DCIT CC 3(1) CEN RG 3A-9 ENERCON TOWER, VEERA DESAI RD, VEERA INDL ESTATE, ANDHERI, MUMBAI vs. VAAYU INFRASTRUCTURE LLP, MUMBAI

The only common issue arising for consideration in the present appeals relate to allowance of assessee’s claim of depreciation on foundation / civil works of wind mills.

Brief facts are, the assessee as stated by the Assessing Officer is engaged in generation of power by wind energy through wind farm. During the assessment proceedings, the Assessing Officer noticed that the assessee has claimed depreciation on wind mills installed at Gujarat. After calling for necessary details on the depreciation claimed on wind mills, the Assessing Officer found that higher depreciation @ 100% as allowable to wind mills was claimed by the assessee on civil construction relating to foundation work of the wind mill. He, therefore, called upon the assessee to explain why depreciation claimed at higher rate on such civil construction should not be restricted to 5% as allowable to civil works like roads and buildings. Objecting to the proposed disallowance of depreciation, the assessee submitted that the foundation work for installing wind mill being a part

The learned Commissioner (Appeals) taking note of the fact that while deciding identical issue in case of assessee’s sister concern, Enercon Wind Firm (Karnataka) Pvt. Ltd., the Tribunal has held that depreciation in respect of foundation / civil work of the wind mill is allowable at the same rate as applicable to wind mill allowed assessee’s claim of depreciation.

Learned Departmental Representative relied upon the observations of the Assessing Officer and the ground raised.

Learned Authorised Representative strongly supporting the order of the first appellate authority submitted that the issue stands decided in favour of the assessee by the following decisions:–

We have heard the rival submissions and perused material on record. The limited issue arising for consideration in the present appeals are, whether the assessee is entitled to claim depreciation on the foundation work (civil construction) of wind mill generators at the same rate as is applicable to wind mills. In our view, the issue stands settled in favour of the assessee by the case laws cited before us by the learned Authorised Representative. In the case of CIT v/s Miraj Products Pvt. Ltd. (supra), the Hon’ble Rajasthan High Court while deciding identical issue relied upon the decision of the Hon’ble Gujarat High Court in CIT v/s Perry Engineering and Electronics Pvt. Ltd., and held that, since, the wind mill has to be fitted and mounted on a civil construction, such civil construction is integrally connected with the wind mill system and has to be considered as part of it. Therefore, the rate of depreciation applicable to wind mill would also apply to civil construction work. The same view has been expressed by the Co– ordinate Bench in case of assessee’s sister concern as referred to above. Facts are identical in the present case also. There is no dispute that the civil construction on which the assessee has claimed depreciation at higher rate are the foundation work for installing the 5 Vaayu Infrastructure LLP wind mill generator. In fact, the Assessing Officer has also accepted the aforesaid factual position while referring to the decision of the Tribunal in case of assessee’s sister concern and has restricted disallowance to 5% only for keeping the issue alive. In view of the settled position of law, we uphold the order of the learned Commissioner (Appeals) by dismissing the grounds raised.

In the result, both the appeals are dismissed. Order pronounced in the open Court on 28.03.2018