TaxTMI 
TaxTMI 
2006 (2) TMI 251
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....said to be installed at Perungudi and Kethanur in the State of Tamil Nadu on the reason that the assessee could not have installed windmills on or before 31-3-1993. In respect of windmills said to have been installed at Mandvi in the State of Gujarat, the Assessing Officer found that there was no installation on the date of inspection. Therefore, the Assessing Officer disallowed the claim of the assessee in toto. On appeal by the assessee, the first Appellate Authority remanded back the issue of depreciation to the file of the Assessing Officer. Even in the reassessment proceedings, in pursuance of an order of remand by the CIT(A), the Assessing Officer confirmed the disallowance. The assessee filed appeal before the CIT(A) against the assessment order. A detailed written submission was filed regarding the claim of depreciation in respect of windmills said to be installed at Mandvi in the State of Gujarat and Perungudi and Kethanur in the State of Tamil Nadu. The CIT(A), while considering the appeal of the assessee, discussed only about the windmills said to be installed at Mandvi in the State of Gujarat. There was no discussion in respect of windmills installed at Perungudi and Ke....
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....spect of windmills said to be installed at Mandvi. Therefore, this Tribunal has rightly dealt with the issue. Therefore, it cannot be said there is an error in the order of this Tribunal dated 30-6-2003. According to the learned D.R., this Tribunal after elaborate consideration, found that no material was produced before the lower authorities to show that the windmills were in existence. This Tribunal specifically found that the very same position continued in the Appellate proceeding also. Therefore, according to the learned D.R., there is no error which is prima facie on the record. 5. We have considered the rival submissions on either side, and also perused the material available on record. Admittedly, the assessee has claimed depreciation on windmills at Rs. 7,60,68,275 in respect of windmills said to be installed at Mandvi in the State of Gujarat and Perungudi and Kethanur in the State of Tamil Nadu. Originally, the assessment order was passed disallowing claim of depreciation on 29-3-1996. The Assessing Officer specifically finds that at Mandvi no windmills were in existence. In respect of Perungudi and Kethanur in the State of Tamil Nadu, though windmills were in existenc....
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....ation is about Rs. 7,60,68,275. This claim of Rs. 7,60,68,275 is for all the windmills said to be installed at Mandvi, Perungudi and Kethanur. The claim of depreciation in respect of windmills said to be installed at Mandvi is only Rs. 21,94,960. In view of this factual position, in our opinion, the order of this Tribunal suffers an error which is apparent on the face of the record. Therefore, the order of this Tribunal dated 30-6-2003 requires to be rectified under section 254(2) of the Income-tax Act. 7. Accordingly, we rectify the order of this Tribunal dated 30-6-2003 as follows: "At page 6, in para 13A of the order of this Tribunal dated 30-6-2003, the following shall be inserted in the last line in between the word "order of the CIT(A)" and "on this point". in respect of windmill said to be installed at Mandvi in the State of Gujarat." After insertion of the above word, the last sentence of para 13A shall read as follows: "Even before us, the same position remained and therefore, we do not interfere with the order of the CIT(A) in respect of windmill said to be installed at Mandvi in the State of Gujarat on this point." The following shall be added as para 1....
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....the conclusions as recoded by him. However, I have the benefit to go through the proposed order of the ld. Brother, but I am recording my reasons hereunder for deferring with the view taken by the ld. Brother. 10. The brief facts of the case are that the assessee has claimed depreciation of Rs. 7,60,68,275 on Wind Energy Equipment installed at Mandvi, Gujarat, Perungudi and Kethanur, Tamilnadu. The Assessing Officer, vide original assessment order dated 29-3-1996 rejected the claim of the assessee for depreciation. During the course of assessment, the Assessing Officer required the assessee to furnish the details of actual installation and commercial use and other details like date of installation, location of installation, date of issue of NOC, Safety Certificate, date of getting HT Connection and copy of agreement entered into with the Government, and details of power generation and also details of transportation of Wind Turbine Generators. The assessee did not furnish evidence and details in support of its claim that Wind Turbine Generators were actually installed and put into commercial use before 31-3-1993 and also not produced details of electricity generated. On enquiry, ....
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....6-5-1995 23-4-1994 (6 WTGs) Date of Power Purchase Agreement Entered into with TNEB 25-7-1994 15-11-1994 -------------------------------------------- From the above date, it is clear that since these Wind Mills were not installed and put into commercial use before 31-3-1993, the very question of existence of the Wind Mills does not arise as existence cannot be at vacuum, on which depreciation is claimed. 11. Regarding wind mill at Mandvi, this did not exist at all and the wind mill claimed to be belonging to the assessee, actually belongs to Gujarat Wind Mill Farms Ltd., which was installed in 1986. The Assessing Officer has observed in this connection that:- "(iv) .... there is no installation even as on the date of site inspection by the undersigned i.e., 14-2-1996. As a matter of fact, these WTGs belong to assessee's subsidiary company namely, G....
