Assessee wins appeal for windmill depreciation claim under Income Tax Rules

The appeal was dismissed in favor of the assessee, affirming their entitlement to claim depreciation on windmills for the assessment year 2005-2006. The Court held that the assessee met the requirements for depreciation under the Income Tax Rules, following the precedent set by a previous decision of the Bombay High Court. It was determined that no separate intimation was necessary if the option for depreciation was exercised while filing returns under Section 139(1) of the Income Tax Act. The questions of law raised by the Revenue were answered in favor of the assessee based on the interpretation of the relevant provisions.

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Issues:
1. Claim of depreciation on windmills contrary to Rule 5(1A) of Income Tax Rules and Appendix 1A.

Analysis:
The Revenue filed an appeal challenging the order of the Income Tax Appellate Tribunal regarding the claim of depreciation by the assessee on windmills for the assessment year 2005-2006. The questions of law raised by the Revenue questioned the Tribunal's decision on the satisfaction of the second proviso to Rule 5(1A) of the Income Tax Rules, granting depreciation at 80% on windmills, and the entitlement to a higher rate of depreciation. The issue revolved around whether the assessee met the requirements for depreciation as per the relevant provisions.

The learned standing counsel for the Revenue argued that the issue was settled by a previous decision of the Court in a batch of cases. Referring to a decision of the Bombay High Court, the Court held that if the assessee exercised the option in terms of the second proviso to Rule 5(1A) at the time of filing the return of income, no separate intimation was required. The Court agreed with the Tribunal's reasoning that no separate procedure was necessary if the option was exercised while filing returns under Section 139(1) of the Income Tax Act. Consequently, the Court answered the questions of law in favor of the assessee based on the precedent set by the Bombay High Court decision.

In conclusion, following the precedent established by the Court's previous decision and the interpretation of the relevant provisions, the substantial questions of law raised by the Revenue were resolved in favor of the assessee. As a result, the appeal was dismissed, affirming the entitlement of the assessee to claim depreciation on windmills as per the provisions of the Income Tax Rules.

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