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Income Tax Appellate Tribunal, JODHPUR BENCH ‘DB’, JODHPUR
Before: SHRI SAKTIJIT DEY, VICE- & DR. BRR KUMAR
IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH ‘DB’, JODHPUR BEFORE SHRI SAKTIJIT DEY, VICE-PRESIDENT AND DR. BRR KUMAR, ACCOUNTANT MEMBER
ITA No. 593/Jodh/2014 Assessment Years: 2010-11 ACIT, Circle-2, Versus M/s. Tirupati Microtech P. Ltd. Udaipur. 1604/1610, Village Thoor, Udaipur. PAN: AAACT5483D (Appellant) (Respondent)
ITA No. 252/Jodh/2016 Assessment Year: 2011-12 ACIT, Circle-2, Versus M/s. Tirupati Microtech P. Ltd. Udaipur. 1604/1610, Village Thoor, Udaipur. PAN: AANPN5358H Appellant) (Respondent)
ITA No. 16/Jodh/2017 Assessment Year: 2012-13 ACIT, Circle-2, Versus M/s. Tirupati Microtech P. Ltd. Udaipur. 1604/1610, Village Thoor, Udaipur. PAN: AAACT5483D Appellant) (Respondent)
2 ITA Nos. 593/Jodh/14, 252/Jodh/16, 16/Jodh/17, 264/Jodyh/16 and 23/Jodh/2017
ITA Nos. 264/Jodh/2016 & 23/Jodh/2017 Assessment Years: 2011-12 & 2012-13 (Through Virtual Mode) M/s. Tirupati Microtech P. Ltd. Versus ACIT, Circle-2, C/o G.S. Punjawat & Co., Udaipur. Chartered Accountants, 149, Bada Bazar, Udaipur. PAN : AANPN5358H (Appellant) (Respondent)
Assessee by : Sh. Rakesh Lodha, C.A. Revenue by : Ms. Meenakshi Vohra, CIT-DR
Date of hearing : 21.09.2023 Date of pronouncement: 06.10.2023
ORDER Captioned appeals by the Revenue and assessee arise out of
separate orders of learned Commissioner of Income-tax (Appeals)-
Udaipur pertaining to assessment years 2010-11, 2011-12 and 2012- 13.
Since, the issues involved in these appeals are more or less
identical, all these appeals were heard together and are disposed of by a consolidated order, for the sake of convenience.
ITA No. 593/Jodh/2014( Revenue’s appeal for A.Y. 2010-11):
3 ITA Nos. 593/Jodh/14, 252/Jodh/16, 16/Jodh/17, 264/Jodyh/16 and 23/Jodh/2017
In ground No.1, Revenue has challenged the decision of learned
first appellate authority in allowing deduction claimed under section
80IB of the Income-tax Act, 1961.
Briefly, the facts relating to this issue are, the assessee is a
resident corporate entity, stated to be engaged in the activity of
purchase of zircon sand, its grinding//crushing and sale. As stated by
the Assessing Officer, zircon sand is supplied to the assessee by M/s.
Indian Rare Earths Ltd., Chavara (Kerala). For the aforesaid activity,
the assessee has set up two units – first one at Udaipur and the
second one in Pondicherry. In so far as the Udaipur Unit is concerned,
the initial year of claiming deduction under section 80IB of the Act was
assessment year 1997-98 and the period of 10 year during which the
assessee can claim deduction, ended in assessment year 2006-07.
Whereas, the Pondicherry unit was set up in assessment year 2003-04
and initial assessment year, in which the assessee claimed deduction
under section 80IB of the Act was assessment year 2003-04 and
thereafter, the assessee continued to claim deduction under the said
provision and assessee’s claim was accepted till assessment year
2009-10. However, in the impugned assessment year, the Assessing
4 ITA Nos. 593/Jodh/14, 252/Jodh/16, 16/Jodh/17, 264/Jodyh/16 and 23/Jodh/2017
Officer rejected assessee’s claim of deduction on the reasoning that
the activity carried out by the assessee does not amount to
manufacturing of products. Against the aforesaid decision of the
Assessing Officer, the assessee preferred appeal before learned first
appellate authority. Having taken note of the fact that identical nature
of dispute was decided in favour of the assessee in the preceding
assessment years, learned Commissioner (Appeals) allowed
assessee’s claim of deduction under section 80IB of the Act.
At the time of hearing, learned counsel appearing for the
assessee submitted that the issue is squarely covered by the decisions
of Tribunal and the Hon’ble jurisdictional High Court in assesee’s own
case.
Learned Departmental Representative, though, agreed with the
aforesaid submission of the assessee, however, she relied upon the
observations of the Assessing Officer.
Having considered rival submissions, we find, this is a recurring
dispute between the assessee and the Revenue from earlier
assessment years and the issue has been decided in favour of the
assessee by the Tribunal as well as Hon’ble jurisdictional High Court.
