2013 (12) TMI 373 - HC - Income Tax

Court affirms ITAT decision on additional depreciation for wind generator under Income Tax Act

The High Court upheld the ITAT's decision regarding the eligibility for additional depreciation on a wind electric generator under Section 32(1)(iia) of ... Depreciation on wind mills installed - Held that:- Following Commissioner of Income Tax Vs. VTM Ltd. [2009 (9) TMI 35 - MADRAS HIGH COURT] - While claiming the deduction under Section 32(1)(iia) of the Income Tax Act setting up will mill has nothing to do with the power industry and what is required to be satisfied in order to claim additional depreciation is that the setting up of new machinery or plant should have been acquired and installed by an assessee, who was already engaged in the business of manufacture or production of any article or thing - Depreciation is allowed - Decided against Revenue. Issues:1. Interpretation of Section 32(1)(iia) of the Income Tax Act regarding additional depreciation on wind electric generator.2. Validity of the deduction claimed by the assessee for installing wind mills.3. Disallowance of additional depreciation by the Assessing Officer.4. Decision of the CIT(A) in deleting the addition on account of disallowance.5. Judgment of the ITAT confirming the CIT(A) order.6. Appeal by the revenue challenging the ITAT decision.Analysis:1. The case involves the interpretation of Section 32(1)(iia) of the Income Tax Act concerning the eligibility for additional depreciation on a wind electric generator. The revenue contested the deletion of an addition of Rs.1,17,98,030 by the ITAT, arguing that the generator did not meet the criteria for additional depreciation under Section 32(1)(iia).2. The assessee, engaged in the manufacture and sale of chemicals, claimed a deduction under Section 32(1)(iia) for installing wind mills to generate electricity. The Assessing Officer disallowed this deduction, leading to a revised total income determination. The CIT(A) later deleted the disallowance based on precedents from the Madras High Court.3. The Assessing Officer's disallowance was based on the belief that the assessee, not in the power industry, was ineligible for the deduction. However, the CIT(A) referenced prior court decisions to support the assessee's claim under Section 32(1)(iia).4. The CIT(A) decision was challenged by the revenue in an appeal before the ITAT, which upheld the deletion of the disallowance. The ITAT's judgment aligned with the Madras High Court decisions and supported the assessee's entitlement to the deduction.5. In the High Court's analysis, the ITAT's decision was deemed appropriate, as it followed the legal precedents and correctly applied the provisions of Section 32(1)(iia). The High Court found no error in the ITAT's ruling and upheld the deletion of the disallowance.6. The High Court concluded that no substantial question of law arose from the case, leading to the dismissal of the revenue's appeal. The judgment affirmed the ITAT's decision and rejected the revenue's challenge, ultimately dismissing the Tax Appeal.