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The Addl. Commissioner of Income Tax, Range 3, Pune Versus M/s. Siddharth Properties and Vica-Versa

2016 (5) TMI 705 - ITAT PUNE

Grant of higher rate of depreciation @80% on Civil work and portion of installation and commissioning work included in the block of assets of windmill - Held 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 .....

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vacuation infrastructure cost, which were incurred exclusively 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 u .....

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ent 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 - Decided in favour of assessee.

Disallowance o .....

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ble to project, revenue of which has been recognized by the assessee in the year under appeal, then the same is to be allowed as deduction. However, the balance interest expenditure is to be allocated to the projects under construction and the interest has to be capitalized. - ITA No.2205/PN/2014, CO No.11/PN/2016 - Dated:- 7-4-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Assessee : Shri Nilesh Khandelwal For The Revenue : Shri Mahesh D. Akhade ORDER PER SUSHMA CHOWLA, JM .....

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n not appreciating the fact that the depreciation under the IT Act/Rules are allowable on block of assets. 3. The Ld. CIT(A) erred in not appreciating the fact that the assessee himself is admitting that the ancillary expenses , though capital in nature, is different from the block of Windmill as it has been shown over and over the cost of windmill in his books of account and hence the assessee cannot claim accelerated depreciation, which is allowable only to the block of Windmill . 4. The Ld. C .....

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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 fa .....

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espondent prays to be allowed to add, amend, modify, rectify, delete, raise any ground of appeal at the time of hearing. 4. The appeal filed by the Revenue and the Cross Objections filed by the assessee were heard together and are being disposed of by this consolidated order for the sake of convenience. 5. The issue raised in the appeal filed by the Revenue is against grant of higher rate of depreciation @80% on Civil work and portion of installation and commissioning work included in the block .....

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al in the case of Poonawalla Finvest and Agro Pvt. Ltd. reported as 118 TTJ 68. 7. The CIT(A) allowed depreciation @80% on Civil work as well as on installation and commissioning work. The CIT(A) while granting relief to the assessee placed reliance on the decision of Pune Bench of the Tribunal in the case of DCIT Vs. Aminity Developers and Builders in ITA No.1505/PN/2011 for A.Y. 2008 -09 decided on 12-12-2012 and in the case of Cooper Foundry Pvt. Ltd. in ITA No.1437/PN/2007 , order dated 29.0 .....

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ryana High Court in the case of Eastman Impex (Supra). We find that in the case of Aminity Developers and Builders (Supra), the Coordinate Bench has considered the decision 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 .....

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oundation 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 Tribunal emphasized on the functional test. So far as the foundation is concerned, as discussed by the Ld CIT(A), the functional test i .....

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as it is directly related to the functioning of wind mill. The Ld CIT(A) has rightly allowed the depreciation on the pro rata basis on the cost of foundation to the extent of the civil work. We may refer to here the decision of the ITAT Ahmedabad Bench in the case of ACIT Vs. Parry Engineering & Electronics, ITA No. 3317/Ahd/2011 dated 2nd March 2012, in which it is held that the foundation is a part of the turbine and is eligible for the rate of depreciation which is applicable to the wind .....

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the appellate order, which is not being reproduced for the sake of brevity. The Hon ble Bombay High Court in CIT Vs. Cooper Foundry Pvt. Ltd. in ITA No.1326 of 2010, vide judgment dated 14.06.2011 has dismissed the appeal filed by the Revenue and held that the finding recorded by the Tribunal that RCC foundation forms integral part of windmill was a finding of fact and no question of law arises. The CIT(A) had relied on the aforesaid decision of Hon ble Bombay High Court (supra) and had also not .....

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n 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 .....

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led an appeal before the CIT(A) and submitted that as per section 32 of the Act, the assessee is entitled to claim depreciation on fixed assets only if the conditions therein are satisfied and as the assets in question were no more in use the same had been written off by the assessee and debited to the Profit & Loss Account. Further, it was contended that the loss claimed by the assessee was a business loss, which was allowable under section 28 of the Act. The CIT(A) noted that the assessee .....

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e plea of the assessee to allow depreciation on the said assets has not been adjudicated by the CIT(A). He further stated that the depreciation was allowable on the said assets as held by the Ahmedabad Bench of Tribunal in Inductotherm (India) Ltd. Vs. DCIT (200) 73 ITD 329 (Ahmedabad). 15. The learned Departmental Representative for the Revenue on the other hand, relied on the orders of authorities below. 16. We have heard the rival contentions and perused the record. The assessee had claimed e .....

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e before us that it is entitled to claim depreciation on the aforesaid assets, in view of the ratio laid down by the Ahmedabad Bench of Tribunal in Inductotherm (India) Ltd. Vs. DCIT (supra). 17. We find that the Tribunal in Inductotherm (India) Ltd. Vs. DCIT (supra) 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 insta .....

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r 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 .....

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course of assessment proceedings and also the assessee having agreed to the aforesaid capitalization of the interest vide order sheet noting dated 22.03.2013. The CIT(A) further noted that the Assessing Officer had not disallowed the claim based on misappropriation of fact as the issue had not arising for earlier years and this issue on similar fact had been disallowed by the CIT(A) in the earlier years. In the totality of the facts and circumstances, the CIT(A) held that interest cost is to be .....

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The learned Authorized Representative for the assessee pointed out that the details were given to the Assessing Officer in respect of project completed, which are placed at pages 1 to 7 of the Paper Book, which have not been considered by the authorities below. 22. The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below. 23. We have heard the rival contentions and perused the record. We find that the Tribunal after considering the issue in asses .....

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mine 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 ent .....

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