Depreciation apportionment in Windmill case clarified by Tribunal

The Tribunal dismissed the Revenue's appeals and partly allowed the assessee's cross-objections regarding the assessment of depreciation on a Windmill. The apportionment of depreciation between the foundation of the Windmill and other civil works was set at 60% and 40%, respectively. Concerns regarding the validity of the notice u/s 153C and the disallowance of depreciation on civil work were withdrawn and dismissed during the hearing. The decision on depreciation apportionment applied to all related appeals and cross-objections, with the order pronounced on 29th November 2013.

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Issues involved: Assessment of depreciation on the cost of Windmill, apportionment of depreciation between civil work and Windmill, validity of notice u/s 153C, disallowance of depreciation on civil work.

Assessment of Depreciation on Windmill:
The dispute in the case revolved around the depreciation claimed on the cost of a Windmill. The Assessing Officer recalculated the depreciation for the assessment years, reducing the claim due to the inclusion of civil work cost. The CIT(A) partially allowed relief, attributing 40% of the civil work cost to the foundation of the Windmill for higher depreciation and 60% for buildings/roads at a lower rate. Both the Revenue and the assessee appealed this decision.

Apportionment of Depreciation:
The Tribunal considered the cost of foundation of the Windmill as an integral part of the Windmill's cost based on previous judgments. However, the exact allocation of the civil work cost was disputed. The Tribunal decided to apportion 60% of the cost to the foundation of the Windmill for higher depreciation and 40% to other civil works for lower depreciation, setting aside the CIT(A)'s order.

Validity of Notice u/s 153C and Disallowance of Depreciation:
The Cross-objections raised concerns about the validity of the notice u/s 153C and the disallowance of depreciation on civil work without seized material. These grounds were withdrawn during the hearing and dismissed accordingly.

Conclusion:
The Tribunal dismissed the Revenue's appeals and partly allowed the assessee's cross-objections. The decision on depreciation apportionment applied to all related appeals and cross-objections. The order was pronounced on 29th November 2013.

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