2022 (9) TMI 157 - AT - Income Tax

Tribunal allows windmill depreciation claim, rules in favor of assessee under Section 115JB.

The Tribunal dismissed the Revenue's appeal against the CIT(A)'s decision to allow the depreciation claim on a windmill, as additional evidence confirmed ... Depreciation on windmill - number of days Asset put to use - as per AO windmill purchased by the assessee company during the period under consideration was not put to use during F.Y. 2011-12 - additional evidence filed by the assessee - HELD THAT:- The claim of the assessee of having put to use the windmill turbine on 31.03.2012 was found to be correct by the AO on verification of the additional evidence filed by the assessee. As categorically stated by AO in the remand report, the additional evidence filed by the assessee including especially the letter dated 25.10.2016 issued by the Deputy Director of GEDA was sufficient to establish that the assessee-company having put to use the windmill turbine on 31.03.2012 was eligible for credit of units on that date. The claim of the assessee of having put to use the windmill turbine on 31.03.2012 and having started the wind farm power generation on 31.03.2012 thus was duly established on the basis of relevant evidence and the same was accepted even by the AO on verification of the said evidence as categorically stated by him in the remand report. Based on this finding of fact recorded by the AO himself in the remand report CIT(A) allowed the claim of assessee for depreciation on windmill; and, at the time of hearing before us, even the learned DR has not been able to rebut or controvert the finding recorded by the AO - We, therefore, find no justifiable reason to interfere with the order of the CIT(A) allowing the claim of the assessee for depreciation on windmill and upholding the same on this issue, we dismiss the appeal filed by the Revenue. Addition on account of depreciation while computing book profit u/s 115JB - We find that the issue raised by the assessee in Cross Objection is squarely covered in favour of the assessee by the decision of Co-ordinate Bench of this Tribunal in the case of Kansara Popatlal Tribhuvan Metal Pvt. Ltd. [2022 (8) TMI 618 - ITAT AHMEDABAD] and respectfully following the same, we delete the addition made by the Assessing Officer and confirmed by the learned CIT(A) on account of depreciation while computing the book profit u/s 115JB. Issues Involved:1. Deletion of addition on account of disallowance of depreciation on windmill by the CIT(A).2. Addition of depreciation while computing book profit under Section 115JB of the Income-tax Act.Issue 1: Deletion of Addition on Account of Disallowance of Depreciation on Windmill by the CIT(A):The Revenue appealed against the CIT(A)'s order, which deleted the addition of Rs.1,68,42,000/- made by the Assessing Officer (AO) on account of disallowance of the assessee's claim for depreciation on a windmill. The AO had disallowed the depreciation claim on the grounds that the windmill, purchased by the assessee, was not put to use during the financial year 2011-12. The AO based this conclusion on letters from regulatory authorities, which indicated that no power generation was registered in the name of the assessee during that period.During the appellate proceedings, the assessee submitted additional evidence, including a letter from the Deputy Director of GEDA dated 25.10.2016, which confirmed that the windmill was put to use on 31.03.2012. The CIT(A) admitted this additional evidence and forwarded it to the AO for verification. The AO's remand report acknowledged that the additional evidence established the assessee's claim of having put the windmill to use on 31.03.2012.The Tribunal noted that the AO, in his remand report, verified and accepted the additional evidence, thereby supporting the assessee's claim. Consequently, the Tribunal found no justifiable reason to interfere with the CIT(A)'s order allowing the depreciation claim and dismissed the Revenue's appeal on this issue.Issue 2: Addition of Depreciation While Computing Book Profit Under Section 115JB of the Income-tax Act:The assessee challenged the addition of Rs.1,82,82,237/- made by the AO and confirmed by the CIT(A) on account of depreciation while computing book profit under Section 115JB. The AO had disallowed excess depreciation claimed by the assessee as per the Income-tax Act, asserting that depreciation should be computed as per the Companies Act. The CIT(A) upheld the AO's decision, relying on the Supreme Court's judgment in the case of Dynamic Orthopedics Pvt. Ltd. Vs. CIT.The Tribunal, however, considered the Supreme Court's earlier judgment in Malayala Manorama Co. Ltd. Vs. CIT, which allowed the computation of depreciation as per the Income-tax Act for the purposes of Section 115J, until it is overruled. The Tribunal also referred to similar decisions from other judicial precedents, including the Gujarat High Court in the case of Vardhman Fabrics (P.) Ltd. and the Punjab & Haryana High Court in the case of Sona Woollen Mills (P.) Ltd., which supported the assessee's stance.Based on these precedents, the Tribunal concluded that the issue was squarely covered in favor of the assessee. Therefore, the addition made by the AO and confirmed by the CIT(A) on account of depreciation while computing book profit under Section 115JB was deleted, and the assessee's cross-objection was allowed.Conclusion:In the result, the appeal of the Revenue was dismissed, and the cross-objection of the assessee was allowed. The Tribunal pronounced the order in the open Court on 31st August 2022 at Ahmedabad.