Tribunal upholds CIT(A) decisions on windmill depreciation & exempted income, dismissing Revenue's appeals.

The Tribunal dismissed all three appeals of the Revenue, upholding the decisions made by the CIT(A) in favor of the assessee regarding the depreciation on items related to windmills and the disallowance under section 14A for earning exempted income. The Tribunal emphasized that items like specialized foundation, electrical fittings, and approach roads were integral to a windmill and should be considered part of it for depreciation purposes, based on a previous case precedent. The Revenue's grounds were dismissed, and the CIT(A)'s decisions were upheld.

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Issues:
- Deletion of additions/disallowances made by the Assessing Officer on account of cost of transformer and civil works in connection with windmills
- Rate of depreciation on items related to windmills
- Deletion of disallowance under section 14A for earning exempted income

Analysis:
1. The three appeals before the Appellate Tribunal ITAT Chennai involved the Revenue challenging the orders of the CIT(A) for the assessment years 2006-07, 2007-08, and 2008-09. The common issue in all three appeals was the deletion of additions/disallowances made by the Assessing Officer regarding the cost of transformer and civil works in connection with windmills, along with the rate of depreciation on these items.

2. The Assessing Officer disallowed higher depreciation claimed by the assessee on civil works and cost of electrical transformer, stating that these items were not eligible for higher depreciation rates as in the case of windmills. The CIT(A) partly allowed the appeals of the assessee, holding that the cost of transformer and approach roads were integral parts of the windmill and thus entitled to higher depreciation rates. This decision led to the Revenue appealing before the Tribunal against the CIT(A)'s orders.

3. The Authorized Representative for the assessee referred to a previous case decided by the Tribunal in favor of the assessee, arguing that the issue had already been settled. The Tribunal examined the previous case and highlighted the essential components of a windmill, emphasizing that items like specialized foundation, electrical fittings, and approach roads were integral to a windmill and should be considered part of it for depreciation purposes. The Tribunal dismissed the Revenue's grounds based on the precedent set by the earlier case.

4. In one of the appeals relevant to the assessment year 2008-09, the Revenue also challenged the deletion of disallowance under section 14A for earning exempted income. The CIT(A) had allowed the assessee's appeal, considering the small quantum of new investments made during the relevant assessment year. The Tribunal upheld the CIT(A)'s decision, stating that no addition was warranted due to the insignificant amount involved, and dismissed the Revenue's ground of appeal on this issue.

5. Ultimately, the Tribunal dismissed all three appeals of the Revenue, upholding the decisions made by the CIT(A) in favor of the assessee regarding the depreciation on items related to windmills and the disallowance under section 14A for earning exempted income.

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