VINODKUMAR S JAIN,MUMBAI vs. ASST CIT CIT 16(1), MUMBAI

In this appeal the only solitary issue raised by the assessee pertains to the action of income-tax authorities in disallowing additional depreciation claimed by the assessee u/s 32(1)(iia) of the Act amounting to 25,60,000/- on the cost of wind mill.

In the course of the assessment proceedings, it was noticed by the Assessing Officer that the assessee had installed a wind mill, including wind turbine generator costing Rs. 1,28,00,000/- during the year under consideration. The assessee had claimed additional depreciation @ 20% on such machinery in terms of Sec. 32(1)(iia) of the Act. The Assessing Officer denied the claim of additional depreciation on the ground that generation or generation and distribution of power was included in Sec. 32(1)(iia) of the Act by the Finance Act, 2012 w.e.f. 1.4.2013 and since the case of the assessee is of a prior period, the additional depreciation was not allowable to the assessee. The CIT(A) has also affirmed the action of the Assessing Officer by primarily confirming the reasoning advanced in the assessment order. As per the CIT(A), the amendment to Sec. 32(1)(iia) of the Act made by the Finance Act, 2012 introducing additional depreciation on machinery used in the business of generation or generation and distribution of power was effective only from Assessment Year 2013-14 and, therefore, the impugned claim of the assessee was not maintainable for the captioned assessment year, which is prior to Assessment Year 2013-14.

Against the aforesaid, learned representative for the assessee contended that the claim of the assessee was supported by the judgment of the Hon'ble Madras High Court in the case of CIT vs Atlas Export Enterprise, 373 ITR 414 (Mad.) and Hon'ble Gujarat High Court in the case of CIT vs. Diamines and Chemicals Ltd., 222 Taxman 218, wherein even for assessment year prior to Assessment Year 2013-14, claim for additional depreciation u/s 32(1)(iia) of the Act has been allowed on the cost incurred for setting-up of wind mill for generation of electricity. It was, therefore, contended that even on the basis of the provisions of Sec. 32(1)(iia) of the Act, as it stood prior to the amendment by the Finance Act, 2012, the claim for additional depreciation was allowable. Apart therefrom, it has also been pointed out that in the following two decisions, viz., DCIT vs. The Hutti Gold Mines Co. Ltd. (ITA No. 832/Bang/2012) dated 2.8.2013 of Bangalore Bench of Tribunal and ACIT vs. M. Satishkumar (ITA No. 718/Mds/2012) dated 28.9.2012 of Chennai Bench of Tribunal, it has been held that the amendment by the Finance Act, 2012 referred to by the Assessing Officer was merely clarificatory in nature and does not dis-entitle an assessee from claiming depreciation even in the assessment year prior to the Assessment Year 2013-14 in the business of generation of electricity.

On the other hand, the ld. DR appearing for the Revenue has reiterated the reasoning advanced by the lower authorities, which I have already adverted to in the earlier part of this part and is not repeated for the sake of brevity.

Sec. 32(1)(iia) of the Act, as it stood for the assessment year under consideration, reads as under :-

In fact, the argument set-up by the Assessing Officer has already been considered by the Bangalore Bench of the Tribunal in the case of The Hutti Gold Mines Co. Ltd. (supra) by relying on an earlier decision of the Chennai Bench of the Tribunal in the case of M. Satishkumar (supra). As a consequence, I find no reason to uphold the order of CIT(A), which is hereby set-aside. Accordingly, the Assessing Officer is directed to allow assessee’s claim for additional depreciation u/s 32(1)(iia) of the Act with respect to the cost of wind mill.

In the result, appeal of the assessee is allowed.