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of <h1>Appeal outcome: depreciation allowance for windmill infrastructure upheld, contribution depreciation allowed despite ownership challenge.</h1> <h3>Commissioner of Income Tax-I, Ludhiana Versus Rakesh Gupta</h3> The appeal was partially successful as the disallowance under Section 36(1)(iii) was upheld, but the disallowance of higher depreciation on the ... Disallowance made under Section 36(1)(iii) - Disallowance of higher depreciation on installation of electrical line for power transmission and metering treated as not part of Wind Mill - Power evacuation infrastructure as part of wind mill - Depreciation on contribution for power evacuation facility - Held that:- Disallowance made under Section 36(1)(iii) - It was not the case of the AO that the assessee had diverted the funds borrowed on interest for the purpose of advancing the sum to his son for business. The Tribunal noted that the AO had in fact accepted that no such borrowed funds had been diverted/advanced by the assessee to his son. There was no nexus between the funds borrowed by the assessee and the funds diverted/advanced to his son. There were free reserves available with the assessee to advance the interest free loan to his son. All other grounds are admittedly covered by a judgement of the Division Bench of this Court dated 18.12.2014 titled as Commissioner of Income Tax-I, Ludhiana Vs M/s Eastman Impex [2015 (1) TMI 436 - PUNJAB & HARYANA HIGH COURT]. The questions are answered against the appellant/department. - Decided against the revenue. Issues:1. Disallowance under Section 36(1)(iii) deleted by ITAT2. Disallowance of higher depreciation on installation of electrical line3. Treatment of power evacuation infrastructure as part of windmill for depreciation4. Allowing depreciation on contribution for power evacuation facilityAnalysis:1. The appellant contested the disallowance made under Section 36(1)(iii), arguing that the ITAT erred in upholding the order of the CIT(A) which deleted the disallowance. The appellant relied on a judgment of the Punjab & Haryana High Court. However, the court noted that the issues related to higher depreciation and power evacuation infrastructure were already covered by a previous judgment against the appellant. Therefore, the appeal on these issues was dismissed.2. Regarding the disallowance of higher depreciation on the installation of the electrical line, the court found that the CIT(A) had deleted the disallowance, which was upheld by the ITAT. The appellant's argument was rejected as the court found that the power evacuation infrastructure was considered part of the windmill by the ITAT. The court upheld the decision of the lower authorities in this regard.3. The court addressed the issue of treating the power evacuation infrastructure as part of the windmill for depreciation purposes. The appellant claimed that the infrastructure was not a renewable energy device and thus not eligible for depreciation at 80%. However, the court found that the ITAT had considered the infrastructure as part of the windmill and renewable energy device. The court noted that the AO's evidence was insufficient to prove otherwise. Therefore, the ITAT's decision was upheld in this matter.4. Lastly, the appellant challenged the allowance of depreciation on the contribution for the power evacuation facility, arguing that they did not own the asset. The court observed that the appellant was a contributor for availing the facility, not the owner. Despite this, the ITAT allowed depreciation on the contribution. The court found no legal error in this decision and dismissed the appeal accordingly.
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