TMI Blog2018 (9) TMI 1868X X X X Extracts X X X X X X X X Extracts X X X X ..... n of goods and thus admissibility of additional depreciation could not be denied to assessee merely on the ground that electricity is not an article or thing. Now coming to the amendment which has been brought-in by the Finance Act 2012 w.e.f. A.Y. 2013-14 whereby the assessee engaged in the business of generation or generation distribution of power have specifically been included and held eligible for claim of additional depreciation. In our view, the said amendment cannot be held to disentitle the assessee to claim of the additional depreciation. Various Coordinate Benches have held that even prior to the amendment brought in by the Finance Act 2012, the assessees engaged in generation or generation and distribution of electricity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed additional depreciation of ₹ 1,11,25,307 on power plant and electric installations. The AO was of the view that plants and machinery are covered under section 32(1)(i) of the Act on which normal depreciation is allowable, hence, additional depreciation is not allowable. The additional depreciation @20% is allowable under section 32 (1) (iia) in respect of plants and machinery acquired and installed after 31.03.2005 and used in manufacturing or production of articles or things. It was contended that that the assessee company was formed as Joint Venture Company (JVC) by four members companies for setting up a Captive Power Plant (CPP). The assessee is a Special Purpose Vehicle for putting up a group Captive Power Plant by 4 Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is engaged in the business of generation of power or generation distribution of power were not eligible for additional depreciation. It was further observed that provision of section 32 (1)(iia) talks about that the assessee engaged in the business of manufacturing and production of an article or thing obviously power generation is not manufacturing and production of an article or thing. Moreover, when specific provision has been made in section 32(1)(i) then there is no need to adopt indirect legislation i.e. Rule 5 (1A) of Income-Tax Rules, 1962. The CIT (A) also observed that the option as per WDV method or Straight Line Method given to the assessee does not mean that the assessee automatically becomes eligible for additional deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has been brought in by the Finance Act,2012 wherein the provisions of section 32 (1)(iia) has been amended to provide for additional depreciation to an assessee engaged in business of generation or generation distribution of powers, the assessee s claim was denied holding that the said amendment is prospective in nature. However, the assessee s case is that as per the second proviso to Rule 5(1)(a) of the IT rules, an undertaking specified in section in 32(1)(i) may instead of claiming depreciation as per Appendix IA (depreciation on actual cost on straight line basis) can exercise its option to claim depreciation as per Appendix-1 (on written down value) and such option has been exercised by the assessee before the due date of furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual cost of such machinery and plant. It further provides that a machinery of plant should be a new machinery or plant (other than ships and aircraft) which has been acquired and installed after the 31st day of March, 2005. It further provides that the additional depreciation in new machinery or plant shall be allowed in the hands of the assessee who is engaged in the business of manufacture or production of any article or thing or in the business of generation or generation distribution of power. In the instant case, it is not in dispute that new machinery or plant has been acquired and installed after the 31st March 2005. It is also not in dispute that the assessee has claimed depreciation u/s 32(1)(ii) of the Act. Once the AO has accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the process of generation of electricity is akin to manufacture of an article or thing, the assessee in the instant case satisfy the requirement that it is engaged in the business of manufacture or production of an article or thing. Now coming to the amendment which has been brought-in by the Finance Act 2012 w.e.f. A.Y. 2013-14whereby the assessee engaged in the business of generation or generation distribution of power have specifically been included and held eligible for claim of additional depreciation. In our view, the said amendment cannot be held to disentitle the assessee to claim of the additional depreciation. Various Coordinate Benches have held that even prior to the amendment brought in by the Finance Act 2012, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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