2022 (7) TMI 167 - AT - Income Tax

Tribunal grants additional depreciation for windmill pre-2013; Assessing Officer to comply

The Tribunal allowed the assessee's appeal, directing the Assessing Officer to compute and grant the additional depreciation claim on the windmill as per ... Additional depreciation u/s 32(1)(iia) - depreciation for wind mills - HELD THAT:- We make it clear that the assessee has already been granted normal depreciation on the corresponding fixed asset i.e. windmill(s) since the instant appeal is only concerned with additional depreciation issue. A perusal of Assessing Officer’s assessment order reveals that the assessee is in windmill’s power generation business at least since A.Y. 2008-09. We therefore reject the Revenue’s argument that it is not entitled for the impugned additional depreciation claim pertaining to installation of air-conditioning unit since going against the facts on record. Most significant aspect of entitlement of assessee’s additional depreciation claim which has been rejected by the lower authorities on the ground that the same is applicable only with effect from 1.4.2013 whereas we are in A.Y. 2012-13 only. This tribunal’s co-ordinate bench order for A.Y. 2011-12 in ACIT vs. Shri Atul Shivdas Ganatra (HUF) [2018 (11) TMI 1907 - ITAT MUMBAI] allowed assessee claim - Decided against revenue. Issues Involved:1. Disallowance of additional depreciation claim under Section 32(1)(iia) of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Disallowance of Additional Depreciation Claim:Background:The assessee's appeal pertains to the assessment year 2012-13, challenging the order of the CIT(A)-1, Pune, which upheld the Assessing Officer's (AO) decision to disallow additional depreciation of Rs.1,05,23,548/- claimed under Section 32(1)(iia) of the Income Tax Act, 1961. The AO had noticed that the assessee company had commissioned a windmill and claimed additional depreciation on it. The AO disallowed this claim, reasoning that the assessee was not engaged in the business of manufacturing or production of any article or thing, which is a prerequisite for claiming additional depreciation under the said section.Arguments by the Assessee:The assessee argued that it was engaged in various activities including the design, drawing, and execution of air-conditioning contracts, assembly and export of air-conditioning equipment, repair and maintenance of air-conditioning systems, and generation of power by windmills. It claimed that these activities qualified it as a manufacturing concern, thus entitling it to additional depreciation. The assessee cited several judicial precedents to support its claim.Findings by CIT(A):The CIT(A) upheld the AO's decision, stating that the assessee's primary activity was the installation of air-conditioning systems in ships, which did not amount to manufacturing or production of any article or thing. Additionally, the CIT(A) noted that the amendment to Section 32(1)(iia) allowing additional depreciation for power generation units was effective from 1.4.2013, whereas the relevant assessment year was 2012-13. Therefore, the assessee was not entitled to the additional depreciation claim for the windmill.Tribunal's Analysis:The Tribunal examined the arguments and the relevant legal provisions. It noted that the assessee had been granted normal depreciation on the windmill and the appeal concerned only the additional depreciation. The Tribunal referred to a co-ordinate bench's decision in a similar case, which had allowed additional depreciation for windmills even for assessment years prior to 2013-14, based on judicial precedents including the case of CIT vs. VTM Ltd. and the Supreme Court's decision in CST vs. M.P. Electricity Board, which recognized electricity as an article or goods.Conclusion:The Tribunal rejected the Revenue's argument that the additional depreciation was applicable only from 1.4.2013. It directed the AO to compute and allow the additional depreciation claim on the windmill as per law. The assessee's appeal was allowed.Order Pronounced:The order was pronounced on June 30, 2022, allowing the assessee's appeal and directing the AO to grant the additional depreciation claim.