OPG BUSINESS CENTRE PRIVATE LIMITED,CHENNAI vs. INCOME TAX OFFICER, CORP WARD 5(1), CHENNAI

आयकर अपीलीय अिधकरण, ’ ए’ �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ी यस यस िव�ने� रिव, �ाियक सद� एवं सु�ी पदमावती यस, लेखा सद� के सम# BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND MS. PADMAVATHY.S, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 3606/Chny/2025 िनधा$रण वष$/Assessment Year: 2013-14 M/s. OPG Business Centre Pvt Ltd., Vs. Income Tax Officer, Old No.4, New No.7, Tiruvika 3rd Street, Corporate Ward - 5(1), Royapettah High Road, Chennai. Mylapore – 600 004. [PAN: AAACO-9712-G] (अपीलाथ'/Appellant) (()थ'/Respondent) अपीलाथ' की ओर से / Appellant by : Mr. D. Anand, Advocate ()थ' की ओर से/Respondent by : Mr. L. Christopher Vasanth, JCIT सुनवाई की तारीख/ Date of hearing : 01.06.2026 घोषणा की तारीख /Date of Pronouncement 25.08.2026 : आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

This appeal filed by the assessee is directed against the order dated 08.09.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2013-14.

2 ITA No. 3606/Chny/2025 2. Ground nos.1 & 2 are not pressed.

of ld.CIT(A) in confirming the disallowance made by the AO on account

of depreciation in the facts and circumstances of the case.

in the business of manufacturing industry, power and energy. The

assessee filed return of income declaring a loss of Rs.3,77,88,967/- and

under scrutiny the said loss was accepted by allowing claim of

depreciation @ 80% on the actual cost of acquisition of two windmills

amounting to Rs.12,16,47,670/- vide assessment order dated

12.02.2016 passed u/s. 143(3) of the Income-tax Act, 1961 (herein after

“the Act”). Thereafter, the AO reopened the said assessment by issuing notice dated 28.03.2018 u/s. 148 of the Act on the ground that the claim of depreciation @ 80% on windmills acquired after 01.04.2002 is only 15% in pursuance of CBDT notification no.15/2012 dated 30.03.2012. In response to the said notice, the assessee filed return of income on 20.04.2018 and the AO called for details. The reply with reference to the rate of depreciation is reproduced by the AO in Para no. 4(9v) of the assessment

3 ITA No. 3606/Chny/2025 order and the AO found the said reply not acceptable, held the assessee is

eligible for 15% depreciation only, as the claim of depreciation starts only

from the date of its acquisition by the assessee and not from the date of

purchase of its earlier owner and determined the income of the assessee

at Rs.1,08,45,630/- as against loss, vide its order dated 30.12.2018 passed

u/s. 143(3) r.w.s. 147 of the Act. Further, by invoking Explanation (3) to

section 43(1) of the Act, denied depreciation on the actual cost of

acquisition and allowed only returned down value of the windmill in the

hands of transferer. Aggrieved by the said order, the assessee preferred

an appeal before the ld.CIT(A), wherein the ld.CIT(A) held that the

assessee failed to discharge the burden cast upon it to substantiate its

claim and there was no reason to interfere with the conclusion arrived by

the AO. As not satisfied with the order of the ld.CIT(A), the assessee is

before us.

