Tribunal Upholds Deduction Claim for Windmills, Adjusts Depreciation Rates

The Tribunal upheld the CIT(A)'s decisions allowing the assessee's deduction claim under Section 80IA and treating windmills as separate undertakings. It also affirmed the initial assessment year selection, 80% depreciation on electrical fittings, and disallowed additional depreciation on windmills. However, the Tribunal reduced the depreciation rate on temporary approach roads and fencing to 10%. The Revenue's appeals were dismissed, while the assessee's appeals were partly allowed for the assessment years 2011-12 and 2012-13, based on legal precedents and prior judgments.

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Issues Involved:
1. Deduction under Section 80IA
2. Treatment of windmills as separate undertakings
3. Selection of initial assessment year for deduction under Section 80IA
4. Rate of depreciation on electrical fittings used for windmills
5. Additional depreciation on windmills
6. Depreciation on temporary approach roads and fencing

Comprehensive, Issue-wise Detailed Analysis:

1. Deduction under Section 80IA:
The Revenue challenged the CIT(A)'s decision to allow the assessee's claim for deduction under Section 80IA for the assessment years 2011-12 and 2012-13. The Tribunal upheld the CIT(A)'s decision, confirming that the assessee's claim for deduction was valid and dismissing the Revenue's grounds on this issue.

2. Treatment of Windmills as Separate Undertakings:
The Revenue contended that windmills set up at different locations should not be treated as separate undertakings for the purpose of Section 80IA deduction. The Tribunal referenced its own prior decisions and the case of J. Sons Foundry Pvt. Ltd. vs. DCIT, confirming that each windmill should be considered an independent undertaking. Therefore, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to treat each windmill as a separate undertaking.

3. Selection of Initial Assessment Year for Deduction under Section 80IA:
The Revenue disputed the CIT(A)'s decision that the initial assessment year for claiming deduction under Section 80IA is at the option of the assessee. The Tribunal upheld the CIT(A)'s decision, referencing its prior judgment and the case of Poonawalla Estate Stud & Agro Farm Pvt. Ltd., stating that the initial assessment year is the year in which the deduction is first claimed by the assessee after exercising the option as per Section 80IA(2).

4. Rate of Depreciation on Electrical Fittings Used for Windmills:
The Revenue argued against the CIT(A)'s decision to allow 80% depreciation on electrical fittings used for windmills, asserting that only 15% should be allowed. The Tribunal upheld the CIT(A)'s decision, referencing its prior decisions and confirming that 80% depreciation is applicable to electrical fittings used for windmills.

5. Additional Depreciation on Windmills:
The assessee's appeal included a claim for additional depreciation on windmills. The Tribunal upheld the CIT(A)'s decision to disallow additional depreciation, referencing prior judgments and the case of CIT vs. VTM Ltd., which established that additional depreciation is not allowable for windmills purchased before the legislative amendment permitting such claims from A.Y. 2013-14.

6. Depreciation on Temporary Approach Roads and Fencing:
The assessee contended that the cost of temporary approach roads and fencing should be included in the actual cost of windmills, allowing for 80% depreciation. The Tribunal upheld the CIT(A)'s decision to allow only 10% depreciation on these items, referencing its prior decisions and the case of Poonawalla Estate Stud & Agro Farm Pvt. Ltd., which determined that 10% is the appropriate rate for depreciation on temporary approach roads and fencing.

Conclusion:
The Tribunal dismissed the appeals of the Revenue for both assessment years 2011-12 and 2012-13 and partly allowed the appeals of the assessee for the same assessment years. The Tribunal's decisions were based on established legal precedents and prior judgments, affirming the CIT(A)'s rulings on the various issues presented.

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