Tribunal decision: Appeal partly allowed, CIT order upheld, issue of higher depreciation remitted.

The Tribunal partly allowed the appeal by condoning the delay in filing, upholding the CIT's order on a typographical error in depreciation, and remitting the issue of higher depreciation on electrical works back to the Assessing Officer for further investigation.

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Issues Involved:
1. Delay in filing the appeal.
2. Invocation of Section 263 by CIT regarding higher depreciation claim on windmill.
3. Classification and depreciation rate of electrical works and development charges related to windmill.

Issue-wise Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal was delayed by 75 days. The assessee filed a petition for condonation of delay, explaining that the authorized representative was involved in statutory audits and subsequently fell ill, causing the delay. The Tribunal found the reasons bona fide and condoned the delay, admitting the appeal for adjudication.

2. Invocation of Section 263 by CIT Regarding Higher Depreciation Claim on Windmill:
The CIT observed errors in the assessment order, noting that excess depreciation of Rs. 8,00,000 was allowed for the windmill. The assessee accepted this as a typographical error during the Section 263 proceedings. The Tribunal found no infirmity in the CIT's order on this count, as the excess depreciation was acknowledged by the assessee.

3. Classification and Depreciation Rate of Electrical Works and Development Charges Related to Windmill:
The CIT found that the electrical works and development charges to KSEB were not part of the renewable energy device and thus not eligible for higher depreciation. The assessee argued that these expenses were integral to the windmill installation, citing various precedents. However, the CIT held that the transmission lines and electrical works were not integral parts of the windmill, as they could function independently and were not exclusively designed for the windmill.

The Tribunal noted that the assessment order lacked any discussion on this issue, indicating that the Assessing Officer did not conduct a necessary enquiry. It emphasized the importance of the functional test to determine if the electrical equipment was an integral part of the windmill. The Tribunal pointed out that the depreciation schedule categorically specifies higher depreciation for "windmills and any specially designed devices which run on windmills." Since there was no evidence that the electrical works were specially designed for the windmill, the Tribunal remitted the issue back to the Assessing Officer for fresh consideration.

Conclusion:
The appeal was partly allowed. The Tribunal condoned the delay in filing the appeal, upheld the CIT's order regarding the typographical error in depreciation, and remitted the issue of higher depreciation on electrical works back to the Assessing Officer for further enquiry.

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