Ld.CIT(A) erred in law and on facts in upholding the action of the Assessing

Officer in restricting depreciation by substituting the assessee’s actual cost

of acquisition of the second-hand windmill with the seller's earlier written-

down value (WDV). He argued that the ld.CIT(A) ought to have seen that

the assessee has furnished valuation report from a Registered

4 ITA No. 3606/Chny/2025 Valuer/Chartered Engineer establishing the market/replacement value of

the windmill at the time of purchase. Such expert valuation is admissible

and constitutes relevant evidence that could not be rejected in the absence

of any contrary material. The AO's reliance on mere conjecture, in place of

substantiated expert evidence, is unjustified and unsustainable. He further

argued that the ld.CIT(A) ought to have seen that the AO erred in law by

computing depreciation on a basis other than the asset's actual cost to the

assessee, as mandated under the Income-tax Act. Section 32, read with

the definitions of 'actual cost' and 'written-down value,' unequivocally

requires depreciation to be allowed on the assessee’s cost of acquisition

or any amount validly substituted for such cost. He argued vehemently that

the assessee is entitled to depreciation on the actual purchase price paid,

and not on the previous owner's WDV and further, that the ld.CIT(A) failed

to appreciate that the appellant had furnished complete documentary

evidence such as invoice/sale deed, bank payment proof, and a valuation

report from a Registered Valuer/Chartered Engineer fully substantiating the

actual purchase price. He submits that by mechanically relying on the

seller's earlier WDV and disregarding this primary evidence, the NFAC has

erred in sustaining an arbitrary and unlawful reduction of depreciation,

rendering the order bad in law. Further, he argued that it is contrary to

evidence on record, and violative of settled principles, in as much as the

5 ITA No. 3606/Chny/2025 actual cost to the assessee cannot be displaced unless the Department

establishes, with cogent material, that (i) the stated consideration is not

genuine, or (ii) the transaction is a colourable device attracting Explanation

3 to section 43(1). He argued that no such evidence or inquiry has been

adduced or conducted by either the Assessing Officer or the NFAC and

prayed to allow grounds.

reading of explanation to section 43(1) introduced in the Income-tax Act,

1961 clearly indicates the intention of the Act to curb double claim of

depreciation on the same asset and to bring correct income under tax. He

argued the plea of the assessee is to be accepted then there is no meaning

in the introduction of such provisions in the Act, which itself will be rendered

nugatory. Further, the assessee has become owner of one windmill only

after 01.02.2013 and the assessee is eligible for 15% depreciation only.

He submits that the installation can only be deemed to have been done

from the date of purchase in the hands of assessee and eligibility to claim

depreciation starts only from the date of its acquisition by the assessee and

not from the date of purchase by its earlier owner. He vehemently argued

that the case of the assessee is that the assessee has intentionally

purchased the assets with a view to reduce the profit by claiming enhanced

6 ITA No. 3606/Chny/2025 depreciation having enduring benefits reducing the profits. Further, he

argued the AO rightly rejected the claim of the assessee and adopted the

cost of the assessee at Rs.1,63,125/- restricting the depreciation at 15%.

He supported the order of the ld.CIT(A) and prayed to dismiss the grounds

raised by the assessee.

It is an admitted position that both the windmills acquired by the assessee

had already been installed, commissioned and put to commercial use by

the transferor during March 2008, much prior to the cut-off date of

31.03.2012 prescribed under CBDT Notification No. 15/2012 dated

30.03.2012. The commissioning certificates issued by the Tamil Nadu

Electricity Board at pages 1 to 5o in Vol-I, conclusively establish that the

windmills commenced commercial generation on 22.03.2008 and

28.03.2008, respectively. We find no dispute in this regard. These material

facts have never been disputed by the Revenue at any stage of the

proceedings and it is equally undisputed that upon acquisition by the

assessee vide agreement of sale dated 21.09.2012 at pages 6-11 of Vol 1,

the windmills continued to remain at the very same locations and continued

to operate as existing wind energy generators which is evident from name

transfer proceedings of Superintending Engineer, TNGDC Ltd, changing

7 ITA No. 3606/Chny/2025 name from M/s. Gupta Global Resources Pvt Ltd to M/s. OPG Business

Centre Pvt Ltd at pages 12-16 of Vol 1, Energy Wheeling Agreement at

page 62-85 of Vol 2. It is noted that there was no dismantling of the

windmills, no relocation to another site, no re-erection and no fresh

commissioning, therefore, we find force in the arguments of ld.AR that the

transaction merely resulted in a transfer of ownership of two existing

operational windmills, further, the character and identity of the assets

remained unchanged, and the original dates of installation and

commissioning continued to govern the assets even after the transfer. We

find the AO has proceeded entirely on the footing that since the assessee

acquired ownership of the windmills after 01.04.2012, the amended rate of

depreciation of 15% automatically became applicable and therefore, the

only criterion we have to see now is as to whether the windmills were

"installed on or before 31st March, 2012 or not?"

of installation or commissioning and its entire case rests solely on the fact

that the assessee became the owner after 01.04.2012. In this regard, we

find an identical issue came up for consideration before the Chennai Bench

of the Income-tax Appellate Tribunal in the case of Senthil Energy Pvt. Ltd.

v. ITO at page no. 40 of case laws paper book. The issue before the

8 ITA No. 3606/Chny/2025 Tribunal was whether an assessee who had acquired second-hand

windmills after 01.04.2012, which had admittedly been installed and

commissioned prior to 31.03.2012, was entitled to depreciation at the rate

of 80% or only at the reduced rate of 15% in terms of CBDT Notification

No. 15/2012 dated 30.03.2012. We find the Revenue advanced

substantially the same arguments as those urged in the present case, that

since the assessee became the owner of the windmills only after

01.04.2012, the benefit of depreciation at 80% was not available and that

only depreciation at the rate of 15% could be allowed. Rejecting the said

contention, the Tribunal undertook a plain reading of Rule 5 read with

Appendix-I and CBDT Notification No. 15/2012. And held the assessee

therein is entitled to have depreciation @80%, the relevant portion of the

said order is reproduced herein below for better understanding:

