Tribunal grants additional depreciation for windmills, upholds rates for approach road, fencing, and installation costs.

The Tribunal allowed the assessee's claim for additional depreciation on windmills, stating that electricity generation qualifies as manufacturing under section 32(1)(iia) of the Act. The Tribunal upheld the CIT(A)'s decision on the depreciation rate for temporary approach road and fencing, citing a previous case. Additionally, the Tribunal affirmed the CIT(A)'s decision on higher depreciation for windmill installation costs, emphasizing their integral nature to the windmill.

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Issues Involved:
1. Disallowance of Additional Depreciation on Windmill
2. Depreciation on Cost of Temporary Approach Road and Fencing
3. Disallowance of Depreciation on Costs Related to Installation of Windmills

Detailed Analysis:

1. Disallowance of Additional Depreciation on Windmill:
The primary issue in the assessee's appeal was the disallowance of additional depreciation on windmills amounting to Rs. 12,62,02,718/- for the assessment year 2011-12. The assessee argued that electricity produced by windmills qualifies as an "article or thing" under section 32(1)(iia) of the Act, thereby entitling them to additional depreciation. The Assessing Officer (AO) and CIT(A) rejected this claim, stating that the assessee was not engaged in manufacturing or production activity, and the amendment extending additional depreciation to power generation was effective only from 1-4-2013.

The Tribunal, after considering various judicial precedents, including the decisions in NTPC Ltd. vs. Dy CIT and Hutti Gold Mines Co. Ltd., concluded that the generation of electricity is akin to manufacturing or production of an article or thing. The Tribunal held that the amendment made by the Finance Act, 2012, effective from 1-4-2013, was clarificatory in nature and not prospective. Thus, the assessee was entitled to claim additional depreciation for the assessment years prior to 2013-14.

2. Depreciation on Cost of Temporary Approach Road and Fencing:
The assessee also contested the CIT(A)'s decision to restrict depreciation on the cost of temporary approach road and fencing to 10% instead of the claimed 80%. The Tribunal noted that the issue was decided against the assessee in the case of Poonawala Finvest & Agro Pvt. Ltd. and upheld the CIT(A)'s decision, thereby dismissing this ground of appeal.

3. Disallowance of Depreciation on Costs Related to Installation of Windmills:
The Revenue's appeal involved the disallowance of depreciation on costs incurred for the installation of windmills, including civil and electrical work. The AO had allowed depreciation at lower rates for these costs, but the CIT(A) reversed this decision, following the Tribunal's decision in Poonawala Finvest & Agro Pvt. Ltd.. The Tribunal upheld the CIT(A)'s decision, stating that the costs related to the installation of windmills are integral to the windmill and should be depreciated at the same rate.

Conclusion:
The Tribunal allowed the assessee's claim for additional depreciation on windmills, holding that the generation of electricity qualifies as manufacturing or production of an article or thing. The Tribunal dismissed the assessee's appeal regarding depreciation on temporary approach road and fencing, and upheld the CIT(A)'s decision to allow higher depreciation on costs related to the installation of windmills.

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