CLEAN WIND POWER (MANVI) PVT LTD,NEW DELHI vs. ACIT SPL. RANGE-02, NEW DELHI

The brief facts of the case are that assessee had filed return of income at a loss and the case was selected for scrutiny. Ld. AO ‘on examination of financials of the assessee’ was of the view that certain expenditures cannot be considered to be part of Wind Turbine Generators and accordingly are not eligible for 80% depreciation. Ld. CIT(A) had sustained the additions for which assessee is in appeal raising following grounds :- “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs. 16,95,41,149/- on account of excess depreciation claimed on civil and electrical work and further erred in not treating the same as integral part of wind mill and impugned disallowance has been made by recording incorrect facts and findings and without appreciating the submissions and evidences filed by the assessee and in violation of principles of natural justice.

At the outset, Ld. AR relied the order of Hon’ble Bombay High Court in the case of CIT vs. CTR Manufacturing Industries , of 2013 order dated 01.03.2016 to submit that expenses incurred on Power Evacuation Infrastructure, Erection and Commissioning, Line Work and Electrical Fittings and Civil Construction Cost are part of the Wind-mill and are eligible for depreciation @ 80%.

Giving thoughtful consideration to the issue and the judgments ld. AR has relied, there appears to be no doubt that the issue has been thoroughly examined and consistently determined in favour of the assessee. It will be relevant to reproduce the findings in CIT vs. CTR Manufacturing Industries (supra), as below : “5. Being aggrieved, both the appellant – revenue as well as the Respondent-assessee preferred appeal to the Tribunal. The Tribunal, by the impugned order negatived the appeal of the Revenue by holding that the items listed at (a) to (d) in paragraph(3) above were necessary parts for a Windmill and supported generation of power. Thus, upheld the order dated 10th February, 2011 of the CIT(A) allowing depreciation @80% on the aforesaid items at (a) to (d) of paragraph(3) above. So far as the appeal of the Assessee with regard to other expenditure at items (e) to (h) in paragraph(3) is concerned, the Tribunal by the impugned order allowed the Respondent-assessee's appeal holding that the items (e) to (h) above relate to setting up of Windmill and consequently depreciation @80% is allowed. However, the issue was restored to the Assessing Officer for the limited purpose finding out the costs thereof which are allocable to the Windmill for the purpose of computing depreciation only on the amounts so quantified on allocation. So far as civil foundation listed at item (i) in paragraph(3) above is concerned, the impugned order of the Tribunal follows the decision of this Court in The case of the Commissioner of Income Tax-III, Pune v/s Cooper Foundary Pvt as the Respondent-assessee preferred appeal to the Tribunal. The Tribunal, by the impugned order negatived the appeal of the Revenue by holding that the items listed at (a) to (d) in paragraph (3) above were necessary parts for a Windmill and supported generation of power. Thus, upheld the order dated 10th February, 2011 of the CIT(A) allowing depreciation @80% on the aforesaid items at (a) to (d) of paragraph(3) above. So far as the appeal of the Assessee with regard to other expenditure at items (e) to (h) in paragraph(3) is concerned, the Tribunal by the impugned order allowed the Respondent-assessee's appeal holding that the items (e) to (h) above relate to setting up of Windmill and consequently depreciation @80% is allowed. However, the issue was restored to the Assessing Officer for the limited purpose finding out the costs thereof which are allocable to the Windmill for the purpose of computing depreciation only on the amounts so quantified on allocation. So far as civil foundation listed at item (i) in paragraph(3) above is concerned, the impugned order of the Tribunal follows the decision of this Court in The case of the Commissioner of Income Tax-Ill, Pune v/s Cooper Foundary Pvt Ltd (Income Tax Appeal No. 1326 of 2010 rendered on 14th June,2011), wherein the depreciation in respect of civil foundation was allowed @80%.

Regarding Question (2) (a) It is agreed position between the parties that the issue raised herein stands concluded against the Revenue by the decision of this Court in Cooper Foundary Pvt Ltd (supra) i.e. the cost of civil foundation is to be allowed depreciation @80%. (b) In the above view, Question No.2 as formulated does not give rise to any substantial question of law. Thus, not entertained.”

Further co-ordinate Bench in the case of Clean Wind Power (Ratlam P. Ltd.) vide order dated 17/08/2022 has dealt with the ITA No. 4568-69/Del/2019 5 issue of Civil Structure being part of Wind mill for depreciation and dismissed the appeal of Revenue by observing that the Civil Structure is part of composite structure of the Wind-mill and therefore, can be seen in isolation.

However, in regard to ground no. 3 Ld. AR has conceded that as with regard to the land, the claim of depreciation is not sustainable.