5 ITA Nos. 593/Jodh/14, 252/Jodh/16, 16/Jodh/17, 264/Jodyh/16 and 23/Jodh/2017
In fact, while deciding a bunch of appeals filed by the Revenue in
assessee’s own case in preceding assessment years, Hon’ble
jurisdictional High Court in judgment dated 24.01.2018 delivered in ITA
No. 20/2013 and others, has dismissed the appeals of the Revenue by
stating that no substantial question of law arises. Thus, respectfully
following the decision of the Tribunal and Hon’ble jurisdictional High
Court, we uphold the decision of learned first appellate authority on the
issue by dismissing the grounds raised.
In ground No.2, the Revenue has challenged the deletion of
disallowance of deduction claimed towards belated payment of
employees’ contribution to Provident Fund (PF) and Employees State
Insurance (ESI) amounting to Rs.41,165/-.
At the time of hearing, learned counsel appearing for the
assessee fairly conceded that now the issue stands squarely covered
by the decision of the Hon’ble Supreme Court in case of Checkmate
Services P. Ltd. vs. CIT, 448 ITR 518 (SC), hence, has to be decided
against the assessee.
Having considered the submissions of the parties, we are of the
view that the issue is no more res integra in view of the decision of
6 ITA Nos. 593/Jodh/14, 252/Jodh/16, 16/Jodh/17, 264/Jodyh/16 and 23/Jodh/2017
Hon’ble Supreme Court in case of Checkmate Services P. Ltd. vs. CIT
(supra). Accordingly, we reverse the decision of learned Commissioner
(Appeals) on the issue and restore the disallowance made by the
Assessing Officer.
In ground No. 3, the Revenue has challenged disallowance of
depreciation claimed in respect of wind mill and accessories at higher
rate of 80%.
Briefly, the facts are, in course of assessment proceedings, while
examining assessee’s claim of depreciation on various assets, the
Assessing Officer observed that it has claimed depreciation at the
maximum rate of 80% in respect of evacuation charges, foundation
work, transformers and installation of electrical items. After verifying
the details, the Assessing Officer observed that evacuation charges
were paid to M/s. Suzlon Power Infrastructure Ltd. for evacuation
facilities and infrastructure created by it and the charges are non-
refundable. On verifying the invoice, the Assessing Officer observed
that the assessee has not acquired any asset by paying these charges.
Hence, he held that the payment made on evacuation charges cannot
be treated as part of assets related to wind mill and any specially
7 ITA Nos. 593/Jodh/14, 252/Jodh/16, 16/Jodh/17, 264/Jodyh/16 and 23/Jodh/2017
designed devices which run on wind mills. He held that depreciation
claimed on investment made in foundation and transformer plinth at
the maximum rate is not allowable, as they are in the nature of civil
construction, hence, do not qualify for depreciation as plant and
machinery. As regards depreciation claimed on electrical items and
cost of installation, the Assessing Officer held that they are not parts of
wind mills, hence, not eligible for higher rate of depreciation. While
deciding the issue in appeal, learned Commissioner (Appeals) allowed
assessee’s claim of higher depreciation in respect of aforesaid items/assets by treating them as part of asset related to wind mill.
We have considered rival submissions and various materials on
record. In so far as evacuation charge is concerned, the investment
has to be made for installation of the wind mill and transmitting
power/electricity generated by the wind mill to the location. Thus, as
rightly held by learned first appellate authority, it is an integral part of
the wind mill. That being the case, depreciation at higher rate of 80% is
allowable.
In so far as foundation work is concerned, it is quite obvious, a
strong foundation is required for installing heavy machinery in wind
8 ITA Nos. 593/Jodh/14, 252/Jodh/16, 16/Jodh/17, 264/Jodyh/16 and 23/Jodh/2017
mill. That being the case, it has to be treated as part of wind mill and
depreciation at higher rate of 80% is admissible. The judicial
precedents cited by learned counsel support this view. Accordingly, we
uphold the decision of learned first appellate authority on this issue.
Similarly, investment made towards electrical items, components
installation, such as electrical lines, have to be considered as part of
wind mill, hence, depreciation at higher rate is admissible. The judicial
precedents cited by learned counsel for the assessee support this
view. Accordingly, we uphold the decision of learned first appellate
authority on the issue. Ground raised is dismissed.
In ground No. 4, the Revenue has challenged allowance of
additional depreciation on wind mill. The gist of Revenue’s case is,
assets of wind mill do not fall under clause (ii) of section 32(1) of the
Act. It is further submitted that the amended provisions of section
32(1)(iia) allowing additional depreciation on plant and machinery used
in generation and distribution of power is effective from 01.04.2013,
hence, not applicable to any assessment year prior to assessment
year 2013-14. In other words, the case of the Revenue is, prior to
9 ITA Nos. 593/Jodh/14, 252/Jodh/16, 16/Jodh/17, 264/Jodyh/16 and 23/Jodh/2017
assessment year 2013-14, generation of electricity did not qualify as
manufacturing process.
