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of <h1>Tribunal Upholds Higher Depreciation on Windmill Civil Work</h1> <h3>The ACIT Circle-6, Ahmedabad Versus M/s. Maharshi Udyog</h3> The ACIT Circle-6, Ahmedabad Versus M/s. Maharshi Udyog - TMI Issues:1. Disallowance of depreciation on windmill.2. Treatment of expenses made on windmill.3. Disallowance of insurance and general insurance expenditure.4. Disallowance of contribution to Group Gratuity Scheme.5. Capitalization of finance charges.6. Capitalization of insurance charges.7. Disallowance of transportation charges.Issue 1: Disallowance of Depreciation on WindmillThe appeal involved the Revenue and the assessee against the order of the Commissioner of Income Tax (Appeals). The Assessing Officer disallowed depreciation on civil work for a wind farm project, leading to an addition of a specific amount to the assessee's income. The CIT(A) reversed this decision, considering the civil work as an integral part of the windmill's cost. The Tribunal dismissed the Revenue's appeal, citing a decision by the Hon'ble Gujarat High Court in a similar case, emphasizing the interconnectedness of the civil structure and the windmill for higher depreciation allowance.Issue 2: Treatment of Expenses Made on WindmillAnother ground of appeal related to expenses incurred on the windmill, specifically bank and loan processing charges. The Assessing Officer disallowed these expenses as capital expenditure, but the CIT(A) directed to allow depreciation at a higher rate. Following the same Gujarat High Court decision, the Tribunal dismissed the Revenue's appeal, upholding the allowance of higher depreciation on these expenses related to the windmill.Issue 3: Disallowance of Insurance and General Insurance ExpenditureThe third issue involved the disallowance of insurance expenditure claimed by the assessee on the windmill. The Assessing Officer treated it as capital expenditure, allowing only normal machinery depreciation. The CIT(A) allowed higher depreciation, and the Tribunal upheld this decision based on the Gujarat High Court's ruling, emphasizing the specialized nature of the civil structure and electric fittings required for windmill operation.Issue 4: Disallowance of Contribution to Group Gratuity SchemeIn a cross-objection, the assessee challenged the disallowance of contribution to a Group Gratuity Scheme. The Assessing Officer disallowed it due to non-approval of the gratuity fund. The Tribunal remanded the matter back to the Assessing Officer for reconsideration with the approval certificate, allowing the assessee an opportunity to verify and support the deduction claim.Issues 5, 6, and 7: Capitalization and DisallowanceThe cross-objection also raised concerns about the capitalization of finance charges, insurance charges, and disallowance of transportation charges. The Tribunal noted that the assessee did not press these grounds during the hearing, leading to their dismissal for want of prosecution.In conclusion, the Tribunal dismissed the Revenue's appeal while partially allowing the cross-objection filed by the assessee for statistical purposes, remanding one issue back to the Assessing Officer for further consideration.
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