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Income Tax Appellate Tribunal, ‘A’ BENCH : CHENNAI
Before: SHRI ABRAHAM P. GEORGE]
आदेश / O R D E R
Assessee in this appeal is aggrieved on restriction of its claim of depreciation on two windmill energy generators to 15% against 80%.
Facts apropos are that assessee engaged in the business of power generation had filed its return of income for the impugned assessment year disclosing Nil income. Assessee had claimed depreciation at the rate of 80% on windmills. Ld. Assessing Officer . :- 2 -: noted that two windmills were purchased by the assessee only during the relevant previous year. According to him, by 4th Amendment Rules, 2012, windmills commissioned on or after 01.04.2012 were eligible for deprecation @15% only. When assessee was put on notice, its reply was that windmills though purchased by it during the relevant previous year were installed prior to that year.
However, ld. Assessing Officer did not accept this contention.
According to him, acquisition of the windmills by the assessee could be considered only as new installation. As per the ld. Assessing Officer, installation could be deemed to have happened only on or after the date of acquisition of the windmills by the assessee. Thus, as per the ld. Assessing Officer, assessee was eligible for depreciation @15% only. A disallowance of Rs.32,76,000/- was made.
Aggrieved, assessee moved in appeal before the ld. 3.
Commissioner of Income Tax (Appeals). Contention of the assessee before ld. Commissioner of Income Tax (Appeals) was that the two windmills which were used by the previous owner could not be considered as new installation or as something commissioned by the new owner. As per the assessee, date of purchase of windmills and date of installation were different. Contention of the assessee was that windmills acquired by it during the relevant previous year stood already installed and was already being operated by its previous . :- 3 -: owner. Thus, according to the assessee, it was entitled for depreciation at a higher rate. However, ld. Commissioner of Income Tax (Appeals) did not accept the contention. He held at para 3 of its order as under:-
‘’I have considered the submissions but am unable to agree. It is an admitted fact that the generators were purchased from another entity. That entity would have availed depreciation at 80% on the basis of his date of installation. The assessee had only acquired the generator/windmill already installed. The appellant has not installed the generator and he only acquired the asset in financial year 2012-13. When the date of acquisition itself in financial year 2012-13 by the appellant, it cannot be said that the appellant had installed the machinery before the said date The installation by the previous owner cannot be considered as installation done by the appellant. The asset having been enjoyed higher depreciation at the hands of the previous owner and the appellant had acquired the asset after 1/4/2012 it is not entitled to higher depreciation at 80% and the assessing officer was right in restricting the same to 15% as per the amended rules referred above. I therefore confirm the order of the assessing officer and the grounds raised are dismissed’’.
Now before me, ld. Authorised Representative submitted that 4. windmills purchased by the assessee were already installed and commissioned by its erstwhile owners on 27.03.2004 and 30.09.2004.
According to him, the correspondence between earlier owners and TANGEDCO was placed before the ld. Assessing Officer and such correspondence clearly confirmed the date of commissioning. As per the ld. Authorised Representative, assessee had claimed depreciation @80% on the WDV of windmills which came to Rs.50,40,000/-. As . :- 4 -: per the ld. Authorised Representative, assessee had acquired windmills at the cost of Rs.2,52,00,000/- and could have claimed depreciation on the whole of such amount, but as a conservative measure restricted itself to the WDV of Rs.50,40,000/- for working out the depreciation. Relying on the Notification No.15/2012, issued by the Government of India, ld. Authorised Representative submitted that amendment to Income Tax Rules specifically mentioned windmills commissioned or installed on or after 31st March, 2012. According to him, when the installed windmills were acquired was irrelevant.
Per contra, ld. Departmental Representative strongly supporting the orders of the lower authorities submitted that in so far as assessee was concerned, the installation could have been done only after it purchased the two windmills from its earlier owners.
According to him, installation by actual owner who claimed depreciation was the relevant factor and not the installation by the earlier owners. Assessee having acquired and installed two windmills after 31.03.2012, as per the ld. Departmental Representative, by virtue of the Amended Rules it was eligible only for 15% depreciation.
I have considered the rival contentions and perused the 6. orders of the authorities below. It is not disputed that two windmills purchased by the assessee on which it claimed depreciation @80% were already under operation of its erstwhile owners. Contention of . :- 5 -: the assessee is that Notification No.15/2012, dated 30.03.2012 bringing into force amendment Income Tax Rules, 1962 only spoke about installation done on or before 31st March, 2012 and had nothing to do with the date of acquisition. I am of the opinion that this argument is on a strong wicket. According to me, already installed machinery cannot be re-installed. A reinstallation could have been done only if it was removed from the premises where it was originally installed. In my opinion, if the assessee had acquired the windmills alongwith the land on a running condition, what the assessee acquired can be considered only as operating windmills of which the installation happened prior to the relevant assessment year. The Income Tax (Fourth Amendment Rules, 2012) through which New Appendix I in the table to Income Tax Rules, 1962 has been amended is reproduced hereunder:- 1. (1) These rules may be called the Income-tax ( 4th Amendment) Rules, 2012. (2) They shall come into force on the 1 st day of April, 2012.
2.In the Income-tax Rules, 1962, in the Table, in the New Appendix I, in Part-A relating to Tangible Assets, under the heading "Ill. Machinery and Plant", in item (8), in sub-item (xiii), - a.In clause (1), after the words, "which run on wind mills", the words, figures and letters, "installed on or before 31st day of March, 2012’’ shall be inserted ; and b. In clause (m), after the words, "running on wind energy", the words figures and letters, "installed on or before 31 st day of March, 2012", shall be inserted.
. :- 6 -: The words mentioned are installed. I cannot read into these words installed by the owner. In my opinion who installed the windmills does not matter. What matters is whether it was installed prior to or after 31.03.2012. However, 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.