We have considered rival submissions on the issue and perused
materials on record. As we find, there are various judicial precedents
holding that generation of electricity by wind mill amounts to production
of an article or thing, hence, the asset generating electricity will qualify
for additional depreciation under section 32(1)(iia). However, the
contention of the Revenue that generation of electricity is considered
as manufacturing activity since assessment year 2013-14 for the
purpose of section 32(1)(iia), requires to be addressed. As we find, in
case of Giriraj Enterprises vs. DCIT (ITA No. 1384 & 1385/Pune/2015),
the Tribunal in order dated 23.02.2017, as per the majority view, has
held that additional depreciation under section 32(1)(iia) is admissible
in respect of wind mill even prior to assessment year 2013-14. Thus,
respectfully following the aforesaid decision of the coordinate Bench,
we uphold the decision of learned first appellate authority by
dismissing the ground raised.
In the result, departmental appeal for A.Y. 2010-11 is partly
allowed.
10 ITA Nos. 593/Jodh/14, 252/Jodh/16, 16/Jodh/17, 264/Jodyh/16 and 23/Jodh/2017
ITA No. 264/Jodh/2016 (Assessee’s appeal for A.Y. 2011-12):
The only ground raised by the assessee in this appeal relates to
disallowance of additional depreciation under section 32(1)(iia) of the
Act. While deciding Revenue’s appeal in ITA No. 593/Jodh/2014 in
earlier part of the order, qua ground No. 4, we have already decided
the issue in favour of the assessee. Following our decision therein, we
direct the Assessing Officer to allow assessee’s claim of additional
depreciation. Ground raised is allowed.
In the result, appeal is allowed.
ITA No. 252/Jodh/2016( Revenue’s appeal for A.Y. 2011-12):
Ground No. 1 is identical to ground No. 1 of ITA No.
593/Jodh/2014 and relates to claim of deduction under section 80IB of
the Act. While deciding the issue in the earlier part of the order, we
have allowed assessee’s claim of deduction under section 80IB of the
Act. Consistent with the view taken therein, we direct the Assessing
Officer to allow assessee’s claim of deduction.
In ground No. 2, the Revenue has challenged allowance of
depreciation on various items of wind mill. The issue raised in this
11 ITA Nos. 593/Jodh/14, 252/Jodh/16, 16/Jodh/17, 264/Jodyh/16 and 23/Jodh/2017
ground is identical to issue raised in ground No. 3 of ITA No.
593/Jodh/2014 decided by us in earlier part of the order. Consistent
with the view taken therein, we uphold the decision of learned
Commissioner (Appeals). Ground raised is dismissed.
ITA No. 23/Jodh/2017 (Assessee’s appeal for A.Y. 2012-13):
The only ground raised by the assessee in this appeal relates to
disallowance of additional depreciation under section 32(1)(iia) of the
Act. While deciding Revenue’s appeal in ITA No. 593/Jodh/2014 in
earlier part of the order qua ground No. 4, we have already decided the
issue in favour of the assessee. Following our decision therein, we
direct the Assessing Officer to allow assessee’s claim of additional
depreciation. Ground raised is allowed.
ITA No. 16/Jodh/2017( Revenue’s appeal for A.Y. 2012-13):
Ground No. 1 is identical to ground No. 1 of ITA No.
593/Jodh/2014 and relates to claim of deduction under section 80IB of
the Act. While deciding the issue in the earlier part of the order, we
have allowed assessee’s claim of deduction under section 80IB of the
Act. Consistent with the view taken therein, we direct the Assessing
12 ITA Nos. 593/Jodh/14, 252/Jodh/16, 16/Jodh/17, 264/Jodyh/16 and 23/Jodh/2017
Officer to allow assessee’s claim of deduction. Ground raised is
dismissed.
In ground No. 2, the Revenue has challenged allowance of
higher depreciation on various items of wind mill. The issue raised in
this ground is identical to issue raised in ground No. 3 of ITA No.
593/Jodh/2014 decided by us in earlier part of the order. Consistent
with the view taken therein, we uphold the decision of learned
Commissioner (Appeals). Ground raised is dismissed.
To sum up, Revenue’s appeal No. 593/Jodh/2014 is partly
allowed. Revenue’s appeal Nos. 252/Jodh/2016 and 16/Jodh/2017 are
dismissed and assessee’s appeal Nos.264/Jodh/2016 and
23/Jodh/2017 are allowed.
Order pronounced in the open court on 06.10.2023. Sd/- Sd/- (DR. BRR KUMAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER VICE-PRESIDENT
Dated: 06.10.2023 *aks/-