Tribunal affirms additional depreciation for windmills in power generation case

The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) to allow additional depreciation for wind mills under section 32(1)(iia) of the Income Tax Act, 1961 to the trader engaged in power generation. The Tribunal dismissed the Revenue's appeals, emphasizing that the wind mills were acquired and installed before the specified date, making the assessee eligible for the additional depreciation. The Tribunal also found the decision in CIT Vs. VTM Ltd. applicable to the trader's case, supporting the allowance of additional depreciation for setting up windmills for power generation.

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Issues:
- Additional depreciation for wind mills u/s. 32(1)(iia) of the Income Tax Act, 1961 allowed by CIT (A).
- Applicability of the decision of CIT Vs. VTM Ltd. (319 ITR 336) to the case of a trader.

Analysis:

Issue 1: Additional Depreciation for Wind Mills
The appeals by the Revenue were against the orders of the Commissioner of Income Tax (Appeals) allowing additional depreciation for wind mills u/s. 32(1)(iia) of the Income Tax Act, 1961. The Revenue contended that the additional depreciation was not applicable for the assessment year 2011-12, as per the provisions of the Act and the Memorandum to the Finance Act, 2012, which allowed it for subsequent assessment years only. The assessee, engaged in trading and power generation, claimed additional depreciation for wind mills installed during the relevant year. The CIT (A) allowed the claim, stating that the wind mill was acquired and installed before the specified date, making the assessee eligible for additional depreciation. The Tribunal upheld the CIT (A)'s decision based on the assessee's engagement in the generation of power, similar to the decision in the assessee's own case from the preceding assessment year. Consequently, the Tribunal dismissed the Revenue's appeals.

Issue 2: Applicability of CIT Vs. VTM Ltd. Decision
The Revenue argued that the decision of CIT Vs. VTM Ltd. (319 ITR 336) was not applicable to the case of a trader claiming additional depreciation for wind mills, as the VTM Ltd. case involved a textile manufacturer. However, the Tribunal found that the VTM Ltd. decision was relevant as it dealt with the allowance of additional depreciation u/s. 32(1)(iia) for setting up a windmill, which was applicable to the current scenario. The Tribunal held that the VTM Ltd. decision supported the assessee's claim for additional depreciation, emphasizing that electricity generated by an assessee constitutes an article or goods. Therefore, the Tribunal dismissed the Revenue's appeals, affirming the applicability of the VTM Ltd. decision to the trader's case.

In conclusion, the Tribunal upheld the CIT (A)'s decision to allow additional depreciation for wind mills to the trader engaged in power generation, based on the provisions of the Income Tax Act and relevant judicial precedents, including the VTM Ltd. case.

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