TMI Blog2019 (8) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is that the setting up of new machinery or plant should have been acquired and installed by an assessee, who was already engaged in the business of manufacture or production of any article or thing. In view of the aforesaid, no error not to speak of any error of law could be said to have been committed by the appellate tribunal in passing the impugned order - Decided against revenue. - R/TAX APPEAL NO. 383 of 2019 - - - Dated:- 6-8-2019 - MR J. B. PARDIWALA AND MR A. C. RAO, JJ. For The Appellant (s) : MRS KALPANAK RAVAL (1046) For The Opponent (s) : MS VAIBHAVI K PARIKH (3238) ORAL ORDER ( PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. This tax appeal under Section 260A of the Income Tax Act, 1961 [for short 'the Act, 1961' ] is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Surat Bench, Surat in the ITA No.143/AHD/2016, dated 06/09/2018 for the A.Y 200607. 2. The Revenue has proposed the following substantial question of law for the consideration of this Court: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional depreciation was disallowed on the ground that power/ electricity generated by assessee could not be equated with an article or thing which was being manufacturing in an industrial undertaking, held that if there can be sale and purchase of electric energy like any movable object, then electric energy is covered by the definition of goods and thus admissibility of additional depreciation could not be denied to assessee merely on the ground that electricity is not an article and thing. In view of the said decisions, P M acquired and installed by assessee for generation of electricity is akin to manufacture or production of an article or thing and consequently assessee is entitled for additional depreciation u/s.32(1)(ia) on same. 12. It is now a settled position as held by the Hon'ble Supreme Court and the various Coordinate Benches of the Tribunal that 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 broughtin by the Finance Act 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion: (1) In respect of depreciation of .... ( iia) In the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii). 7. Learned counsel for the assessee has drawn our attention to the judgment of the Karnataka High Court dated 16.09.2014 in ITA No.08/2014 [Commissioner of Income Tax vs. The Hutti Gold Mines Co. Ltd.] wherein the question of additional depreciation was considered and it was held as follows: 3. The material on record shows that the assessee is generating electricity through windmill as a second line of business. It is a product of the assessee company. It is covered under the words article or thing , which is tradable / identifiable. In other words, the electricity falls within the definition of Sale of Goods Act, 1930, and process of generation of electricity is akin to manufacture or production of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and purchase of electrical energy like any other moveable object, this Court held that there was no difficulty in holding that electric energy was intended to be covered by the definition of goods . However, A.N.Grover, J., speaking for threeJudge Bench of this Court went on to observe that electric energy can be transmitted, transferred, delivered, stored, possessed etc. in the same way as any other moveable property . In this observation we agree with Grover. J., on all other characteristics of electric energy except that it can be stored and to the extent that electric energy ‟ can be stored ‟ , the observation must be held to be erroneous or by oversight. The science and technology till this day have not been able to evolve any methodology by which electric energy can be preserved or stored. 9. The Tribunal's judgment in NTPC vs. DCIT [relied upon in the orders of the CIT(A) as well as the Tribunal in the present case] followed this judgment of the Supreme Court to hold that electricity has all the necessary trappings of articles or things and the benefit of additional depreciation cannot be denied. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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