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Income Tax Appellate Tribunal, DELHI
Before: SH. SHAMIM YAHYA & SH. ANUBHAV SHARMA
Both appeals have been filed by the assessee against the order dated 27.03.2019 of CIT(A)-02, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeal before it against the order dated 26.12.2017 and 5.12.2018 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the ACIT, Spl. Range-2, New Delhi (hereinafter referred as the Ld. AO).
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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.
2. That in any case and in the view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs. 16,95,41,149/- on account of excess depreciation, is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not giving the benefit of Rs.2,80,96,275/- which led to double disallowance made by Ld; AO.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234A, 234B, 234C and 234D of Income Tax Act. 5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal
at the time of hearing and all the above grounds are without prejudice to each other.”
3. Heard and perused the record.
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%.
4.1 Ld. DR has however defended the order of Ld. Tax Authorities below.
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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%.
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6. TheRevenue being aggrieved with the impugned order of the Tribunal is in appeal before us raising the two questions for our consideration.
7. Regarding Question (1) (a) We find both the CIT(A) as well as the Tribunal have recorded a finding of fact that the items listed at (a) to (d) in paragraph(3) above form an integral part of the Windmill. Thus, entitled to 80% depreciation being a part of a Windmill. Admittedly, this very question arose before the Punjab and Haryana High Court in Commissioner of Income Tax v/s M/s Eastman Impex being Income Tax Appeal No.350 of 2013 decided on 18th December, 2014 wherein an identical question arose and following the decisions of Rajasthan High Court in Commissioner of Income Tax v/s K. K. Enterprises (108 DTR 109) allowed the claim of depreciation made by the Assessee therein similar to one made here. (b) Moreover, the Pubjab and Haryana High Court in Eastman Impex(supra) also refers to the decision of the Mumbai Bench of the Tribunal in Trumac Engineering Co Pvt Ltd Mumbai v/s Income Tax Officer (Income Tax Appeal No. 555/Mum/2003 rendered on 27th June, 2008) wherein an identical issue has arisen and the assessee's claim therein for depreciation @100% (as in A. Y. 1996-97) was allowed. Mr. Suresh Kumar for the Revenue very fairly states that no appeal has been filed by the Revenue from the decision of the Tribunal in Trumac Engineering Co Pvt Ltd (supra), as the same has been accepted. (c) We find that there are concurrent finding of fact with regard to the nature of function rendered by the items listed at items (a) to (d) in paragraph (3) above in the Windmill in the orders of the CIT(A) and the impugned order of the Tribunal which are not shown to be perverse. This coupled with the decision of the Punjab and Haryana High Court i.e. Eastman Impextsupra) and the decision of the Tribunal in Trumac Engineering Co.Pvt Ltd(supra) which has been accepted by the Revenue and no distinguishing features are shown to us. Question No.(l) as framed does not give rise to any substantial question of law. Thus, not admitted.
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.