Tribunal Upholds Deletion of Depreciation & Section 14A Disallowance

The Tribunal upheld the Ld. CIT(A)'s decision to delete the additions related to disallowance of depreciation on investment in Wing Turbine Generation (WTG) and disallowance under section 14A of the Income Tax Act for Assessment Year 2011-12. The Tribunal found that the investment in WTG aligned with the assessee's main object clause and upheld the principle of consistency in tax proceedings, following previous findings and legal precedents. The Tribunal dismissed both grounds of appeal raised by the Revenue, maintaining consistency with earlier decisions.

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Issues Involved:
The issues involved in the judgment are the deletion of additions related to disallowance of depreciation on investment in Wing Turbine Generation (WTG) and disallowance under section 14A of the Income Tax Act for Assessment Year 2011-12.

Disallowance of Depreciation:
The Revenue appealed against the Ld. CIT(A)'s deletion of the additions of Rs. 14,26,44,143 made by disallowing depreciation on the investment in WTG, arguing that the investment cannot be equated with trade or business activities. The Ld. CIT(A) restricted the disallowance to Rs. 14,26,414, differing from the original amount of Rs. 23,80,59,197. The assessee, a Non-Banking Financial Company (NBFC), engaged in energy value chain projects, argued that the investment in WTG aligns with its main object clause, covering power generation and sale activities. The Tribunal found that the Ld. AO overlooked the principle of consistency in tax proceedings and upheld the Ld. CIT(A)'s decision based on previous findings and legal precedents.

Disallowance under Section 14A:
The Ld. CIT(A) also deleted the disallowance under section 14A made by the Ld. AO. The Ld. DR contended that the disallowance was justified, but the Ld. AR argued that the issues were previously addressed in the assessee's case for AY 2010-11, where the Tribunal and the Hon'ble Delhi High Court ruled in favor of the assessee. The Tribunal, following the precedent set in the previous year's judgment, dismissed both grounds of appeal raised by the Revenue, maintaining consistency with the earlier decisions.

Separate Judgment by Judges:
The judgment was pronounced by SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and MS. ASTHA CHANDRA, JUDICIAL MEMBER, with the order being pronounced in the open court on 14th March, 2023.

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