ₹ 3 lakhs holding the same to be capital expenditure. The Assessing Officer noted that auditor of assessee in the audit report in column 17(a) under the head Expenditure of Capital nature had declared ₹ 3 lakhs being amount of mobiles written off. The assessee was asked to explain as to why the same should not be taken as capital expenditure and vide order sheet noting dated 22.03.2013, the assessee admitted that the same was not an allowable ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demolished or destroyed during the previous year is ascertained the same cannot be reduced for the purpose of computing depreciation. In the instant case, the machinery in question was only scraped during the year, that meant it had not been used during the previous year. The scrap value of the same had not been ascertained as yet which would be possible only after selling the same. Therefore, nothing could be reduced at present from the written down value of the block assets and the Tribunal thus, directed the Assessing Officer to allow depreciation as claimed by the assessee on the aforesaid assets. The issue arising before us is similar to the issue before the Ahmedabad Bench of Tribunal in Inductotherm (India) Ltd. Vs. DCIT (supra) and following the same parity of reasoning, we hold that the assessee is entitled to the claim of depreciation on the assets. The ground of Cross Objection No.1 raised by the assessee is thus, allowed. 18. The issue in ground No.2 raised in Cross Objection is against the addition of ₹ 32,84,047/-. 19. The Assessing Officer noted that the assessee had debited interest expenditure of ₹ 1,75,78,350/-, which included interest expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffered for taxation. The Assessing Officer was directed to determine and allow proportionate interest attributable to the project which was completed and income of which has been offered to taxes and remaining income was directed to be capitalized and apportioned to different projects on the basis of utilization of borrowed funds. The assessee before us claims that the working of interest attributable to the projects placed at pages 1 to 3 of the Paper Book, were filed before the Assessing Officer and also placed at pages 4 to 6 of the Paper Book. In the entirety of the above said facts and circumstances, where the assessee is following project completion method, the assessee is entitled to claim the deduction on account of interest attributable to such projects against the revenue recognized of the said project. However, where the assessee has not recognized the revenue of the projects which have not been completed, then the interest attributable to such uncompleted projects is to be capitalized. Undoubtedly, the said issue has been decided in favour of the assessee in assessment year 2008-09 and directions have been given to the Assessing Officer to re-compute the disallowance in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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