9911796707
TMI Blog2025 (4) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... directing the assessing officer to allow depreciation at the rate of 80% on assets such as steel structure, street light, fans, fire fighting equipments etc., of which productive life is very high and without discussing on merit. 3. The Ld. CTI(A)-15, New Delhi has erred in law & on facts in directing the assessing officer to allow depreciation at the rate of 80% on assets without appreciating the fact that while calculating the depreciation on building, cost of land on which building is situated is not used to be included because land does not suffer any depreciation due to wear & tear or its uses. 4. On the facts and in the circumstances of the case, the Ld CIT(A) has erred in deleting the addition of Rs 70.51,63.674/- made by the A.O. without appreciating the fact that the assessee has capitalized expenses such as custom duty, stamp duty, inverter, administrative and other expenses, consultancy charges, fee for term loan, travelling expenses etc., and claimed depreciation @ 80 %as part of Solar Power Generating Systems. 3. Brief facts of the case:- The assessee company is engaged in the business of power generation and infrastructure development and supplies power to Gujara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Module: These represent the MS structures on which the solar power panels are embedded. * Cables: These are used to connect the solar power panels. 3.2. The assessee further submitted that all the components used for setting up the Solar Power Generating System shall be included for the purpose of claim of depreciation at the applicable rate. Further, the assessee filed the details of bills of fixed assets. As per the details of the Bills as tabulated by the Assessing Officer on page 3 to 9 of the assessment order, the Assessing Officer found that the total fixed assets addition amounted to Rs. 15,44,72,437/- only whereas as per the chart of depreciation submitted by the assessee, the total addition under the head 'Renewal Energy Devices/Energy Saving Devices' was Rs. 218,61,05,231/-. The Assessing Officer after perusing the details of the fixed assets, amounting to Rs. 15,44,72,437/- held that out of Rs. 15,44,72,437/- the depreciation on Solar Power Generating System was allowable @ 80% only on the fixed assets amounting to Rs. 1,63,70,847/- only (@ 40% as assets use less than 180 days). He identified the said items at Sr. No.65, 66, 75, 78, 81, 86, 92, 94, 101, 105, 107, 108, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars to be a bonafide error in this line of thought of the Assessing Officer because by this logic even the solar power generation panels go out of the ambit of depreciation @ 80%. 9. From the assessment order it is seen at point 2 in 3.2 that the Assessing officer had questioned the assessee as to how structure for MBSL modules qualifies to be included in the plant and machinery for solar power generation. 10. The above question by the Assessing officer suggests that the Assessing officer had doubted the applicability of the depreciation @ 80% on steel structure for mounting solar photo voltaic module. Let me first focus on whether the above thought of the Assessing officer in regard of steel structure for mounting solar photo voltaic module not being part of power generating system holds good. The counsel of the appellant has explained that these structures are necessary for giving the appropriate direction and tilt to the installed panels. In view of this, I find that such structures are integral part of our generating system. 11. Having decided the above question, I find that there is a mistake, arithmetic or inadvertent, committed by the Assessing Officer in allowing 80% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable income of Rs. 5,468,115/-u/s 115JB of The Income Tax Act. The assessing officer issued a notice under section 142(1)/143(2) of the Act to the appellant along with detailed questionnaire. In the impugned order passed under section 143(3) of the Act the assessing officer has assessed the loss of the appellant at Rs. 110,661,995/- by making the following additions: * Rs. 705,163,674/- on account of disallowance of depreciation. The validity of the addition made by the Ld. assessing officer was challenged before the Hon'ble CIT(A) through various grounds of appeal. The same was allowed in favour of the appellant. Submissions in respect of the grounds of appeal are as follows: Grounds of Appeal No. 1-4 The assessing officer in the impugned assessment order has disallowed a sum of Rs. 705,163,674/- on account of deprecation on the premise that the assets in question do not comprise as Solar Power Generating System and therefore shall be entitled to depreciation @ 15% as opposed to 80% prescribed under The Income Tax Act. At the very outset it is pertinent to point out that the learned assessing officer has passed the order erroneously, even based on his own conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant on 16,370,847/-, but erroneously applied the same to the balance sum of Plant & Machinery. Be as it may, the conclusion drawn by the Ld. assessing officer is completely erroneous and contrary to the provisions laid down under the statute. The rate of deprecation prescribed under The Income Tax is @ 80% in respect of the following assets: III. MACHINERY AND PLANT (1) ...................... (2) ...................... (3) (i).................. (xiii) Renewal energy devices being- (a)................ (b)................ ................. (i) Solar power generating systems The terminology used is Solar power generating systems. The same will include all the components that go into making a system that generates Solar Power. HR sections, structure for MBSL modules, cables etc. as explained supra are some of the various components that go into to setting up a Solar power generating system. An easy test for the same will be by putting up a question "that in the absence of these components, will the Solar power systems be able to function and generate power?". The answer to the same shall be "No". Therefore, these components are an integral part of the Solar p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly to save the expenditure on maintaining a separate exhibition hall for this purpose. It is an undisputed fact that the assessee is frequently doing this decoration and design work and the office of the assessee is used for the purpose of displaying the same to its prospective clients. When the object of the assessee doing this interior design and decoration work in its own office is to exhibit and demonstrate the work of the assessee to its prospective clients, then, merely because the same office is used by the assessee, the designing and decoration work done by the assessee for exhibition purpose cannot partake the character of 'furniture and fittings' of the assessee's office. The work carried our by the assessee is wholly and exclusively for business purposes. Therefore, the same would fall under the category of "plant" and eligible for depreciation applicable for"plant". Accordingly, we find no error or illegality in the order of the CIT(A) and hence the same is upheld. In the instant case too the expenditure incurred on HR sections, structure for MBSL modules, cables etc. has been exclusively for the purpose of setting up the Solar Power plant and would fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt error in allowing depreciation @80% only on Rs. 1,63,70,847/- and @15% on the balance amount of Rs. 216,92,34,384/- (Rs.13,81,01,590/- + Rs. 2,03,16,32,794/-) is not correct. As per the discussion in the assessment order, the AO had given reasons for allowing depreciation @80% only on Rs. 1,63,70,847/- and @15% on the balance amount of Rs. 216,92,34,384/- and there was no arithmetical or inadvertent error as claimed by the assessee and accepted by the ld. CIT(A). However, the AO did not examine the full details of the items claimed by the assessee under the head 'Renewable Energy Devices/Energy Saving Devices' amounting to Rs. 218,61,05,231/- and did not give adequate reasons/finding for the treatment of depreciation made in the assessment order. The assessee's claim that the entire amount of Rs. 218,61,05,231/- constitutes Solar Power Generating Systems requires factual verification vis-à-vis both with respect to capital goods added and as to whether the other expenses under the head custom duty, stamp duty, inverter, custom duty inverter, administrative and other expenses, consultancy charges, syndicate fee for term loan, tour & travelling expenses etc. as listed out in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
