DCIT, COIMBATORE vs. M/S. CLOVER ENERGY PVT. LTD., COIMBATORE

Shri Pathlaveth Peerya, the Ld. Departmental Representative submitted that by virtue of Slump Sale Deed dated 27.03.2012, the assessee purchased windmill. As per this Slump Sale agreement, the physical possession of the windmill has to be handed over to the assessee company on 27.03.2012, subject to fulfillment of the lumpsum payment of Rs.7,51,87,582/- to the assessee. Therefore the transfer of windmill is subject to payment of entire consideration of Rs.7,51,87,582/-. Admittedly according to the Ld. counsel, the payment was not made on 27.03.2012. Therefore, there was no transfer of windmill. Referring to the order of the CIT (Appeals), the Ld. Departmental Representative submitted that the CIT (Appeals) has not considered anything about the transfer of windmill. The CIT (Appeals) simply observed that major portion of the account was debited before 31.03.2012. Therefore, it is obvious that the full consideration was not paid on 27.03.2012. Hence, as per the agreement the assessee cannot become the owner of the windmill.

On the contrary, Shri T. Raghunathan the Ld. representative for the assessee submitted that the substantial payment for collecting the windmill was paid before 31.03.2016. Therefore, the assessee becomes the beneficial owner of the windmill, even though it was not registered by TNEB. Whereas the assessee becomes the beneficial owner and generates the electricity, according to the Ld.representative the assessee is entitled for depreciation in view of the decision of the Apex Court in Mysore Minerals Ltd v CIT(1999) 106 Taxman 166 (SC). Therefore, the CIT (Appeals) has rightly allowed the claim of the assessee.

We have considered the rival submissions on either side and perused the material available on record. We have carefully gone through the orders of both the authorities below and also the Slump Sale Deed dated 27.03.2012. As per clause 3 of the Slump Sale Deed dated 27.03.2012, the physical possession of the windmill shall be handed over to the assessee on 27.03.2012 subject to full payment of lumpsum consideration of Rs.7,51,87,582/-. Now, the assessee claims that substantial payment was made and the same was debited in the books of account on 31.03.2012. When the agreement says that the assessee has to pay the entire consideration, it is not known whether the physical possession of the windmill was delivered to the assessee on payment of the so called substantial portion of the sale consideration. For the purpose of applying the judgment of the Apex court in M/s. Mysore Minerals Ltd, supra, the assessee has to take over the physical possession of the windmill for the purpose of claiming beneficial ownership. Of course registration by TNEB and other requirements under the common law for the purpose of transfer of ownership may not be a precondition for the purpose of claiming depreciation under the Income Tax Act. However, the assessee has to establish that it has taken over the physical possession of the property and enjoyed the same as it is owned. Therefore, the assessee has to establish before the authorities below that it has taken over the physical possession of the property on 27.03.2012. Since, this fact was not examined by CIT (Appeals), this Tribunal is of the considered opinion that the matter needs to be reexamined. Accordingly, the orders of the lower authorities are set aside and the entire claim of depreciation is remitted back to the file of the Assessing Officer.

In the result, the appeal of the Revenue is allowed for statistical purposes.