TMI Blog2017 (8) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... dmills have no connection with the business activity of the assessee is factually incorrect. In view of the fact that Madras, Gujarat and Karnataka High Courts have taken a view that additional depreciation on windmills acquired and installed prior to 31.03.2002 is available under Section 32(1)(iia) of the Act. All that is required for allowing additional depreciation is that the assessee must be engaged in the manufacture or production of any article or thing, and such an assessee would on the setting up of a new machinery or plant would be entitled to additional depreciation on the new plant and or machinery under Section 32(1)(iia) of the Act. There is no requirement in Section 32(1) (iia) of the Act that additional depreciation on the new plant or machinery would be available only if the plant or machinery has some nexus/connection with the article or thing being manufactured by the respondent-assessee. To accept the Revenue's contention would require reading words into Section 32(1)(iia) of the Act which is not permissible. - Decided in favour of assessee - Income Tax Appeal No.21 of 2011, Income Tax Appeal No.22 of 2011 - - - Dated:- 18-7-2017 - M. S. Sanklecha And Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nergy and iron ore manufacturing and processing. 5. The Commissioner of Income Tax was of the view that the order dated 29.12.2008 passed by the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. Therefore, a show cause notice was issued calling upon the respondent to justify its claim for additional depreciation on windmills to the extent of ₹ 2.75 crores under Section 32(1)(iia) of the Act. In response, the respondentassessee pointed that the view taken by the Assessing Officer in his order dated 29.12.2008 was a possible view as allowing additional depreciation on windmills was in line with the decision of the Chennai Bench of the Income Tax Appellate Tribunal in the case of CIT .vs. Hi-Tech Arai Ltd. rendered on 12.12.2008. It was further pointed out that subsequent to the assessment order dated 29.12.2008 the view of the Tribunal in Hi-Tech Arai Ltd. (supra) was upheld by the Madras High Court as reported in CIT .vs. Hi Tech Arai Ltd. - (2010)321 ITR 477. Thus the exercise of jurisdiction under Section 263 of the Act was not called for. In any event, it was also pointed out that on merits it is undisputed that the respondent- assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order also records the fact that the view taken by the Assessing Officer was a possible view even though the Assessing Officer has allowed additional depreciation without making enquiry into the facts. This by relying upon the order of the Apex Court in CIT vs. Max India Limited 295 ITR 482 (SC). 8. For proper appreciation of the controversy, it would be useful to reproduce Section 32(1)(iia) of the Act which at the relevant time reads as under:- Section 32 (1) In respect of depreciation of- (i) buildings, machinery, plant or.............. (ii) ....................... owned, wholly or partly by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed:- (i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed; (ii) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed; Provided ................ (iia) in the case of any new machinery or plant (other than ships and aircraft), which has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article or thing. It is not necessary that the setting up of windmills acquired or installed on or before 31.03.2002 should have any operational connectivity to the article or thing which has already been manufactured by the assessee. 12. In the present case, it is not disputed by the Revenue that the respondent-assessee was engaged in the manufacture/processing of iron ore. Thus the requirements of the Section 32(1)(iia) of the Act are complied with by the respondent- assessee. In spite of being specifically asked, Mr. Parchure, learned counsel appearing for the revenue was not able to distinguish or point out as to why the decisions rendered by the Madras High Court in Hi Tech Arai Ltd. (supra), Karnataka High Court in the Hutti Gold Mines Co. Ltd. (supra) and Gujarat High Court in Diamines and Chemicals Ltd. (supra) should be departed from by us. However, all that Mr. Parchure states is that prior to 2012 the acquisition and installation of a plant for generation of power would not be entitled to the benefit of windmills. This does not appeal to us. In fact the bare reading of the provisions as held by the Madras High Court the only requirement under Section 32(1)(iia) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
