Wind power generation qualifies as manufacturing for additional depreciation under section 32(1)(iia)

The ITAT Bangalore upheld the CIT (A) decision, ruling that power generation through windmills qualifies as a manufacturing activity eligible for additional depreciation under section 32(1)(iia). The Tribunal emphasized that electricity generation falls within the definition of goods and is akin to the manufacture of an article or thing. The decision clarified that the amendment including power generation for additional depreciation supported this interpretation, dismissing the Revenue's appeal and affirming the allowance of additional depreciation for the power generated through windmills.

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Issues:
1. Denial of additional depreciation on windmill by Assessing Officer.
2. Appeal filed by the assessee before CIT (A) challenging the denial.
3. CIT (A) allowing the claim of the assessee for additional depreciation.
4. Revenue's appeal against CIT (A) order before ITAT Bangalore.
5. Interpretation of provisions related to additional depreciation u/s 32(1)(iia).
6. Whether power generation qualifies as a manufacturing activity for additional depreciation.

Analysis:
1. The Assessing Officer denied the claim of additional depreciation on a windmill installed by the company for power generation, stating it was not used in the production of the company's main products. The AO held that the windmill was not installed for the business of manufacturing gold, hence not eligible for additional depreciation.

2. The assessee appealed before CIT (A) contending that the power generated through the windmill was a separate line of business, covered under the definition of "article" or "thing." The CIT (A) agreed with the assessee, stating that the power generation was part of the company's business as per its objectives, and allowed the claim for additional depreciation.

3. The Revenue appealed the CIT (A) decision before ITAT Bangalore, arguing that the power produced was not used in the production of any article or thing, and thus, additional depreciation should not be granted. The Revenue also raised the issue of windmills being eligible for 80% depreciation previously, and the amendment to include power generation for additional depreciation was only clarificatory.

4. ITAT Bangalore upheld the CIT (A) order, emphasizing that electricity generation qualifies as a manufacturing activity. Referring to relevant judgments, the Tribunal clarified that electricity falls within the definition of goods and the process of electricity generation is akin to the manufacture of an article or thing. The Tribunal also noted that the amendment to include power generation for additional depreciation was supportive of this view.

5. The Tribunal dismissed the Revenue's appeal, stating that the assessee fulfilled the conditions under section 32(1)(iia) for additional depreciation. The Tribunal also highlighted that the Revenue's argument regarding the previous year's depreciation rate was not relevant to the current claim for additional depreciation on windmills.

6. Ultimately, the ITAT Bangalore upheld the CIT (A) decision, dismissing the Revenue's appeal and affirming that the power generation through windmills qualified for additional depreciation as per the law.

Conclusion:
The judgment clarified that power generation activities through windmills qualify as a manufacturing process eligible for additional depreciation, emphasizing the broader interpretation of the law beyond the direct production of the company's main products.

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