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Facts
The assessee claimed depreciation on windmills used for power generation. The Assessing Officer viewed that depreciation of Rs. 3,23,689 was claimed twice, once for deduction under Section 80-IA and again while calculating total income. The CIT(A) upheld this view, dismissing the assessee's appeal.
Held
The Tribunal held that the Revenue Authorities erred in concluding that the assessee claimed depreciation twice. The assessee had reduced depreciation from sales to claim deduction under Section 80-IA, which is permissible as depreciation is an expenditure.
Key Issues
Whether claiming depreciation on windmills, after reducing it from sales for Section 80-IA deduction, amounts to claiming the same deduction twice.
Sections Cited
Sec 32, Sec 80 IA, Sec 143(3), Sec 144B, Sec 270A, Sec 143(2), Sec 142(1), Sec 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES, “ A-Bench” JAIPUR
Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 471/JPR/2024
vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM The question involved in this appeal filed by the asseessee is: “Where an assessee reduces from total sales, amount of depreciation on windmills, used for generation of power, and also claims deduction of the same amount u/s 80 IA of the Income Tax Act, 1961 (hereinafter referred to as the Brief Facts 2. On 20-04-2021, the Assessing Officer passed an assessment order, qua the assessee, and relating to assessment year 2018-19, thereby computing and assessing its income at Rs.1,05,76,630/- u/s 143(3) read with Section 144B of the Act, and also simultaneously directing initiation of penalty proceedings u/s 270A of the Act. 2.1 In its return of income for the said assessment year, the assessee company had shown total income of Rs.1,02,52,940/-. 2.2. The assessment order came to be passed after the case of the assessee was selected for scrutiny and notice u/s 143(2) of the Act was served upon it ‘’due to the large deductions claimed u/s 80 IA’’.Notice u/s 142(1) of the Act is also stated to have been served upon the assessee alongwith a questionnaire. The reason for framing of the above assessment was that amount of depreciation of Rs.,1,56,73,275/-claimed by the assessee in its computation of income, was found to include depreciation of a sum of Rs.3,23,689/-found to have already been 3 ANAMIKA CONDUCTORS PVT LTD. VS ACIT, CIRCLE6, JAIPUR considered while calculating deductions u/s 80 IA of the Act. In other words, Assessing Officer was of the view that depreciation to the tune of Rs.3,23,689/- was claimed by the assessee twice. 2.3. The AO accordingly observed that the said amount was required to be added back to the total income of the assesee.
2.4 The assessee felt dissatisfied with the assessment order dated 20-04-2021. Accordingly, the same was challenged before the ld. CIT(A). That appeal came to be dismissed by the ld. CIT(A), NFAC, Delhi vide order dated 23-02-2024 passed u/s 250 of the Act. 2.5 Learned CIT(A) upheld the observation by the AO that the assessee had claimed depreciation of Rs.3,23,689/- twice i.e. once while computing deduction u/s 80IA of the Act and then while calculating total taxable income. Holding that the assessee was not entitled to claim depreciation on same set of assets twice, Learned CIT(A) dismissed the appeal.
Hence, this appeal, before this Appellate Tribunal. 4.1 Arguments heard. File perused.
4 ANAMIKA CONDUCTORS PVT LTD. VS ACIT, CIRCLE6, JAIPUR 4.2 Learned AR for the assessee has submitted that in order to claim deduction u/s 80-IA of the Act, depreciation and other expenses relating to generation of electricity and power using windmills, are required to be reduced, as per section 32 of the Act, and that is why, depreciation amount was reduced by the assesee in order to claim deduction u/s 80-IA of the Act. Therefore, the contention is that impugned order deserves to be set aside. 4.3 On the other hand, the ld. DR for the Department has simply submitted that he stands by the impugned order, for the reasons recorded therein.
Section 32 of the Act pertains to depreciation. It provides that deductions as specified in clause(i) of sub-section (1) of section 32 are to be allowed in respect of depreciation of building, machinery, plant or furniture, being tangible assets owned wholly or partly by the assessee and used for the purposes of business or profession. 5.1 It is not in dispute that the assessee owned and used windmills for generation of power, for its sale. 5.2 Section 80 IA of the Act provides for deductions in respect of profit and gain from industrial undertakings or enterprises engaged in infrastructure development.
5 ANAMIKA CONDUCTORS PVT LTD. VS ACIT, CIRCLE6, JAIPUR 5.3 Depreciation is a kind of expenditure. So as to claim deductions u/s 80 IA of the Act, on sale of electricity and power generated from Windmills, such an assessee is required to reduce the amount of depreciation and other expenses relating to generation of electricity and power. 5.4 Learned AR for the assessee has rightly submitted that had the assessee not shown deductions by way of depreciation on Windmills, to the tune of Rs. 3,23,689/- from the income on sale of electricity and power i.e. from Rs.1,97,35,358/-, it would have led to claiming of excess deductions u/s 80 IA of the Act i.e. the deductible amount would have been higher by Rs. 3,23,689/- than is permissible to be deducted u/s 80 IA of the Act.
Conclusion 6. In the given situation and having regard to the provisions of Section 32 and Section 80 IA of the Act, the Revenue Authorities below erred in arriving at the conclusion that the assessee had claimed depreciation to the tune of Rs.3,23,689/- twice i.e. once while computing deduction under section 80 IA of the Act, and secondly, while computing the total income.
6 ANAMIKA CONDUCTORS PVT LTD. VS ACIT, CIRCLE6, JAIPUR Result 7. In view of the above reasons and findings, this appeal deserves to be allowed. Consequently, while allowing the appeal order passed by Learned CIT(A) is hereby set aside, with the direction to the Assessing Officer to make recalculations accordingly, to give effect to this decision.
Order pronounced in the open court on 11 /06/2024.