Tribunal Upholds Revenue's Depreciation Appeal, Wind Mill Components Treated Together

The Tribunal dismissed both appeals of the Revenue related to claiming additional depreciation under section 32(1)(ii) of the Income Tax Act and the treatment of wind mill and electrical works as separate components for depreciation. The Tribunal upheld the CIT(A) order, stating that generation of electricity qualifies as a manufacturing activity. It also ruled that civil and electrical components of wind mills cannot be given separate treatment for depreciation, directing depreciation at 80% on the whole cost of the wind mill. The decisions were based on previous tribunal judgments supporting the assessee's position.

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Issues involved:
1. Claiming additional depreciation u/s. 32(1)(ii) of the Income Tax Act.
2. Treatment of wind mill and electrical works as separate components for depreciation.

Issue 1: Claiming additional depreciation u/s. 32(1)(ii) of the Income Tax Act:
The appeals were filed by the Revenue against the orders of the Commissioner of Income Tax(Appeals) for AYs 2007-08 & 2008-09. The Revenue contended that the assessee did not satisfy the condition of engaging in the business of manufacture or production of any article or thing for claiming additional depreciation u/s. 32(1)(ii). The Assessing Officer had disallowed additional depreciation claimed by the assessee on the wind mill and restricted the rate of depreciation on civil works and electrical fittings. The CIT(Appeals) allowed the appeals of the assessee, citing previous tribunal judgments supporting the view that generation of electricity is akin to manufacturing of a new product. The Tribunal upheld the CIT(A) order, stating that generation of electricity qualifies as a manufacturing activity and fulfills the conditions under section 32(1)(iia). The Tribunal dismissed the Revenue's appeal, as the issue had already been adjudicated in a previous case.

Issue 2: Treatment of wind mill and electrical works as separate components for depreciation:
The second issue involved in the appeal was regarding the rate of depreciation on civil works and electrical fittings. The Tribunal referred to a previous case where it was held that wind mills are fabricated/erected on a specialized foundation, and the civil and electrical components are indivisible parts of the wind mill. Therefore, the civil and electrical components cannot be given separate treatment for depreciation. The Tribunal directed the assessing authority to grant depreciation at 80% on the whole cost of the wind mill, including civil and electrical components. Based on this decision, the Tribunal dismissed the Revenue's appeal on this ground as well.

In conclusion, the Tribunal dismissed both appeals of the Revenue, as the issues raised had been previously adjudicated and the decisions were in favor of the assessee. The judgments cited by the parties and the previous tribunal decisions played a crucial role in the final decision of the Tribunal.

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