2018 (5) TMI 758 - AT - Income Tax

Tribunal allows depreciation for civil work in wind energy, dismisses Revenue's appeal, upholding consistency and precedent.

Deputy Commissioner of Income-tax, Central Circle 3 (1), Mumbai Versus M/s. Wind World Wind Farms (Rajasthan) Ltd.

The tribunal upheld the CIT(A)'s decision to allow depreciation for civil work at the same rate as windmills, based on previous tribunal rulings and the ... Depreciation in respect of foundation/civil work at the rates applicable to the windmills - Held that:- Tribunal in assessee’s own case and group companies [2011 (12) TMI 694 - ITAT MUMBAI] adjudicated this issue in favour of assessee by holding that the assessee would be entitled for depreciation on civil works(foundation) for wind mills at the same rate of depreciation as is applicable to wind mills and hence the appeal of the Revenue stood dismissed. - Decided in favour of assessee. Issues:- Allowability of depreciation for civil work at the same rate as windmills- Interpretation of tribunal decisions in favor of the assessee- Effect of change in company name on legal proceedingsAnalysis:1. Allowability of Depreciation: The Revenue filed appeals against the CIT(A)'s order allowing depreciation for civil work at the same rate as windmills. The AO had disallowed the claim, citing a pending appeal before the Bombay High Court. However, the CIT(A) relied on previous tribunal decisions in favor of the assessee and directed the AO to allow depreciation. The tribunal upheld the CIT(A)'s decision, emphasizing the binding nature of tribunal decisions and dismissed the Revenue's appeal for both assessment years.2. Interpretation of Tribunal Decisions: The tribunal analyzed previous decisions related to similar issues for group companies like Enercon Wind Farms and upheld the allowance of depreciation for civil work at the same rate as windmills. The tribunal noted that the foundation and civil work are integral to windmills' functioning and thus eligible for higher depreciation rates. The tribunal's decision was based on the principle of encouraging power generation through wind energy and the necessity of the foundation for windmill operation.3. Effect of Company Name Change: The tribunal addressed the change in the company name from Enercon Wind Farms to Wind World Wind Farms and requested documentation to verify the name change's legal effect. The assessee provided the necessary certificate of incorporation to demonstrate the name change's validity, ensuring continuity in legal proceedings despite the company name alteration.In conclusion, the tribunal upheld the CIT(A)'s decision to allow depreciation for civil work at the same rate as windmills, based on previous tribunal rulings and the essential role of civil work in wind energy generation. The tribunal's analysis considered the legal implications of the company name change and ensured consistency in the legal process.