“8. We have given our thoughtful consideration to the reasons given by the Assessing Officer for disallowance of depreciation over and above 15% on windmills and find no merits, because the Act specifically states that windmills installed on or before 31.03.2012 are eligible for depreciation @ 80%. The said rule does not give emphasize for purchase/acquisition of windmills, but only talks about installation. When the Act itself talks about installation of windmill, then acquisition of such asset is not material to decide rate of depreciation. In this case, there is no dispute with regard to the fact that windmills were installed on or before 31.03.2012. It is an admitted fact that the assessee has purchased used windmills on ‘as is where is’ basis for the financial year 2013-14. Therefore, once the windmills are installed before 31.03.2012, then rate of depreciation is applicable as per pre-amended Appendix-I of Rule 5 of Income Tax Rules,1962. Further, as per said rule, rate of depreciation on windmills which are acquired and installed on or before 31.03.2012 is at 80%. Therefore, we are of the considered view that the Assessing Officer as well as learned CIT(A) erred in coming to the conclusion that assessee became owner of 11 ITA No.581/Chny/2019 windmills only after 31.03.2012 and entitled for depreciation as per amended rate, when the law is very clear about

9 ITA No. 3606/Chny/2025 installation of windmills and acquisition of asset is immaterial to claim depreciation. In this case, since the windmill was acquired and installed on or before 31.03.2012 and assessee has became second owner and has not dismantled from one place and reerected in another place, the interpretation given by the Assessing Officer and learned CIT(A) are contrary to the provisions of Rule 5 of Income Tax Rules,1962. Hence, we set aside the order of the learned CIT(A) and direct the Assessing Officer to allow depreciation @ 80% on windmills as claimed by the assessee. “

statutory provision lays emphasis on the date of installation of the windmills

and not on the date of their acquisition, further, it was observed that the

amended Appendix-I does not prescribe acquisition or purchase as the

determining factor for the applicable rate of depreciation. Once it is

established that the windmills were installed prior to the cut-off date, the

subsequent acquisition of such windmills after 01.04.2012 does not alter

the applicable rate of depreciation and the Tribunal concluded that

depreciation continued to be allowable at the rate of 80% notwithstanding

the subsequent transfer of ownership. We find the facts and circumstances

of the present case as similar to facts in the above case and the findings of

Tribunal is squarely applicable to the present case as an admitted position

that the windmills were commissioned on 22.03.2008 and 28.03.2008,

much prior to the cut-off date prescribed under the Notification.

v. ITO, wherein the Tribunal held that the expression employed in the

10 ITA No. 3606/Chny/2025

Notification is "installed" and not "installed by the assessee" and the

relevant portion is reproduced herein below:

11 ITA No. 3606/Chny/2025 whether the assessee had acquired windmills which were already running alongwith with the land where it was situated or whether he had moved the machinery and re-installed it somewhere else are not clear from the records. I am therefore of the opinion that the issue requires a fresh look by the ld. Assessing Officer. I set aside the orders of the lower authorities and remit the question regarding depreciation on windmills back to the file of the ld. Assessing Officer for consideration afresh in accordance with law after ascertaining all the relevant facts.

that an already installed windmill cannot once again be regarded as being

installed merely because ownership has changed. The Tribunal further

observed that who installed the windmill is wholly irrelevant, what is

relevant is whether the windmill stood installed prior to the prescribed date

or not? We find the Tribunal, therefore, held that the date of installation is

attached to the asset itself does not change merely because the ownership

of the asset changes.

