TMI Blog2020 (5) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... gly claimed and allowed in the original assessment proceedings without examination is clearly a case of excess claim of depreciation and jurisdiction has been rightly invoked by the AO u/s 147. Disallowance of additional depreciation - HELD THAT:- In respect of claim of additional depreciation on energy saving devices which have been acquired and installed during the year, there cannot be any dispute as the same is clearly allowable under section 32(i)(iia) and the amendment brought in by the Finance Act, 2012 doesn t in any manner impact such a claim of the assessee and thus, the disallowance so made of additional depreciation is hereby directed to be deleted. In respect of additional depreciation on windmills in respect of which the assessee has made additions under the head wind mills at wind power generation unit , we find that the assessee is engaged in the business of manufacturing and sale of textiles (yarn fabrics) and generation and supply of power and satisfies the necessary condition for claim of additional depreciation as prescribed under section 32(1)(iia) and such windmills have been acquired and installed in the financial year relevant to impunged assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wind power generation unit in the depreciation chart and claimed additional depreciation of 20% (10% for less than 180 days) thereupon. Total depreciation claimed to the tune of ₹ 26,27,86,306/- (i.e. of 80% + of 20%=50%). The assessee was allowed additional depreciation of ₹ 5,37,14,642/- on new machinery. On going through the provisions of clause (iia) of sub-section (1) of section 32, it is found that additional depreciation on new machinery and plant used in the business of generation or generation and distribution of power is allowable w.e.f. 01.04.2013. However, in this case tax was paid u/s 115JB. Even after considering this disallowance, tax would be payable u/s 115JB. Hence, the income of ₹ 5,37,17,642/- has escaped from assessment. In view of the above facts, I have reasons to believe that income to the tune of ₹ 5,37,17,642/- has escaped assessment within the meaning of provisions of section 147 of the IT Act, 1961 for the Asstt. Year 2012-13. The escapement was on account of failure on the part of the assessee to disclose all material facts . 3. Against the notice issued u/s 148, the assessee filed objection vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015) 127 DTR 161 (Del.) 6. It was further submitted that the Ld. CIT(A) has confirmed the validity of reopening of reassessment by referring to clause (c) of Explanation 2 to section 147 according to which computation of excessive depreciation allowance is deemed to be a case where income chargeable to tax has escaped assessment. However, in the present case, the additional depreciation allowed by the AO on power generating unit though specifically included in section 32(1)(iia) w.e.f. 01.04.2013 but even before this insertion, it was held allowable in various judgment pronounced by the various High Courts. Therefore, it is not a case covered under clause (c) of Explanation 2 to section 147. In view of above, assessment framed by the AO u/s 147 is illegal and bad in law and the same be quashed. 7. On the contrary, the ld. DR supported the orders of the authorities below. It was submitted that the AO had specific information in his possession that additional depreciation of ₹ 5,37,17,642/- not admissible to the assessee was claimed by the assessee as deduction and allowed by the AO. Therefore, the AO had sufficient material with him to form the belief that income pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on details of Fixed Assets on which additional depreciation of ₹ 19,09,306 is claimed and calculation thereof . In response, the assessee company has submitted as under: The assessee has the honour to submit that the additional depreciation of ₹ 19,09,306/- is pertaining to the fixed assets in the nature of New Plant Machinery acquired and installed in the previous year 2010-11 and used for less than 180 days in that year, and therefore, only 50% of the allowable additional depreciation (20%) under section 32(1)(iia) was claimed in that year equivalent to ₹ 19,09,306/-. Therefore, the balance 50% (i.e 10% of the cost of the Plant Machinery acquired and installed and used for less than 180 days in the previous year 2010-11) of the allowable additional depreciation equal to ₹ 