TMI Blog2017 (12) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... the depreciation at 15% except in the case of 12.35 KVA turbine as per the details given - Held that:- The assessee is entitled for a higher rate of depreciation in the case of RCC Chimney, Bagasee Drier, DC Drier, Steam piping, Coal and gas feeding system and coal handling systems. In the case of sub station tower line, the expenditure required to be treated as revenue expenditure. Accordingly we direct the AO to allow higher rate of depreciation on the items mentioned above and in the case of substation tower line to allow the same as revenue expenditure. The appeal of the assessee in Ground Nos. 3 and 4 are allowed. - I.T.A. No. 577/VIZ/2014 - - - Dated:- 20-12-2017 - Shri V. Durga Rao, Judicial Member And Shri D. S. Sunder Singh, Accountant Member Appellant by : Shri G. V. N. Hari, AR Respondent by : Smt. R. M. Madhavi, DR ORDER Per D. S. Sunder Singh, Accountant Member 1. This appeal is filed by the assessee against the order of the Commissioner of Income-Tax (Appeals) [CIT(A)], Visakhapatnam vide order No.0128/2013-14/AC C-1,KKD/2014-15 dated 14.08.2014 for the A.Y. 2010-11. 2. Ground No.1 and 5 are general in nature which does not require specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of section 2(28A) of IT Act. The assessee has not paid the interest on monies borrowed for the purpose of business. The purpose of introducing the Section 43B to allow the deduction on actual payment is to ensure the compliance. In the instant case the assessee failed to make the payment of purchase tax and paid the interest thereon which takes the character of tax but not the interest. Therefore, the interest payable on purchase tax is hit by section 43B of I.T.Act and required to be allowed on actual payment basis. Hence, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. The appeal of the assessee on this ground is dismissed. 6. Ground No.3 is related to the depreciation on co-generation plant. During the assessment proceedings, the AO found that the assessee had claimed the depreciation @ 80% and co generation power plant including pheripheral assets except on turbine as under :- Sl.No. Nameofthe asset Dateput touse Costof asset Rateof Depn.claimed Rateof eligible depn. Depreciaiton claimed Depr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in assessee s own case for the assessment year 2009-10 in ITA No.367/Viz/2013 dated 19.12.2014. In the appeal cited supra, the coordinate bench allowed higher rate of depreciation on the following items : (i) RCC Chimney (ii) Bagasse drier (iii) D.C.Drier (iv) 12.35 KVA turbine (v) Stam piping (vi) Coal gas feeding system (vii) Coal handling system (viii) Sub-station tower line In the case of sub station tower line, the Hon ble ITAT allowed the same as revenue expenditure. For the sake of convenience and clarity, we extract relevant part of the order of the Tribunal which reads as under: 16. Both parties agreed that the assessee is entitled for higher depreciation for cogeneration system. The only issue is whether particular equipment is part of cogeneration system or not. Before we give our findings on each and every item, we briefly touch upon the facts of this issue. The assessee company is in the business of manufacturing of sugar for which purpose, it requires steam. The assessee company was having some boilers which were serving the purposes of its business. During the financial year 2006-07, the assessee company decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in our opinion on that account, it cannot be said that electrical machinery in Cl. E should be read as excluding from its scope overhead cables and wires. The use of the expression electric plant, machinery, boilers in Cl. E appears to have been made in a comprehensive sense so as to include parts of the plant as well as electric machinery . 20. The Hon'ble Delhi High Court in the case of BSES Yamuna Powers Limited (supra) heldas follows: We are in agreement with the view of the Tribunal that computer accessories and peripherals such as printers, scanners and server etc form an integral part of the computer system. In fact, the computer accessories and peripherals cannot be used without the computer. Consequently, as they are the part of the computer system, they are entitled to depreciation at the higher rate of 60 %. 20.1. In this case, the computer system by itself can be used as a standalone basis which is like boiler in the case of the assessee. But this does not mean that accessories and peripherals are not entitled to higher depreciation. The reasons given by the Hon'ble Court is that these peripherals and accessories cannot be used withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply system was part and parcel of the boiler and held that the entire coal handling system is entitled to 100% depreciation. The Id CIT(A) disputed these findings of the Hon'ble M.P. High Court. We do not find much substance in the observations of the Id CIT(A) and hence we do not approve the same. 23. In the case of Andhra Organics vs Addl. CIT, 40 CCH 038(Hyd)(Trib), it was held thatthe claim of the assessee that it has commenced trial production in the absence of control panel cannot be accepted. The AO's findings in that case was that on search of internet, he found that the asset is a 3MW cogeneration captive power plant consisting of coal fired boiler with efficiency of 80% and turbines. The AO further was of the view that the boiler and turbine are not two different assets but part of cogeneration plant. He further found that the control panel for turbine was put to use only on 6.10.2008. Therefore, it was held that unless the entire system becomes functional, depreciation cannot be allowed on the individual items. These factual findings have been relied upon by Id counsel for the assessee. 24. In the case of IDC of Orissa Ltd., (supra), the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal came to a conclusion that certain assets like air pollution control equipment and water pollution control equipment, etc do not qualify as pollution control equipment. This is a factual issue and has no relevance to the case at hand. 28. In the light of the above legal position, we now consider the contention of the assessee that the higher efficiency boiler and 12.65 KVA turbine have to be considered together along with other equipments necessary for generation of power, as the integrated cogeneration system. In our view, there cannot be two opinions that high efficiency boiler along with turbine and the associated equipments connecting them, increasing its efficiency etc., are to be considered as part of cogeneration system and are therefore eligible for higher depreciation allowance. 29. The Id CIT(A) observed that RCC Chimney and Bagasse Drier are part of the higherefficiency boiler. This factual finding is not disputed before us by the revenue. Thus, both these items have to be considered as integral part of the cogeneration system. The very expression 'cogeneration' refers to simultaneous generation of two forms of power i.e. heat and electricity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Both the parties agreed that this is legal claim and that the facts are on record. Under these circumstances, we hold that the Id CIT(A) should have admitted this additional ground of the assessee and adjudicated the same following the decision of Hon'ble Supreme Court in the case of NTPC Ltd., (supra). 35. Coming to allowability of this claim, the Hon'ble Rajasthan High Court in the case of CITvs. Hindustan Zinc Ltd., (2009) 221 CTR (Raj) 637 considered the following question No.2 and answer as follows: Coming to the question No.2, it is to be noticed that the power line had been erected by the assessee for facilitating routine operations and smooth functioning of the business of the assessee. It is not disputed before us that the power line remains the property of the electricity board and the assessee had not acquired any capital asset or any enduring benefit or advantage. Therefore, for the parity of the reasons assigned by us in deciding question No. 1,, against the revenue and in favour of the assessee, the question No.2 also deserves to be decided against the revenue and in favour of the assessee. 36. Consistent with the view taken therein, we dire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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