Tribunal remands Solar Power Plant depreciation issue for verification

The Tribunal partly allowed the assessee's appeal for statistical purposes. The primary issue of depreciation on the Solar Power Plant was remanded to the AO for verification to determine if the office is part of the factory building and if the electricity generated is used for factory purposes. The Tribunal emphasized the importance of this verification for allowing depreciation.

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Issues Involved:
1. Disallowance of depreciation and additional depreciation claimed on Solar Plant in AY 2015-16.
2. Additional claim of foreign exchange fluctuation gain on reinstatement of ECB Loan.
3. Initiation of penalty proceedings under Section 271(1)(c).

Summary of Judgment:

Issue 1: Disallowance of Depreciation and Additional Depreciation Claimed on Solar Plant in AY 2015-16

The primary issue revolves around the disallowance of depreciation amounting to INR 3,55,95,528/- claimed by the assessee on two Solar Power Plants installed at Bikaner and Manesar. The Dispute Resolution Panel (DRP) held that the solar plants were installed and put to use on 30.03.2014, thus eligible for depreciation in AY 2014-15 at half the rates since they were used for less than 180 days. The DRP further denied additional depreciation for the solar plant installed at Manesar, treating it as installed in office premises. The Tribunal noted that the lower authorities failed to appreciate that the Solar Power Plant at Manesar was of 160 KW capacity and used for in-house production at the factory. The Tribunal restored the issue to the file of AO for verification, directing that if the AO finds the office is part of the factory building and electricity is generated for factory use, the depreciation should be allowed as per the law. This ground of the assessee's appeal was allowed for statistical purposes.

Issue 2: Additional Claim of Foreign Exchange Fluctuation Gain on Reinstatement of ECB Loan

The assessee did not press Ground Nos. 4 to 4.3, as the issue had already been decided in favor of the assessee for AY 2014-15. Consequently, these grounds were dismissed as not pressed.

Issue 3: Initiation of Penalty Proceedings under Section 271(1)(c)

Ground No. 5 concerning the initiation of penalty proceedings under Section 271(1)(c) was dismissed as premature.

Other Grounds:

Ground No. 6 was general in nature and dismissed without separate adjudication.

Conclusion:

The appeal of the assessee was partly allowed for statistical purposes, with the primary issue regarding depreciation on the Solar Power Plant being remanded to the AO for verification. The Tribunal emphasized the need for the AO to verify whether the office is part of the factory building and if the electricity generated is used for factory purposes.

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