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.... to Mandvi. Letter in P.A. No. 47-097-CX-8769.93-94 dated 18-2-1997 was specifically issued requesting the assessee to depute its representative in connection with inspection. Vide this office letter in P.A. No. 47-097-CX-8769 dated 16-7-1997, the assessee was again requested to fix up a mutually convenient date for visit to Mandvi to inspect the Wind Mills. However, the assessee failed to co-operate in this regard despite having requested for inspection before the CIT(A)-II and in spite of specific direction of the CIT(A)-II, Chennai. The assessee's representative, vide his letter dated 10-8-1998 pleaded that the assessee or its representative was not in a position to accompany the Assessing Officer to Mandvi for inspection and verification on account of deterioration in the liquidity position of the assessee. It is difficult to appreciate as to how the detonation in financial liquidity could undermine the visit to Mandvi especially when the assessee on its own initiative requested for it and the assessee's very claim for depreciation rested heavily on this inspection. While a visit to Mandvi did not materialize, the assessee's representative by his letter dated 21-8-1998 stated t....
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....usage of asset was not relevant condition for commencement of production and that the claim for depreciation might precede the usage of such asset for commercial purposes. In making the above claim, he relied on the decision of Jabalpur Tribunal in the case of Packwell Printers v. Asstt. CIT (138 Taxman 119) and Mumbai Tribunal's decision in the case of Grasim Industries. The Assessee's representative vide his letter dated 27-1-1999 stated that when sales have been accepted, that implies the existence of assets and correspondingly depreciation ought to have been given, when depreciation was not given, then there could not be any assets transferred and correspondingly sales and as such sales had to be deleted. He has also cited the decision of the CIT (Appeals)-II, Chennai in ITA No. 85/96-97, dated 29-4-1998 for the assessment year 1994-95. For the assessment year 1994-95, after making detailed enquiry, the Assessing Officer gave a finding that with the available raw materials, the Assessee could not have manufactured 53 Wind Turbine Generators claimed to have been transferred to its Power Division. On the basis of the finding, the Assessing Officer allowed the profit element refer....
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....s) on the ground that the Assessing Officer has erred in disallowing the depreciation on windmills of Rs. 7,60,68,275 by making one sided addition without going through the available facts and materials and the observations made by the Hon'ble Commissioner of Income-tax (Appeals)-II for a later assessment year (assessment year 1994-95) though rendered before the passing of this order. The CIT (Appeals) rejected the claim of the Assessee with the following findings:- "The Appellant had claimed depreciation on wind mills installed and commissioned at Mandvi. The depreciation was not initially allowed as the wind mills were found on investigation not to have existed at all. The Commissioner of Income-tax (Appeals) directed the Assessing Officer to visit Mandvi along with the representatives and identify the wind mills on which depreciation was claimed. The Assessing Officer after repeated attempts to get the Assessee to accompany him for a site visit F finally gave up as the Appellant had submitted on 10-8-1998 that it had no funds to arrange for its executives to travel to Mandvi. When the visit to Mandvi did not materialize, the Appellant submitted vide letter dated 21-8-1998 tha....
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....bunal has upheld the disallowance on depreciation without going into the factual position and submitted that in the assessment order dated 29-3-1996, the Assessing Officer has observed that "wind mills are existing on the date of visit at Perungudi and Kethanur. No such wind mills are existing at Mandvi, Gujarat". He, therefore, submitted that the Tribunal is not correct in rejecting the claim of depreciation of all the wind mills. 17. On the contrary, the learned Departmental Representative submitted that depreciation in respect of wind mills installed at Perungudi and Kethanur does not arise out of the order of the CIT (Appeals). The CIT (Appeals) has considered only in respect of wind mills said to be installed at Mandvi. Therefore, this Tribunal has rightly dealt with the issue and hence, it cannot be said that there is an error in the order of this Tribunal. According to him, this Tribunal after elaborate consideration, found that no material was produced before the Departmental authorities to show that the wind mills were in existence. This Tribunal specifically found that the very same position continued in the Appellate proceedings also and hence, according to the learne....
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....qua nun for exercise of power under section 254(2). 19. Thus, it is seen that the powers conferred by the Statute under section 254(2) on the Tribunal are very limited and are circumscribed by the restrictions mentioned therein. In the case on hand, the Tribunal has passed its order purely based on facts and material produced before it which alone forms basis for the Tribunal to decide the issue. Whether the decision of the Tribunal is right or wrong is a different issue which cannot be agitated under section 254(2) of the Act. However, the fact remains that the Tribunal, after duly considering all aspects and applying its mind, has taken this conclusive view and this view though in the opinion of the Assessee is wrong, cannot be said to be a mistake apparent from record since the said view has been arrived at after due application of mind to the facts and circumstances of the case and the relevant material on record. 20. Further, it is well settled that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions. In the present c....