19,09,306/- is claimed in the previous year 2011-12 (Assessment Year 2012-13). Copy of relevant Annexure-C to Form 3CD of the Tax Audit Report for the assessment year 2012-13 and assessment year 2011-12 are enclosed herewith and collectively marked as Annexure-4. It is submitted that the total additions to the Plant Machinery used for less than 180 days (15% Block) as per An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the reasons so recorded by the Assessing officer, he has stated that by virtue of amendment brought-in by the Finance Act, 2012, the claim of additional depreciation u/s 32(1)(iia) is allowable w.e.f 1.04.2013 relevant to assessment year 2013-14 which ex-facie suggest that such claim has been wrongly claimed and allowed in the original assessment proceedings without examination is clearly a case of excess claim of depreciation and jurisdiction has been rightly invoked by the Assessing officer u/s 147 of the Act. In the result, ground no. 1 and 2 of the assessee s appeal is dismissed. 14. In Ground No. 3, the assessee has challenged the disallowance of additional depreciation on merits. In this regard, briefly stated, the facts of the case are that during the year under consideration, assessee made additions amounting to ₹ 52,55,72,612/- under the head wind mills at wind power generation unit ₹ 1,16,03,810/- under the head energy saving equipments at textile unit and claimed additional depreciation of 10% (being less than 180 days), i.e. ₹ 5,37,17,642/-. The AO observed that in view of the provision of sec. 32(1)(iia), the claim of additional depre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional depreciation on the same assets u/s 32(1)(iia). It was further submitted that the said decision of the Coordinate Bench has since been affirmed by the Hon ble Rajasthan High Court in case of Pr. CIT, Kota vs M/s Mangalam Cement Ltd (DB Appeal No. 211/2017 213/2017 dated 4.09.2017) wherein the Hon ble High Court has held that we are in complete agreement with the view taken by the Tribunal. No substantial question of law arises. Further, reliance in this connection was placed on following cases:- PCIT Vs. NTPC Sail Power Co. (P) Ltd. (2019) 178 DTR 53 (Del.) Principal CIT Vs. Kanishk Steel Industries (2016) 96 CCH 0292 (Mad.) CIT Vs. Diamines Chemicals Ltd. (2014) 109 DTR 62 (Guj.) JCIT Vs. Mineral Enterprises Ltd. (2013) 144 ITD 680 (Bang.) CIT Vs. VTM Ltd. (2009) 319 ITR 336 (Mad.) Giriraj Enterprises Vs. DCIT (2017) 149 DTR 95 (Pune) Sanwaria Agroils Ltd. Vs. ACIT (2017) 165 ITD 604 (Indore) 17. It was further submitted that the expression article or thing used in section 32(1)(iia) is not defined in the IT Act, 1961. Supreme Court in case of State of Andhra Pradesh vs. NTPC Ltd. 5 SSC 203 held that electricity is good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of claim of additional depreciation of ₹ 11,60,381/- on energy saving devices of ₹ 1,16,03,810/- which have been acquired and installed during the year, there cannot be any dispute as the same is clearly allowable under section 32(i)(iia) of the Act and the amendment brought in by the Finance Act, 2012 doesn t in any manner impact such a claim of the assessee and thus, the disallowance so made of additional depreciation is hereby directed to be deleted. 22. In respect of additional depreciation of ₹ 5,25,57,261/- on windmills in respect of which the assessee has made additions amounting to ₹ 52,55,72,612/- under the head wind mills at wind power generation unit , we find that the assessee is engaged in the business of manufacturing and sale of textiles (yarn fabrics) and generation and supply of power and satisfies the necessary condition for claim of additional depreciation as prescribed under section 32(1)(iia) of the Act and such windmills have been acquired and installed in the financial year relevant to impunged assessment year 2012-13 much after 31.03.2005. Further, we find that the assessee s case is squarely covered by the decision of the Coor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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 accepted the assessee's claim u/s 32(1)(ii) of the Act, we do not see a reason why the assessee should be denied the claim of additional depreciation on the same assets u/s 32(1)(iia) of the Act. 16.8 It is now a settled position as held by the Hon'ble Supreme Court and the various Co-ordinate 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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