TMI Blog2017 (3) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... mere machines provider. Assessee is itself engaged in mining activity. We thus accept assessee’s former substantive ground to delete the impugned disallowance of additional depreciation claim. - Decided in favour of assessee Adhoc allocation of expenses between windmill and mining business - Held that:- We proceed in this backdrop to notice that the assessee has been maintaining separate books of its two businesses throughout as duly audited as per this statutory provisions. It has further entered into annual maintenance contract with the windmill installment companies so far as its former business is concerned. There is no evidence in the case file indicating that the assessee has either way diverted expenditure of one business towards the other one i.e. from windmill to mining and vice versa. The Assessing Officer rather appears to have adopted prorate turnover figures to arrive at the impugned allocation. We notice that such a course of action already stands reversed by various tribunal’s decisions. For instance, ACIT vs. P I Industries [2011 (12) TMI 604 - ITAT JODHPUR ] deleting similar allocation / apportionment of expenses made by the Assessing Officer in case of an en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s contention based on hon ble apex court s decision in CIT vs. Sesa Goa Ltd. [2005] 271 ITR 331 that similar mineral or processing / excavation amounts to production for the purpose of investment allowance u/s. 32A of the Act by observing that the said appellant was a first of all a mining company which was producing the ore from the mine in question. He then referred to Section 2(29BA) in the Act defining manufacture as resulting in transformation of an object to a new and distinct one. The assessing authority was accordingly of the view that the assessee neither was a manufacturer nor producer of the lignite in question so as to be held eligible for impugned additional depreciation in question since it was mainly participating in deploying excavators and dumpers to deliver lignite ore to the above two corporations. All this resulted in the impugned disallowance of ₹ 67,20,175/-. 4. We now advert to the lower appellate order under challenge to notice that the CIT(A) has also affirmed Assessing Officer s action in the order under challenge. His findings are reproduced as follows: 3.3. In the assessment order A.O. observed that the appellant had claimed add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings of fact have been up held by the Income Tax Appellate Tribunal and they have not even been discussed in the impugned judgment of the High Court. For the afore-said reasons, the civil appeal filed by the Department is allowed with no order as to costs. Keeping in view the observations of the A.O. in the assessment order and the Supreme Court decision referred to above, I hold that appellant's activity is not one of manufacture or production and accordingly it is not entitled to additional depreciation. Impugned disallowance of additional depreciation of ₹ 67,20,175/- is upheld. This ground of appeal is dismissed. 5. Heard both sides strongly reiterating their respective stands against and in support of the impugned disallowance. We first come to the statutory provision itself. Section 32(1)(iia) admittedly is a deduction provision in the nature of additional depreciation admissible to an assessee engaged in the business of manufacture or production of any article or a thing. The assessee undisputedly does not seek to treat itself as a manufacturer of the lignite ore. Its case is that it is a producer of the said mineral ore. We further find that hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Minerals that the situation is no different since the assessee has to excavate lignite ore after deploying all of its machinery. We therefore take into account all these contractual terms to observe that the assessee is itself engaged in mining activity rather than to be a labour contractor or a mere machines provider. 7. Learned Departmental Representative files before us hon ble apex court s decision in General Contracts Company (supra) disallowing investment allowance to the said assessee removing over burden / earth excavation work carried out for facilitating mining by way of undertaking labour contract activity. The same however does not apply to facts of the instant case wherein the instant assessee is itself engaged in mining activity. We thus accept assessee s former substantive ground to delete the impugned disallowance of additional depreciation claim of ₹ 67,20,175/- in question. 8. We now advert to assessee s latter substantive ground challenging adhoc allocation of expenses between windmill and mining business resulting in disallowance of ₹ 47,17,803/-. There is no dispute that this assessee has installed a windmill units in Tirunalveli (Tamilnad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to ₹ 35,05,591/- was being allocated to the wind mill activity and A the sum of ₹ 47,17,803/- being depreciation (Rs.10,82,646/-), common expenses (Rs.1,29,565/-) and interest expenditure (Rs.35,05,591/-) was being reduced from the deduction claimed u/s.80IA. 4.3. The contentions of the ld. A.R. are that the secured loans were availed towards purchase of plant and machinery not pertaining to the activity of the wind mills and therefore no proportionate allocation of the interest expenses was called for; as regards the common expenses the bank commission, books and travelling could not be treated as common since they had no nexus with the wind mill project and therefore reduction of proportionate interest and common expenses was not warranted. 4.4. I have considered the facts of the matter. As seen from the written submission reproduced above, appellant had not contested the reduction of depreciation of ₹ 10,82,646/- while computing the deduction claimed u/s.80IA. Further as seen from appellant's reply reproduced at para-4.3 of the assessment order, appellant stated that the depreciation as per the I.T. Act may be reduced. Therefore, disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a course of action already stands reversed by various tribunal s decisions. For instance, [2012] 23 taxmann.com 301 (Jodhpur-tribunal) ACIT vs. P I Industries deleting similar allocation / apportionment of expenses made by the Assessing Officer in case of an entity having two businesses and one of them eligible for Section 80IA deduction. We adopt the same reasoning herein as well to reverse the impugned allocation in absence of any specific material. The impugned disallowance/addition of ₹ 47,70,803/- is partly deleted. It is made clear that we have not dealt with the two issues of depreciation and interest expenditure (supra). Assessee s former appeal ITA No.551/Ahd/2014 is partly accepted. 11. This leaves us with assessee s latter appeal ITA No.552/Ahd/2014 seeking to raise a similar sole substantive ground challenging correctness of allocation of expenses resulting in disallowance/addition of ₹ 60,05,017/-. Both the learned representatives state very fairly that our findings in preceding paragraph dealing with the very issue in former assessment year apply mutatis muntandis herein as well. We accept this substantive ground in same terms. This appeal partly succee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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