Windmill depreciation claims upheld for installation-related costs treated as part of the eligible asset

Electrical items supplied for windmill installation, together with labour charges for erection, testing and commissioning, were treated as integral to the windmill asset and allowed for the higher depreciation rate. Processing fees and application fees were allocated between windmill and civil cost components, and only the windmill-related portion qualified for higher depreciation. The reasoning followed the assessee's earlier-year treatment, with no basis found to depart from that view. Higher depreciation was therefore confined to eligible windmill-related components, while the Revenue's objection failed.

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Issues: Whether the cost of electrical items, labour charges, processing fees and other allied expenses incurred for installation and commissioning of windmills formed part of the eligible windmill cost for depreciation at the higher rate.

Analysis: The dispute was identical to the assessee's earlier year and the same reasoning was applied. Expenses on electrical items supplied for the windmill, and labour charges for erection, installation, testing and commissioning, were treated as integral to the windmill and therefore eligible for the higher depreciation rate. Processing fees and application fees were apportioned between the windmill and civil cost components, with the eligible portion allowed at the higher rate. The Tribunal found no reason to differ from the view already taken in the assessee's own case for the earlier assessment year.

Conclusion: The higher depreciation was allowed only on the eligible windmill-related components and the Revenue's challenge failed.

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