2023 (7) TMI 995 - AT - Income Tax

Tribunal remands Solar Power Plant depreciation issue for verification

Viney Corporation Ltd. Versus ACIT, Circle-26 (2), New Delhi.

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 ... Eligibility to claim depreciation at higher rate - two 'Solar Power Plants' installed at two manufacturing units/factories at 'Bikaner' and 'Manesar' - DRP rejected the claim on the premise that the Solar Power Plant is installed at the roof top of office building for captive use for office - Contention of the assessee that office building is part of factory premise and the electricity is used for factory only - HELD THAT:- The Solar Power Plant in question is of 160 Mega Watt capacity and even in the wildest of imagination, it cannot be presumed that this is installed for meeting the need of office only. We therefore, are of the considered view that authority below ought to have verified the fact by making field inquiry. Considering the fact that Solar Power Plant is of very high capacity and it is stated at bar that the office building is part of factory and electricity so generated is used for factory only. The issue is restored to the file of AO for verification.This ground of assessee’s appeal is allowed for statistical purposes. 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 2015-16The 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 LoanThe 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.