TMI Blog2022 (9) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... rification of the said evidence as categorically stated by him in the remand report. Based on this finding of fact recorded by the AO himself in the remand report CIT(A) allowed the claim of assessee for depreciation on windmill; and, at the time of hearing before us, even the learned DR has not been able to rebut or controvert the finding recorded by the AO - We, therefore, find no justifiable reason to interfere with the order of the CIT(A) allowing the claim of the assessee for depreciation on windmill and upholding the same on this issue, we dismiss the appeal filed by the Revenue. Addition on account of depreciation while computing book profit u/s 115JB - We find that the issue raised by the assessee in Cross Objection is squarely covered in favour of the assessee by the decision of Co-ordinate Bench of this Tribunal in the case of Kansara Popatlal Tribhuvan Metal Pvt. Ltd. [ 2022 (8) TMI 618 - ITAT AHMEDABAD] and respectfully following the same, we delete the addition made by the Assessing Officer and confirmed by the learned CIT(A) on account of depreciation while computing the book profit u/s 115JB. - ITA No. 412/Ahd/2018 & CO No. 17/Ahd/2019 - - - Dated:- 31-8-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricity generation in account of the assessee company has taken place from 01.04.2012 no power generation taken place in F.Y. 2011-12. In the above referred letter of GEDA, at Para-D it was clearly concluded that the power generated by the above referred Wind Mill for the period from 01.04.2011 to 31.03.2012 was for the erstwhile owner namely M/s. Decolight Ceramics Ltd, and thus no generation registered in the name of M/s. Kansara Popatlal Tribhovandas Metal Pvt. Ltd. for the said period. The reply of GEDA is very clearly and conclusive that the assessee company did not put the windmill to use for the purpose of generation of electricity during the period from 01.04.2011 to 31.03.2012. The regulatory authorities have also not recognized any power generation in the name of assessee company during F.Y. 2011-12. The power generation from the windmill was credited in the name of erstwhile owner namely M/s. Decolight Ceramics Ltd. when the assets is not put to use for its business purpose the question of depreciation on the said assets is not arise. f. The assessee company in its reply has stated that GETCO has revised the certificate on 04.02.2013 and the same was internal letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee along with an application seeking admission of the same. The said additional evidence was admitted by the learned CIT(A) and the same was forwarded by him to the Assessing Officer for verification along with written submission filed by the assessee. After verification, the Assessing Officer submitted his remand report vide letter dated 24.11.2016 to the learned CIT(A) offering his comments as under:- In this case case, the assessment for A.Y. 2012-13 was completed on 20/03/2015 u/s. 143(3) of the I.T. Act and depreciation on windmill turbine of Rs.1,68,42,000/- claimed u/s. 32 of the I.T. Act was disallowed. The facts of the case are as under:- (a) The assessee company purchased one Suzlon Make 1250 KW wind electric generator bearing WEG No.M-15 with infrastructure and transmission rights from M/s. India Windpower Limited for consideration of Rs.4,21,05,000/- on 14/03/2012. The windmill was situated at Survey No. 114, Village Kandoli, Ta - Abdasa, Disi. Kutch. M/s. Decolight Ceramic Lid. has given the said windmill to M/s. India Windpower Ltd. which was later sold out to the assessee company. The company has claimed that the electricity production / gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings, indicate that the assessee company has put to use the windmill turbine on 31/03/2012. Particularly, the letter of The Dy. Director of GEDA, Shri S. B. Patil dated 25/10/2016, wherein, he has accepted to assessee's view point and held that M/s. Kansara Popatlal Tribhovandas Metal Pvt. Ltd. is eligible for credit of units on 31/03/2012, negates his earlier letter dated 26/02/2015 of the Dy. Director of GEDA, Shri S.B. Patil and certificate of Chief Engineer (Op), UGVCL, Mehsana, letter dated 03/07/2012. Now, with these additional evidences, it appears that the company has started wind farm power generation on 31/03/2012. 4.1 After taking into consideration the submission made by the assessee as well as the material available on record including especially the remand report submitted by the Assessing Officer, the learned CIT(A) allowed the claim of the assessee for depreciation on windmill vide paragraph No. 2.4 of his impugned order which reads as under:- 2.4 I have carefully considered the details filed by the appellant, the report of the A.O. and the counter comments filed by the appellant. Certain evidences could not be produced by the appellant before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l filed by the Revenue. 