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Income Tax Appellate Tribunal, “A”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD, JM
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the revenue against the order of CIT(A) for the assessment year 2007-08, in the matter of order passed u/s. 143(3) r.w.s.263 of the IT Act. 2. The following grounds have been taken by the revenue.
1. The Ld. CIT(A) has erred in allowing the claim of depreciation amounting to Rs.1.18 crores on windmill installed during previous year.
2. The appellant prays that the order of the CIT(Appeals)on the above grounds be set aside and that of the A.O. be restored.
3. The appellant craves leave to amend or alter any ground or to submit additional new ground which may be necessary.
Rival contentions have been heard and record perused.
M/s. Lovely Fragrances 4. Facts in brief are that during the year assessee has installed one windmill and claimed depreciation thereon. Original assessment was completed vide order dated 22.09.2009 u/s 143(3). Subsequently the said assessment was set aside by the CIT-20 Mumbai vide order dated 01.11.2010 u/s 263 with a direction to the A.O. to pass a fresh assessment order after thorough verification of the claim of depreciation made by the assessee. During the subsequent scrutiny proceedings, the A.O called for details supporting the claim of the assessee that depreciation of Rs 1,18,00,000/- was allowable. The A.O. observed that the invoice issued by Vestas RRB India Ltd. for the purchase of windmill was dated 31.03.07 but that the unit was shown to have been commissioned on 30.03.07 and asked the assessee to produce the bills for supply of electricity for two days i.e 30.03.07 and 31.03.07. However, he noted that the appellant was unable to furnish the said evidence. Accordingly he completed the assessment disallowing the depreciation of Rs. 1,18,00,000/-.
By the impugned order CIT(A) deleted the disallowance after observing as under:- 6. I have carefully considered the facts relating to the disallowance of depreciation as they emerge from the impugned assessment order, the submissions made during these proceedings, the remand report of the A. O. as well as the comments of the appellant to the said report. I find that though the A.O. has stated that enough opportunity was given to the appellant to produce the required evidences, the impugned order gives no details of the time provided to the appellant for submission of the bills evidencing production of electricity. Therefore given that the additional evidence is material to the M/s. Lovely Fragrances determination of admissibility of depreciation claim, the same is admitted and taken on record. 6.1 On perusal of the Impugned assessment order, I find that the disallowance of depreciation in the instant case is based on two factors, firstly that the invoice issued by Vestas RRB for the purchase of windmill was dated 31.03.2007 whereas the commissioning certificate was dated 30.03.2007 and secondly. that the appellant was unable to produce satisfactory evidence to show that there was any production of electricity on 30.03.2007 and/or 31.03.2007. 6.2 From a perusal of the documents submitted by the appellant, I find that the Govt. of Karnataka (Electrical Inspectorate) issued letter dated 29.03.2007 granting approval to commission the 0.6 MW Wind Power Project comprising l x 600 KW 690 V wind energy converter associated 1 x 750 KVA 33 KV /690 V unit step up transformer and 33 KV metering arrangement along with the connected 33KV inter-farm overhead line. The appellant had also obtained on 29.03.2007, the Temporary Interconnection Approval from the Chief Engineer Electricity (P and C), Bangalore. The said approval clearly states that the installations of the four firms named in the letter were' ready for commissioning as on 29.03.2007. The commissioning certificate issued by the Executive Engineer (Ele.), TL &SS Division, KPTCL,Gadag, states as follows: "This is to certify that 1 Nos 600KW (0.6 MW) wind energy converter of M/s Lovely Fragrance, near Unachagere, Rajur, Vadegola & Kuntoji Vii/age in Ron Taluk, Gadag District, Karnataka. With associated electrical equipment interconnecting the wind farm with KPTCL grid through 33KV sub-station at Gajendragag of M/s Shah Agency bearing R.R. No. GDG/TL &SS/WF/LF/76 dated 30-03-2007 has been commissioned on 30-03-2007. This certificate is issued as per the interconnection approval accorded by the Chief Engineer (Planning and Co- ordination) KPTCL vide letter No. CEE(P&C)/SEE(PLG)/AEE- l/Cys-170 dated 29-03-2007 and the approval for the commissioning the wind energy converters accorded by the Chief Electrical Inspector to the Government of Karnataka vide letter No. CEIG/DEI-l/36063-36068/2006-07 dated 29-03-2007." 6.3 As regards the aspect of the commissioning certificate being dated 30.03.2007 and the invoice from M/s Vestas RRB being dated 31.03.2007, I find that the appellant has satisfactorily explained that M/s.Vestas RRB being responsible for the installation and commissioning work as well as for obtaining M/s. Lovely Fragrances necessary approvals as per the agreement between them and the appellant, had issued the invoice only after completion of all works assigned to them. 6.4 The copy of invoice from the Karnataka Power Transmission Corporation Ltd for electricity production in the month of April, 2007 clearly pertains to the 1X600KW wind power project put up by the appellant at Gajendragad. This invoice reflects an initial meter reading of 0.07 KWH as on 01.04.2007 and a final meter reading of 7.18 KWH as on 30.04.2007. The initial reading of 0.07 KWH can be there only if there has been generation of electricity on the dates prior to 01.04.2007. This leads to the' conclusion that once the windmill was installed and commissioned, electricity production took place. The commissioning certificate having been issued on 30.03.2007, the production could therefore have taken place only on 30.03.2007 and/or 31.03.2007 for it to be reflected as opening balance as on 01.04.2007. 6.5 For these reasons, I find that the appellant has adduced satisfactory evidence with regard to the generation of electricity after the commissioning of the windmill and is entitled to depreciation as claimed. Accordingly, tile grounds raised by the appellant are allowed.
We have considered rival contentions and carefully gone through the orders of the authorities below and found from record that after calling the remand report from AO and asking for rejoinder from the assessee, the CIT(A) recorded a finding to the effect that assessee has satisfactorily explained that M/s.Vestas RRB being responsible for the installation and commissioning work as well as for obtaining necessary approvals as per the agreement had issued the invoice only after completion of all works assigned to them. The CIT(A) also found that Karnataka Power Transmission Corporation issued invoice for electricity provided in the month of April 2007 clearly pertains to 1X600KW wind power project put up by the assessee at Gajendragad, which reflects an initial meter reading of M/s. Lovely Fragrances 0.07 KWH as on 01.04.2007 and a final meter reading of 7.18 KWH as on 30.04.2007. It was therefore inferred that the initial reading of 0.07 KWH can be there only if there has been generation of electricity on the dates prior to 01.04.2007 which leads to the conclusion that once the windmill was installed and commissioned, electricity production took place.
Detailed finding recorded by CIT(A) are as per material on record and has not been controverted by department by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the finding of CIT(A) resulting into deletion of disallowance of claim of depreciation on windmills. 7. In the result, appeal of the Revenue is dismissed.