Superintending Engineer to M/s. Gupta Coalfields & Washeries Ltd i.e.,

erstwhile owners which is at page no.4 of the vol-I of paper book, we note

that 1 No. 1500 KW capacity Wind Electric Generator commissioned

satisfactorily on 22.03.2008 at Thiruvambalapuram Village and another

Commissiong at Kasturirengapuram Village vide commission certificate at

page no.5 of the Vol-I of paper book, clearly demonstrate that another 1

12 ITA No. 3606/Chny/2025 No. 1500 KW capacity Wind Electric Generator was installed successfully

on 28.03.2008 in Kasturirengapuram Village. Further, on an acquisition of

said two 1500 KW capacity Wind Electric Generators by the assessee, the

Superintending Engineer of Tamilnadu Generation and Distribution

Corporation Ltd vide proceedings dated 08.03.2013 certified the name

transfer from M/s. Gupta Coalfields & Washeries Ltd to assessee in

Thiruvambalapuram Village and Kasturirengapuram Village which is at

page no. 12 of the Vol-I of paper book. Therefore, on an examination of

the commissioning certificate and name transfer certificate issued by the

Superintending Engineer of Tamil Nadu Generation and Distribution

Corporation Ltd clearly demonstrates that there was no need of

reinstallation of Wind Electric Generators which were acquired by the

assessee from erstwhile owner and no occasion arises to remand the

matter to the file of the AO for fresh verification. Therefore, we find the

facts and circumstances of the case of the present case are similar to the

facts of above case except to the remand, in our opinion, when there is no

dispute by the respondent revenue with reference to certificates issued by

the Superintending Engineer which are at page nos. 4 & 5 of the Vol-I of

paper book certifying the date of commission on 22.03.2008 & 28.03.2008

i.e. prior to 31.03.2012, we are of the considered opinion that the assessee

13 ITA No. 3606/Chny/2025 is entitled to claim the depreciation at 80% as was held by the Coordinate

Bench in the above said orders.

adopting computing depreciation on windmill, the ld.AR submits that the

impugned reassessment order proceeds on a fundamentally erroneous

premise that once Explanation 3 to section 43(1) is invoke, the Written

Down Value (WDV) of the asset in the hands of the transferor automatically

becomes the “actual cost” in the hands of the transferee and argued that

such an approach is wholly contrary to the scheme of Section 43(1) and

the express language of Explanation 3. He submits that Explanation 3

nowhere authorises the AO to substitute the transferor’s WDV for the actual

consideration paid by the purchaser and on the contrary, the provision

mandates that the AO must, after recording a valid satisfaction that the

main purpose of the transfer was reduction of tax liability by claiming

depreciation on an enhanced cost, determine the actual cost of the asset

having regard to all the circumstances of the case. He argued that the

statutory obligation is to determine the actual cost based on objective

material and recognised valuation principles and it is not a licence to

14 ITA No. 3606/Chny/2025 mechanically adopt the transferor’s tax WDV. He prayed to allow the claim

of the assessee.

that the transaction was entered into between independent parties at arm’s

length under a duly executed agreement and the Revenue has neither

questioned the genuineness of the transaction nor alleged that the

consideration was fictitious, excessive or colourable. The AO has merely

substituted the transferor’s WDV as the actual cost, an approach which has

been specifically disapproved by the Chennai Bench of the Tribunal in

SVPB Spinners Pvt Ltd., wherein it was held that the WDV in the hands of

the transferor cannot, by itself, be treated as the actual cost in the hands

of the purchaser and that the burden lies upon the Revenue to determine

the fair market value before invoking Explanation 3. Further, in the present

case, the assessee has submitted the valuation report in support of the

price paid towards cost of acquisition, which is rejected without proper

appreciation of facts. Our view is strengthened by the fact that the wind

mill is generating power at its 100% capacity in subsequent AYs also which

15 ITA No. 3606/Chny/2025 fact is substantiated by the monthly generation report in page nos. 86 to 97

of the paper book. The Revenue has not produced an evidence to

demonstrate that the consideration exceeded the fair market value or that

any part of the consideration represented an artificial inflation designed to

claim excessive depreciation, therefore, the impugned action of the AO in

substituting the transferor’s WDV for the assessee’s actual cost is contrary to the express provisions of section 43(1) of the Act. We hold that the

assessee is entitled to depreciation at the rate of 80% on the actual cost of

acquisition incurred by the assessee for purchasing the windmills. Thus, order of the ld.CIT(A) is not justified in confirming the order of AO and is

set aside. Thus, ground nos. 3 to 7 raised by the assessee are allowed.

Sd/- Sd/- (एस. पदमावती) (यस यस �व�वने� र�व) (S. PADMAVATHY) (SS VISWANETHRA RAVI) लेखा सद�य/Accountant Member �या�यक सद�य / Judicial Member

Chennai, Dated: 25.08.2026 JPV आदेश की (ितिलिप अ.ेिषत/Copy to: 1. अपीलाथ'/Appellant,

16 ITA No. 3606/Chny/2025 2.()थ'/ Respondent, 3. आयकर आयु//CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय (ितिनिध/DR & 5. गाड$ फाईल/GF.

PRASANNA Digitally signed by PRASANNA VANI JETTY VANI JETTY Date: 2026.09.01 15:27:44 +05'30'