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TaxTMI 
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TaxTMI 
2014 (9) TMI 211
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....ITAT, Pune 'A' Bench, Pune in the case of Punawala Finvest and Agro Pvt. Ltd V/s. ACIT (2008) 118 TTJ (Pune) 68, 12 DTR 211. 3. On the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals), Kolhapur erred in relying upon general technical reports on installation and construction of wind mills in absence of any specific evidence adduced by the assessee regarding installation and construction of its own wind mill." 2. The facts which reveal from the record are as under. The assessee firm is in the generation of the energy from the wind mill. The assessee claimed depreciation on the wind mill of Rs. 5,93,23,589/-. The assessee has installed Suzlon made turbine in the wind mill and cost of turbine as noted by the A.O is Rs. 7,41,56,986/-. The wind mill is installed at village Moti Shindodi, Tal. Apdasa, Dist. Kutch, Gujarat State. The total cost of the wind mill after segregation is as under : Sr. No. Particulars Amount 1. Cost of Turbine 5,64,40,792/- 2. Cost of Civil Construction 52,23,108/- 3. Installation and Commissioner 1,23,93,086/- The A.O. relied on the decision of ITAT, Pune in the case of Poonawala Finwest & Agro (P) Ltd.....
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....tated that the ITAT in the above stated decision has only considered the civil work of control room side development and internal road adjacent to wind mill generating electricity is not entitle to 100% depreciation as a wind mill however transformer upto DP structure being a gazette for transmission for power generated by wind mill is entitled to 100% depreciation. With due honour to the ratio of Hon'ble ITAT, similar situation arises with respect to allow ability of depreciation on the civil work consisting of earth work and the foundation and also erection and commission expenditures. (c) Though, the ratio of Hon'ble ITAT does not cover entirely the facts of the case I still hold that, the decision of the Hon'ble ITAT supports the view that proportionate depreciation are to be given with respect to civil work erection and commission and also to the wind mill as provided in the Act. The depreciation provisions are provided in the IT Rules for different types of assets at different rates of depreciation. In the Assessee's case the main issue is regarding the claim of depreciation on wind mill project. It is to be appreciated that, while wind mill and specific designed devises run....
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....tion on foundation : "19. We have to apply the parameters stated above to the foundation (Which is a civil work) and see if the foundation qualifies the test to be considered as a part and parcel of machinery. Any expenditure to put the asset in working condition should go to the cost of the asset. Hence, it will be useful to understand the layout of a typical wind farm and the structure of a windmill to answer the question 'whether or not the cost incurred in laying the foundation of a wind turbine generating system should be included in the cost of windmill for the purposes of claiming depreciation applicable to plant and machinery?' COMPONENTS OF A TYPICAL FARM PROJECT (Source - www.powematurally.org of New York State Energy Research 85 Development Authority) 20. The diagram below (Fig. 1) shows the components that comprise a typical wind energy project. Groups or rows of wind turbines are positioned for optimum exposure to the prevailing winds while accounting for terrain variations. Inter-turbine spacing is selected to maximize production while minimizing exposure to damaging rotor turbulence. Inter turbine and inter-row spacing vary as a function of the rotor diameter and....
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....ations - In general, the foundation design is based on the weight and configuration of the proposed turbine, the expected maximum wind speeds, and the soil characteristics at the site. Typical foundation approaches include an inverted "T" slab design and the patented concrete cylinder design. Control and Communications System - In addition to individual turbine control systems on each machine, a wind project typically includes a Supervisory Control and Data Acquisition System (SCADA). SCADA systems consist of a central computer with control capabilities for individual turbines and the ability to collect, analyse, and archive timeseries data. Communication cables connecting the central computer with the individual turbine controllers are commonly buried in the same trenches as the electrical collection system. Access Roads - Access roads to each turbine location are typically 18 to 20 ft. wide and consist of compacted crushed rock. In hilly or complex terrain, access roads are constructed to speciDed slopes and turning radii that are necessary to allow delivery of large components such as blades and tower sections. During the construction phase of a project, 'crane pads' (Nat, wel....
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.... loading regime causes large moment loads to be applied to the foundations of a wind turbine. As a result, considerable attention needs to be given when designing the footings / foundation to ensure that the turbines are sufficiently restrained to operate efficiently. (source Wikipaedia). 2. As seen in the diagram above a wind turbine contains a turbine connected to a rotor which is allowed to rotate at acceptable wind speeds to generate electricity. During high wind conditions, rotors are locked and blades are positioned to minimize the wind exposed surface area. Wind turbine footings are exposed to tremendous load of the turbine and moment due to wind. Wind turbine foundations have to be designed as per the ACI code. These types of foundations are very specialized types of footings because of their shape, design, load path provided and components. The footing is more like a "mechanical device" than a foundation. (Source: STAAD.pro 2007 Design of Wind Turbine Foundations) 23. Wind turbine foundations are generally octagonal in shape. The diameter of the footing may vary anywhere from 50ft to 65ft with an average depth of 4 to 6 feet. An 8ft to 9ft pedestal (includes the height o....
