TMI Blog2015 (11) TMI 1607X X X X Extracts X X X X X X X X Extracts X X X X ..... being necessary adjunct to the windmill and is not meant for any other purposes other than for operational functioning of wind turbine and therefore cannot be treated differently. Therefore, impugned capital expenditure towards civil work & commissioning etc. also will qualify for the same rate of depreciation as applicable to wind turbine itself. The issue is no longer res-integra and is covered by in the case of Poonawala Finvest & Agro (P.) Ltd. vs. ACIT, (2008 (6) TMI 586 - ITAT PUNE ) wherein it has been clearly held that the capital expenditure incidental to the windmill has to be tested on the touchstone of the functional test and the assessee will be entitled to higher rate of depreciation on such incidental expenditure, if it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of electricity through windmills. The assessee company has shown installation of windmills and generation of wind energy in difference places of the country. The assessee company has, inter-alia, declared income from sale of wind energy of ₹ 3,69,52,669/-. It was noticed by the Assessing Officer that the assessee company had been claiming depreciation on windmills @ 80% since its installation from assessment year 2004-05 onwards till this assessment year. It was, inter-alia, noticed by the Assessing Officer that the depreciation @ 80% was claimed uniformly in respect of all the works such as civil and construction work, erection and commissioning work of windmill itself. The Assessing Officer took a view that the assessee compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the end of the life of the existing property. Since civil structures last longer therefore, a lower rate of depreciation of 10% and 20% is allowed under Income-tax Rules for various types of structures. Whereas machinery/plant become obsolete soon due to change in technology and due to wear and tear. Therefore, higher rate of depreciation is allowed under the Income-tax Rules. Another purpose of allowing higher depreciation of the order of 80% to 100% is with a view to encourage development in certain sectors which the Government wants to promote. That is why in respect of wind plants, higher rate of depreciation has been allowed. Now, civil work, if used with wind turbine mast as its foundation will not depreciate earlier just because it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted for these windmills. It is the case of the assessee before the Assessing Officer as well as before the CIT(A) that entire expenditure together with cost of windmill is entitled to same rate of depreciation at 80% as the other expenditure incurred towards foundation civil work and erection commissioning work , etc. are integral part of windmills and are directly attributable to installation and operational functioning of wind turbine. Since the civil work and erection commissioning expenses incurred are in relation to installation of windmill, depreciation on the same should be provided at the rate applicable to windmill. We find that the aforesaid assertions made on behalf of the assessee before the Revenue remains uncontrover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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