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.... non consideration of ground raised in appeal is an error?" We direct the registry to place the appeal files before the Hon'ble President for nominating Third Member. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 I have gone through the question framed by the Ld. Judicial Member. In my opinion, the question framed by the ld. J.M., does not reflect the true position of the difference of opinion regarding the issue. I am, therefore, of the opinion that the following question framed by me will help proper adjudication of the issue:- "(1) Whether the Tribunal has rightly considered the issue of depreciation on Wind Mills involved in this appeal. (2) Whether there is any error apparent from record in the order of this Tribunal, resulting in entertaining the Miscellaneous Petition filed by the assessee." THIRD MEMBER ORDER Per Shri M.K. Chaturvedi, Vice President. - This miscellaneous application came before me as a Third Member to express my opinion on the following questions: As framed by the Judicial Member: "(1) Whether the issue of depreciation in respect of windmills installed at Perungudi and Kethanur in the State of Tamil Nadu was considered by....
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....e Commissioner of Income-tax (Appeals) directed the Assessing Officer to visit Mandvi along with the representative and identify the wind mills on which depreciation was claimed. The Assessing Officer after repeated attempts to get the assessee to accompany him for a site visit finally gave up as the appellant had submitted on 10-8-1998 that it had no funds to arrange for its executives to travel to Mandvi. When the visit to Mandvi did not materialize, the Appellant submitted vide letter dated 21-8-1998 that the wind mills or wind turbine generators may have been damaged or disappeared due to super-natural forces. It is clear from the recital in the order of assessment and in the submissions without substance made by the Appellant that there were in reality no such wind mill installed at Mandvi on which depreciation was admissible. 17. I have, therefore, no hesitation in holding that the Appellant is not entitled to the depreciation claim of Rs. 7,60,68,275 which has been disallowed in the order of assessment." 5. Being aggrieved of the order of the CIT(A) assessee preferred appeal before the Tribunal. In the grounds of appeal assessee projected the grievance in this regard a....
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....unting year as the installation work was completed subsequent to 31-3-1993. 8. Shri T.N. Seetharaman, learned counsel for the assessee filed affidavit under Rule 10 of Income-tax (Appellate Tribunal) Rules, 1963 in which it was stated, inter alia, as under: "Pursuant to the hearing and in confirmation of my oral statement made on 16-1-2006, I state and declare that in the course of the hearing of the appeal in ITA No. 1666/Mds./2000 I argued the issue regarding disallowance of depreciation on windmills installed at Perungudi and Kethanur in Tamil Nadu with reference to Ground No. 6 of the Grounds of Appeal at the time of hearing of the appeal as one of the batch of appeals in the assessee's case." 9. The ld. Counsel also submitted that the factual details in regard to the wind mills located at Perungudi and Kethanur were furnished before the CIT(A) in the form of written submissions. Error has crept in the order of the CIT(A) inasmuch as he omitted to consider the allowability of depreciation in respect of wind mills located at Perungudi and Kethanur. This fact was brought to the notice of the Tribunal vide ground No. 6. Arguments in this regard were also made at the time ....
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....e stated clearly and consciously and supported by a duly sworn affidavit. At the time of hearing, a doubt was raised as to whether ground No. 6 raised in the Memorandum of Appeal was fully argued? Ld. D.R. submitted that it was argued in part only and the Tribunal delivered the judgment to the extent it was argued. The part which was not argued was not adjudicated upon. To clarify this doubt learned counsel for the assessee who did appear before the Tribunal at the time of original hearing made a statement that the ground was fully argued. Due to inadvertence complete facts were not appreciated by the Tribunal and to support this affidavit was filed. In my opinion it cannot be construed to be a fresh evidence as this was filed just to dispel the doubts raised in regard to the arguing of the ground No. 6 raised in the Memorandum of Appeal. 13. It is evident from records that Assessing Officer visited Perungudi and Kethanur. Windmills were found to be existing. However, at Mandvi windmill was not found to be existing. The claim in respect of Mandvi windmill was only Rs. 21,94,960. When the matter was taken before the CIT(A) he adumbrated only on the fact of non-existence of Man....
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....hall be added as para 13B. "The assessee has also claimed depreciation in respect of windmills said to be installed in Perungudi and Kethanur in the State of Tamil Nadu. The facts on record clearly shows that the claim of depreciation to the extent of Rs. 7,60,68,275 is for all the windmills said to be installed at Mandvi in the State of Gujarat, Perungudi and Kethanur in the State of Tamil Nadu. In respect of windmills said to be installed at Perungudi and Kethanur in Tamil Nadu, the Assessing Officer finds that the windmills were in existence. The only reason for disallowance of depreciation is that the windmills were not installed on or before 3-3-1993. However, the first Appellate authority while disposing of the appeal of the assessee, has not considered the claim of the assessee with regard to windmills said to be installed at Perungudi and Kethanur in the State of Tamil Nadu. The first Appellate Authority confined himself in respect of windmills said to be installed at Mandvi in Gujarat. Therefore, in our opinion, the first Appellate Authority has to consider and record a specific finding whether the assessee is entitled to depreciation in respect of windmills said to be ....