7. In the Cross Objection, the assessee has raised the solitary issue relating to the addition of Rs.1,82,82,237/- made by the Assessing Officer and confirmed by the learned CIT(A) on account of depreciation while computing book profit under Section 115JB of the Act by way of following grounds:- 1. The C.I.T. (Appeals) erred in law and on facts in confirming the enhancement of book profit by the amount of Rs.1,82,82,237/- being the alleged excessive claim of depreciation without appreciating the facts of the case properly. 2. The C.I.T. (Appeals) erred in law in placing reliance on the order of Hon ble Supreme Court in case of Dynamic Orthopedics Pvt. Ltd. Vs. CIT reported in 321 ITR 300, wherein Hon ble Supreme Court has only referred the matter to the larger bench by disagreeing with the earlier judgment of Hon ble Supreme Court in case of Malayala Manorama Co. Ltd. Vs. CIT, reported in 300 ITR 251. 8. While computing book profit under Section 115JB of the Act, the assessee-company had claimed depreciation on windmill at the rate prescribed in the Income-tax Act. According to the Assessing Officer, depreciation as per the Companies Act wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok profit, as defined in the Explanation, the total income of the company, chargeable to tax, shall be deemed to be an amount equal to thirty per cent of such book profit. The whole purpose of Section 115J of the Act, therefore, was to take care of the phenomenon of prosperous `zero tax' Companies not paying taxes though they continued to earn profits and declare dividends. Therefore, a Minimum Alternate Tax was sought to be imposed on `zero tax' Companies. Section 115J of the Act imposes tax on a deemed income. Section 115J of the Act is a special provision relating only to certain Companies. The said section does not make any distinction between public and private limited companies. In our view, Section 115J of the Act legislatively only incorporates provisions of Parts II and III of Schedule VI to 1956 Act. Such incorporation is by a deeming fiction. Hence, we need to read Section 115J(1A) of the Act in the strict sense. If we so read, it is clear that, by legislative incorporation, only Parts II and III of Schedule VI to 1956 Act have been incorporated legislatively into Section 115J of the Act. Therefore, the question of applicability of Parts II and III of Schedule VI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Supreme Court in the case of State of Maharashtra Vs. Sarva Shramik Sangh, [2013] 16 SCC 16, he contended that the decision of Hon ble Supreme Court in the case of Malayala Manorama Co. Ltd. (supra) is required to be followed until it is overruled since the proposition therein continues to hold good. He has contended that that the learned CIT(A) thus was not justified in deciding the issue under consideration against the assessee by relying on the decision of Hon ble Supreme Court in the case of Dynamic Orthopedics P. Ltd. (supra) and he ought to have decided the issue in favour of the assessee by following the decision of Hon ble Supreme Court in the case of Malayala Manorama Co. Ltd. (supra) since the same was not overruled and the proposition therein continued to hold good. He has also cited the decision of a Co-ordinate Bench of this Tribunal in the case of Kansara Popatlal Tribhuvan Metal Pvt. Ltd. Vs. PCIT, rendered by its order dated 22.07.2022 passed in ITA No. 1057/Ahd/2015, wherein a similar issue was decided by the Tribunal in favour of the assessee inter alia by relying on the order of the Hon ble Supreme Court in the case of Malayala Manorama Co. Ltd. (supra) v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a bona fide technological evaluation and proper disclosure is to be made by way of a note forming part of annual accounts. The Tribunal further held that, in instant case, proper disclosure was made by way of a note to annual statement of accounts and rates claimed on basis of income-tax records were based on bona fide information of Board of Directors as contained in aforesaid minutes of meeting of Board of Directors. In appeal, the High Court held that the Tribunal was right in holding that depreciation worked out by assessee on basis of income- tax records and debited to profit and loss account was not violative of provisions of Companies Act and ITAT has not erred in cancelling order passed by Commissioner under section 263 of the Act. Again, in the case of CIT Ludhiana v. Sona Woollen Mills (P.) Ltd. 2007] 160 Taxman 22 (Punjab Haryana), assessee claimed depreciation as per provisions of income tax Act for computing quantum of income under section 115J. The Assessing Officer rejected claim of assessee on ground that depreciation for purposes of section 115J was permissible as per Schedule XIV of Companies Act. The Commissioner (Appeals) allowed claim of assessee holding t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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