Appeal outcome: Section 14A disallowance restricted, windmill depreciation allowed, additional depreciation granted, commission payments remanded.

The appeal was disposed of with directions to restrict the disallowance under Section 14A to the exempt income, delete the disallowance of depreciation on windmill components, allow the claim for additional depreciation, and remand the issue of commission payments to non-residents for fresh adjudication.

---

---

Issues Involved:
1. Disallowance under Section 14A read with Rule 8D.
2. Disallowance of depreciation on windmill components.
3. Disallowance of additional depreciation under Section 32(1)(iia).
4. Disallowance of commission paid to non-residents under Section 40(a)(ia).

Issue-wise Detailed Analysis:

1. Disallowance under Section 14A read with Rule 8D:
The assessee challenged the disallowance of Rs. 2,44,530/- under Section 14A read with Rule 8D. The assessee argued that no expenditure was incurred to earn the dividend income of Rs. 27,225/-. The AO noted a nexus between the interest expense and the investment, invoking Section 14A and Rule 8D to disallow 1% of the average investment. The CIT(A) upheld the disallowance due to the lack of a fund flow statement from the assessee. The Tribunal found the disallowance exceeded the exempt dividend income and restricted the disallowance to the extent of the exempt income. The ground was partly allowed.

2. Disallowance of depreciation on windmill components:
The assessee contested the disallowance of Rs. 46,630/- on windmill components, arguing that the civil work and electrical items were integral to the windmill, justifying a depreciation rate of 80%. The AO treated these as building and plant & machinery, allowing depreciation at 10% and 15%, respectively. The CIT(A) confirmed the AO's decision. The Tribunal cited decisions from the Rajasthan High Court and ITAT Jaipur Bench, which supported the assessee's claim. The Tribunal allowed the ground, directing the deletion of the disallowance.

3. Disallowance of additional depreciation under Section 32(1)(iia):
The assessee claimed additional depreciation of Rs. 2,02,91,277/- for plant & machinery used for less than 180 days in the previous year. The AO disallowed the claim, stating that additional depreciation could not be carried forward. The CIT(A) upheld the disallowance, referencing an amendment effective from 01.04.2013. The Tribunal noted that the amendment in the Finance Act, 2015, allowing carry forward of unclaimed additional depreciation, was clarificatory and retrospective. Citing judicial precedents, the Tribunal allowed the claim for additional depreciation, deciding in favor of the assessee.

4. Disallowance of commission paid to non-residents under Section 40(a)(ia):
The assessee paid Rs. 19,56,000/- as commission to foreign agents without TDS, arguing that the income was not chargeable to tax in India. The AO treated the payments as fees for technical services, invoking Section 40(a)(ia) for non-compliance with Section 195. The CIT(A) confirmed the disallowance, relying on Explanation 2 to Section 195. The Tribunal noted the need to examine the nature of services and the applicability of DTAA provisions. It set aside the issue for fresh adjudication by the CIT(A), emphasizing that TDS is required only if the payment is chargeable to tax in India. The ground was allowed for statistical purposes.

Conclusion:
The appeal was disposed of with directions to restrict the disallowance under Section 14A to the exempt income, delete the disallowance of depreciation on windmill components, allow the claim for additional depreciation, and remand the issue of commission payments to non-residents for fresh adjudication.

---