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....GS towers and foundation. The fatigue loading represents operational conditions considering a variety of possible wind speed regimes and other operational events. Laying of a WTGS in a wind farm includes a large number of technical work. Assessment of soil conditions 29. Each wind project has a site-specific geotechnical study to determine geotechnical parameters for the proposed foundations and associated load transfer mechanisms. A review of available geotechnical and geologic documentation is conducted as part of the geotechnical investigation scope of work. Typical documentation review includes the following: * Historical and current aerial photographs, * Published regional geologic maps, * Soil survey reports, * Groundwater hydrology data and maps, * Landslide mapping, * Solution cavity (sinkhole) mapping * Mine subsidence mapping * Seismic hazard mapping, * Slope stability analysis, if determined necessary * Other applicable geotechnical and geologic documentation. Geotechnical Exploration 30. Geotechnical documentation is followed by Geotechnical exploration for each turbine site which consists of at least one exploration point per foundation, or more as necessa....
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....elements include ultimate strength of concrete, reinforcing steel, anchor bolts, prestressing elements, grouts and embedment rings. Ultimate limit states also includes stability against overturning, stability against sliding, soil bearing capacity, ultimate axial capacity of piles, drilled shafts and rock anchors, and lateral capacity of piles and drilled shafts. 2. Serviceability Limit States All foundations are analysed to verify their serviceability under operation loads. Serviceability limit states may include foundation settlement, tilt, ground gapping, foundation stiffness, crack width, soil cracking and foundation movements. 3. Fatigue Limit States Fatigue analysis is performed to verify that concrete, reinforcing steel, prestressing steel, anchor bolts have adequate fatigue strength to resist the cyclic fatigue loads prescribed by wind turbine manufacturer. The tower structure is connected to the foundation by anchorages. Tower anchorages have historically consisted of two types: embedded and bolted. Embedded tower anchorages comprise a short section of tower that is cast into the reinforced concrete foundation and then bolted to the remainder of the tower via a convent....
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....d fundamental frequency may be different than anticipated during tower design. Overall foundation stiffness depends on the strength and stiffness parameters of the soil, and their interaction with the structural elements of the foundation. It is common for turbine manufacturers to specify minimum rotational and/ or translational stiffness values for wind turbine foundations. 2. Differential settlement or Tilting Total and differential settlements are kept to an acceptable level. Settlement are calculated for the entire foundation inNuence zone and include immediate settlement, primary and secondary consolidation settlement, as well as seismically induced settlement. 3. Bearing Capacity The foundation support material is evaluated to determine the ultimate and allowable bearing capacities. Bearing capacity is traditionally evaluated with allowable stress design approaches with the factor of safety at 3.0 in determining the allowable bearing capacity at service loads and fatigue loads, and 2.26 under unfactored extreme loads. Evaluation of bearing capacity also includes consideration of eccentric loading due to the turbine overturning moment and the resulting reduced foundation c....
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....r demands of the foundation mat. 8. Fatigue Analysis Fatigue adequacy verification for concrete structures is performed for both the concrete and for the reinforcement in separate analyses. Foundation fatigue evaluation must comply with the fatigue criteria as defined in standards/ codes. Safety factors for fatigue loads, materials, safety class and fatigue damage cannot be less then as prescribed per the turbine certification standard. 34. We will not go into the specialised requirements for Deep Foundations and Rock Anchored Foundations because the onshore WTGS in India normally do not require Deep Foundations or Rock Anchored foundations. They are typically used in offshore installations. Deep .foundations include drilled piles, drilled shafts and pier foundations that are post tensioned or regularly reinforced, pile groups supporting concrete caps, rock and soil anchors and other proprietary foundation systems such the tensionless pier (mono-pier) foundation. Piles include driven piles, drilled shafts, bored piles, auger-cast piles, and micropiles. Operations, Inspections and Structural Health Monitoring 35. Finally, the post-construction inspection of the steel tower stru....
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....oncrete slab as shown in Figure 5 above. The slab is designed to resist the thrust of horizontal load caused by wind and bending movement caused by shear forces operating at the tower foundation interface. 39. In effect, as mentioned earlier in this order, the foundation or the footing can be understood to be a mechanical devise whose combined action and independent operation allows the wind turbine to perform. on optimal efficiency levels. They have a definite and specific result. The ultimate use of the foundation structure is to provide the WTGS stability against various loads, dead weight, dynamic eccentric loads, shear, moment, sliding resistance, to prevent pedestal pullout or overturning resistance, and to transfer resonant forces into ground. There is a constant interplay of dynamic and static forces of the tower, nacelle and rotor along with other components and the foundation which is specifically designed to withstand such forces and provide operational efficiency to the Turbine. There is a functional interdependence between the motor, the power generating set, the tower, nacelle and the foundation. 40. The assessing officer has relied on the decision given in the case....
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....nal roads etc. being civil construction work in nature are not at par with the "windmill" as far as the period of diminution is concerned."(Emphasis mine) 42. It was finally held that "Civil work of control room, site development and internal roads adjunct to a windmill generating electricity is not entitled to 100 per cent depreciation as a windmill; however, transformer upto DP structure being a gadget for transmission of power generated by windmill is entitled to I00 per cent depreciation." Thus it is clear that Honourable Tribunal, in Poonawala Finvest (supra) did not give a categorical finding that the foundation does not form a part of wind turbine generating system on functional test ". 3. In the case of Poonawala Finwest & Agro (P) Ltd. (Supra), the following cost was included as a part of wind mill : (1) Cost of Labour work for site development 2) Civil Work control room 3) Internal road development 4) Transformer up to DP structure The assessee has categorized the cost of labour work, construction of control room and the expenditure on internal road and had claimed the depreciation on the said cost at the rate applicable to the wind mill. As per the facts recorded ....