Tax Appeals Granted Deductions for Power Generation & Depreciation. Additional Depreciation Ordered. Revenue Appeals Dismissed.

The assessee's appeals in I.T.A.Nos.344 and 1034/Mds/2012 were allowed, permitting deduction u/s 80IA for power generation, depreciation on building in captive power plant, and goodwill. The Tribunal directed the Assessing Officer to allow additional depreciation on the power plant and machinery upgrades. However, the appeal in I.T.A.No.457/Mds/2014 was dismissed. The Revenue's appeals were also dismissed. The order was pronounced on 4th March 2016 in Chennai.

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Issues Involved:
1. Disallowance of deduction u/s 80IA of the Act.
2. Disallowance of depreciation on the building added in the captive power plant.
3. Depreciation on goodwill.
4. Provision made for doubtful advances.
5. Reopening of assessment u/s 147 of the Act.
6. Additional depreciation on the captive power plant.
7. Additional depreciation on addition made to plant and machinery.

Issue-wise Detailed Analysis:

1. Disallowance of Deduction u/s 80IA of the Act:
The assessee claimed deduction u/s 80IA on profits from generating power by windmill for captive consumption. The Assessing Officer disallowed the claim, and the CIT(A) upheld this based on a previous Tribunal order. However, the Madras High Court allowed the claim in a similar case. The Tribunal followed the High Court's judgment and directed the Assessing Officer to allow the deduction.

2. Disallowance of Depreciation on the Building Added in the Captive Power Plant:
The assessee claimed depreciation on a building constructed for the captive power plant, which the Assessing Officer disallowed. The Tribunal, referencing a prior decision and the Supreme Court's judgment in CIT vs Karnataka Power Corporation, found the assessee eligible for additional depreciation and directed the Assessing Officer to allow it.

3. Depreciation on Goodwill:
The assessee claimed depreciation on goodwill, which the Assessing Officer disallowed. The Tribunal upheld the CIT(A)'s decision to allow the claim, citing that goodwill is an intangible asset eligible for depreciation under Explanation 3 to sec. 32 of the Act.

4. Provision Made for Doubtful Advances:
The assessee wrote off advances as doubtful, which the Assessing Officer disallowed. The Tribunal found that since the provision was already offered for taxation, disallowing it would result in double taxation. Therefore, the Tribunal upheld the CIT(A)'s decision to allow the deduction.

5. Reopening of Assessment u/s 147 of the Act:
The assessment was reopened to add back the provision for bad and doubtful debts to the book profits. The Tribunal found the reopening justified as the provision was not discussed in the original assessment. The Tribunal also confirmed the addition of the provision to the book profits under sec. 115JB.

6. Additional Depreciation on the Captive Power Plant:
The assessee claimed additional depreciation on the power plant used for captive consumption. The Tribunal, following its previous decision, found the assessee eligible for additional depreciation and directed the Assessing Officer to allow it.

7. Additional Depreciation on Addition Made to Plant and Machinery:
The assessee claimed additional depreciation on upgraded machinery. The Tribunal found that the upgradation amounted to the installation of new machinery and allowed the additional depreciation, setting aside the lower authorities' orders.

Summary of Judgments:
- Assessee's appeals in I.T.A.Nos.344 and 1034/Mds/2012 were allowed.
- Assessee's appeal in I.T.A.No.457/Mds/2014 was dismissed.
- Revenue's appeals in I.T.A.Nos.448 & 1085/Mds/2012 and 468/Mds/2014 were dismissed.

Order Pronounced:
The order was pronounced in the open court on 4th March 2016, at Chennai.

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