Tribunal upholds depreciation claims for Solar Power Plant, ruling in favor of appellants.

The Tribunal dismissed both appeals of the Revenue, upholding the depreciation claims of the appellants regarding the Solar Power Plant. The Tribunal considered the SPP as an integrated plant and found no reason to interfere with the CIT(A)'s decision, as the assets were eventually used for business purposes. The decision was rendered on 11th May 2020 in Open Court.

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Issues Involved:
1. Grant of depreciation on Solar Power Plant (SPP).
2. Acquisition and usage of assets for business purposes before the end of the accounting year.

Issue-wise Detailed Analysis:

1. Grant of Depreciation on Solar Power Plant (SPP):

The Revenue's main grievance in both appeals concerns the grant of depreciation on the Solar Power Plant (SPP) by the CIT(A). The facts of the case are common for both appellants, and the appeal of Unimed Technologies Ltd. (UTL) was extensively argued. UTL filed its return of income electronically, declaring a total income of Rs. 4,45,94,808/-. During scrutiny, it was revealed that UTL added assets worth Rs. 10,65,00,000/- on account of SPP and claimed depreciation at 80% and additional depreciation at 20%, totaling Rs. 5,32,50,000/-. The same was observed for Sun Petrochemicals Pvt. Ltd., which declared a total income of Rs. 3,51,52,094/- and claimed similar depreciation on SPP. The assets were not put to use for the complete year, so 50% depreciation was claimed.

The CIT(A) allowed the depreciation claim, referencing a similar case of Aditya Medisales Ltd. (AMSL), where the CIT(A)-1 had allowed depreciation on SPP. The CIT(A) concluded that since the facts were identical, the appellants were entitled to claim depreciation on the SPP owned and leased out during the year for earning lease rentals assessed as business income.

2. Acquisition and Usage of Assets for Business Purposes Before the End of the Accounting Year:

The AO issued a detailed questionnaire to verify the acquisition and usage of assets. The AO rejected the depreciation claim, noting discrepancies in the transportation details, inspection reports, and installation reports. The AO's comparative study highlighted that the appellants failed to prove the acquisition and usage of assets before the end of the accounting year.

The CIT(A) did not make an independent analysis but relied on the AMSL case, where similar depreciation was allowed. The DR argued that the CIT(A) failed to address the AO's findings and discrepancies. The DR emphasized that for depreciation to be allowed, the assets must be purchased and put to use before the end of the accounting year.

The appellants argued that the SPP was a composite block of 16, and since AMSL's depreciation was allowed, the same should apply to them. The Tribunal noted that while discrepancies raised by the AO created suspicion, the overall facts suggested that the SPP was established and leased out. The Tribunal acknowledged that the AO allowed depreciation in the subsequent year, indicating the assets were eventually used for business purposes.

Conclusion:

The Tribunal concluded that the SPP should be treated as an integrated plant consisting of 16 blocks, and the part owned by the appellants should not be treated separately. Since the department accepted the establishment and depreciation of SPP in AMSL's case and allowed depreciation in the subsequent year for the appellants, the Tribunal found no justification to interfere with the CIT(A)'s findings. Therefore, both appeals of the Revenue were dismissed.

Final Judgment:

Both appeals of the Revenue are dismissed, and the depreciation claims of the appellants are upheld. The decision was pronounced in the Open Court on 11th May 2020.

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