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2015 (11) TMI 1607 - ITAT PUNE

2015 (11) TMI 1607 - ITAT PUNE - TMI - Disallowance of higher rate of depreciation on windmills - allowability of similar depreciation rate as applicable to windmills, also to the ‘foundation & civil work’ and ‘erection & commissioning work’ executed for these windmills - Held that:- . 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 afo .....

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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 has no other use except for power generation done by the windmill. - Decided in f .....

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(A) erred in confirming disallowance of depreciation on Wind Mills of ₹ 54,44,869/-. 1.2 The learned AO may be directed to allow the depreciation in full as claimed by the assessee. 1.3 The learned CIT(A) failed to appreciate that the issue is covered by jurisdictional ITAT decision in the case of Jsons Pvt. Ltd., and hence needs to be allowed. 1.4 The disallowance of depreciation may please be deleted. 2.0 The appellant craves right to add, later, delete, modify all or any of the grounds .....

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f 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 .....

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f Plant & Machinery under the Income Tax Rules, 1962. He accordingly recomputed the depreciation applying the revised rate from assessment year 2004-05 onwards. As per the revised working depreciation for the assessment year 2010-11 was computed at ₹ 6,95,46,231/- as against depreciation claimed by the assessee ₹ 7,49,91,100/-. Accordingly, the Assessing Officer disallowed the alleged excess claim of depreciation of ₹ 54,44,869/- relatable to foundation & civil work and .....

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n to recover the cost of property before the expiry of its life so that it may be replaced with a new one at 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 pur .....

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epreciation @ 80% on roads which are included in civil work is to stretch too far the meaning of windmill. Therefore, allowing a higher rate of depreciation to the components of wind project other than wind turbine mast is not warranted. Therefore, the ground taken by the appellant is rejected. 6. Before us, none appeared for the Assessee. No adjournment application was moved either. It is seen from the records that the notices for hearing have been served on the assessee. Thus, it can be inferr .....

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ction of the Revenue is fully justified. 8. We have carefully considered the orders of the authorities below and submissions made on behalf of the revenue. The only issue for adjudication before us is allowability of similar depreciation rate as applicable to windmills, also to the foundation & civil work and erection & commissioning work executed 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 .....

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