Tribunal Upholds Depreciation Claim on Leased Windmills, Overturns Tax Authorities' Decision

The Tribunal allowed the appellant's depreciation claim on windmills leased out, despite initial disallowance by the AO and affirmation by the Commissioner of Income Tax (Appeals). The Tribunal acknowledged the windmills' operational status based on evidence from the Electricity Board, overturning the previous decisions. The case was remitted to the AO for recalculating the depreciation amount.

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Issues involved: Disallowance of depreciation claim on windmills given on lease.

Summary:
1. The appellant contested the disallowance of a depreciation claim of Rs. 1,10,00,000/- on windmills given on lease, despite a certificate from the Electricity Board confirming their commissioning.
2. The Assessing Officer (AO) questioned the cost of the windmills and limited the depreciation claim to Rs. 43,39,469/- based on a grant agreement with a bank. He also doubted the production of power by the windmills on the claimed date.
3. The Commissioner of Income Tax (Appeals) upheld the AO's decision, stating that even if the windmills were ready for use, depreciation could not be claimed.
4. The appellant argued before the Tribunal, citing the electricity board's certificate and precedents supporting their claim for depreciation.
5. The Departmental Representative contended that the minimal power production was insufficient for a depreciation claim.
6. The Tribunal found that the windmills were indeed connected to the grid and producing electricity, thus allowing the depreciation claim. The quantification of depreciation was remitted back to the AO for further assessment.

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