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TMI Blog2022 (9) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... rk & generation of power for own use through windmill turbine. Return of income for the year under consideration was filed by it on 25.09.2012 declaring a total income of Rs.26,72,110/-. The said return was selected for scrutiny and a notice under Section 143(2) of the Income-tax Act, 1961 ["the Act" in short] was issued by the Assessing Officer to the assessee on 06.08.2013. In the return of income, depreciation of Rs.1,68,42,000/- was claimed by the assessee on windmill stated to be purchased and put to use after 01.10.2011. During the course of assessment proceedings, this claim of the assessee was verified by the Assessing Officer and after obtaining the required details as well as making necessary inquiries, the Assessing Officer disallowed the claim of the assessee for depreciation on windmill for the following reasons given in the assessment order:- "In view of the above discussion and on the basis of reply received from GEDA, perusal of copy of letter GEDA dated 31.03.2012 address to M/s Decolight Ceramics Ltd., copy of letter of UGVCL dated 03.07.2012, copy of letter of GETCO dated 04.02.2013 showing sharing of power generation only in the name of M/s Decolight Ceramics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually claimed depredation on new windmill at Rs. 1,68,42,000/-. During the period under consideration the assessee company has claimed depreciation on windmill at Rs. 1,82,02,800/-. Out of it the depreciation on old windmill was of Rs. 13,60,800/- and depreciation of Rs. 1,68,42,000/-was claimed against re-purchase of windmill during the period under consideration. But, in view of the discussion made in para-3.4, it comes out that the windmill purchased during F.Y. 2011-12 was put to use during F.Y. 2011-12 and has started its power generation (electricity) for the Assessee company from 01.04.2012. It can be verified from the wheeling agreement dated 31.03.2012 and also from the letter of UGVCL dated 03.07.2012. As the credit of electricity generated from the said windmill was given to the assessee company from 01.04.2012, it concluded that the assets (windmill) put to use after 31.03.2012 and was not used in FY 2011-12. Accordingly, the assessee company is not entitled to claim depreciation u/s 32 of the Act. Therefore, the depreciation of Rs.1,68,42,000/- claimed by the assessee company for F.Y. 2011-12 relevant to A.Y. 2012-13 is disallowed." 4. The disallowance of Rs.1,68,42, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part B of the certificate and at sr. no. 24 of the certificate the sharing of electricity was shown in name of the assessee company also. Accordingly the company has claimed depreciation @ 40% of Rs.1,68,42,000/-. Further, in support of its claim of production and put to use of windmill before 31/03/2012, the assessee company has also submitted a wheeling agreement dated 21/03/2012, which was executed between the Assessee Company and GETCO, Vadodara. (b) Thereafter, during the assessment proceedings, the Assessing Officer issued notice u/s 133(6) of the Act to the GEDA (Gujarat Energy Development Agency). In response, the Dy. Director of GEDA, Shri S. B. Patil vide letter dated 26/02/2015 informed that (which relied on the Chief Engineer (Op) UGVCL, Mehsana, letter dated 03/07/2012) for the period of 01/04/2011 to 31/03/2012, no power generation is registered in the name of M/s. Kansara Popatial Tribhovandas Metal Pvt. Ltd. Accordingly the Assessing Officer disallowed the depreciation claimed on windmill turbine, as the windmill was not put to use within the period. 3. Thereafter, during the course of appellate proceedings, the assessee company has filed additional evidences to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee of having put to use the windmill turbine on 31.03.2012 was found to be correct by the Assessing Officer on verification of the additional evidence filed by the assessee. As categorically stated by the Assessing Officer in the remand report, the additional evidence filed by the assessee including especially the letter dated 25.10.2016 issued by the Deputy Director of GEDA was sufficient to establish that the assessee-company having put to use the windmill turbine on 31.03.2012 was eligible for credit of units on that date. The claim of the assessee of having put to use the windmill turbine on 31.03.2012 and having started the wind farm power generation on 31.03.2012 thus was duly established on the basis of relevant evidence and the same was accepted even by the Assessing Officer on verification of the said evidence as categorically stated by him in the remand report. Based on this finding of fact recorded by the Assessing Officer himself in the remand report, learned 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 Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer on this issue vide paragraph Nos.4.3 and 4.4 of his impugned order which reads as under:- "4.3. I have carefully considered the facts of the case, assessment order and submission of the appellant. The appellant while computing the book profit for the MAT purpose has claimed depreciation on wind mill as per Income Tax Act instead of Company Act. The appellant has relied upon the decision of Honourable Apex Court in the case of Malayala Manorama Co. Ltd. Vs CIT reported in 300 ITR 251 (SC) in this regard. Appellant's contention is not acceptable as Honourable Supreme Court in the case of Dynamic Orthopedics P. Ltd. Vs. CIT, Cochin [231 ITR 300] (SC) had occasion to examine the above issue and held as under:- "5. In our view, with respect, the judgement of this Court in Malayala Manorama Company Limited vs. Commissioner of Income Tax, reported in [2008] 300 I.T.R. 251 needs re-consideration for the following reasons: Chapter XII-B of the Act containing "Special provisions relating to certain Companies" was introduced in the Income Tax Act, 1961, by the Finance Act, 1987, with effect from 1st April, 1988. In fact, Section 115J replaced Section 80VVA of the Act. Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent from the rates specified in Schedule XIV of 1956 Act. In fact, by the Companies (Amendment) Act, 1988, the linkage between the two has been expressly de-linked. Hence, what is incorporated in Section 115J is only Schedule VI and not Section 205 or Section 350 or Section 355. This was the view of the Kerala High Court in the case of Commissioner of Income Tax vs. Malayala Manorama Company Limited, reported in [2002] 253 I.T.R. 378 (Kerala), which has been wrongly reversed by this Court in the case of Malayala Manorama Company Limited (supra)." 4.4 In view of the above, AO was justified to compute book profit on the basis of Company Act. The ground of appeal is accordingly dismissed." 10. Aggrieved by the order of the learned CIT(A) on this issue, the assessee has preferred this cross-objection before the Tribunal. 11. We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. As submitted by the learned Counsel for the assessee, even though the Hon'ble Supreme Court in the case of Dynamic Orthopedics Pvt. Ltd. Vs. CIT, [2010] 321 ITR 300 (SC), did not agree with its earlier judgment in the case of Malayala Manora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e profits of the assessee under section 115J by substituting the rates of depreciation prescribed in Schedule XIV of the Companies act, 1956. In appeal, the Supreme Court held that where assessee was consistently charging depreciation in its books of account at rates prescribed in Income-tax Rules and accounts of assessee had been prepared and certified as per provisions of 1956 Act, Assessing Officer would not have any jurisdiction under section 115J to rework net profits of assessee by substituting rates of depreciation prescribed in Schedule XIV to 1956 Act. We further note that the jurisdictional Gujarat High Court in the case of DCIT v. Vardhman Fabrics (P.) Ltd. [2002] 122 Taxman 375 (Gujarat) has also adjudicated on this issue in favour of the assessee. The brief facts of the case were that assessee calculated depreciation on plant and machinery at 33.33 per cent as permissible under the Income-tax Rules, 1962 as against 30 per cent depreciation required to be calculated under Schedule XIV of the Companies Act. The Commissioner, acting under section 263, held that rate of depreciation claimed was in excess of the rate under the Companies Act and that excess was to be disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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