TaxTMI 
TaxTMI 
2014 (9) TMI 279
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....Windmill is essentially a civil construction Work, consisting of Mortar, Cement and Bricks, and therefore qualifies for depreciation at the rate of 10%." 2.1 Facts of the case, in brief, are that the Assessing Officer during the course of assessment proceedings noted that the assessee has claimed depreciation @80% on the windmills installed by it at village Ranjangaon (Brahmanvel), Taluk Shirur, Dist.Dhule in Maharshtra). The Assessing Officer asked the assessee to justify the claim of depreciation at 80% on the windmills purchased by it. Rejecting the various explanations given by the assessee the Assessing Officer allowed depreciation @10% as against 80% claimed by the assessee and made a disallowance of Rs. 16,81,042/-. 3. In appeal the Ld.CIT(A) following various decisions directed the Assessing Officer to re-compute the depreciation in the following manner : "54. The appellant has provided the costs of various components which have been included by it in the cost of windmill as detailed below: Srl. No. Particulars Amount (Rs.) Amount (Rs.) 1 Cost of wind turbine generator 4,14,00,000/- 2 a) Cost of component-Suzlon Blades 65,00,000/- 3 b) Elect....
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....allow depreciation on HT electrical UCB and transmission line for windmill @ 80% as well. 56. I find that the appellant has claimed an amount of Rs. 37,50,000/- towards power evacuation facility and creation of infrastructure which is included in the cost of WTGS by the appellant. The breakup of power evacuation cost and infrastructure creation cost is not given. Since the infrastructure creation cost would include the cost of making of roads providing free access and keeping the surrounding area vacant, the same would be treated as a building and hence, depreciation @ 10% would be applicable. Since nothing has been provided by the appellant, it would only be fair to assume that 60% of this cost is incurred towards these expenses and 40% towards power evacuation facility. Therefore, depreciation allowable on civil construction will only be Rs. 22,50,000/-. The Assessing Officer is directed to recompute the depreciation accordingly in respect of the new windmill. 57. The appellant has not given a breakup of the component where the cost of consideration for providing easy and free access and keeping the area vacant surrounding land at Gat No. 21/4 village Ranjangaon Windmill Pr....
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.... case of Poonawala Finvest & Agro (P) Ltd. (Supra), the Tribunal emphasized on the functional test. So far as the foundation is concerned, as discussed by the Ld CIT(A), the functional test is fulfilled. There should not be quarrel that civil work is involved in the erection of the foundation, but every civil work cannot be treated as civil work as required for bringing construction. In our opinion, cost on the foundation of the wind mill is eligible for the depreciation at the rate 180% or the rate which is applicable to the wind mill as it is integral part of cost of wind mill erection. Same way, the cost for commission and erection cannot be said to be separate from the wind mill as it is directly related to the functioning of wind mill. The Ld CIT(A) has rightly allowed the depreciation on the pro rata basis on the cost of foundation to the extent of the civil work. We may refer to here the decision of the ITAT Ahmedabad Bench in the case of ACIT Vs. Parry Engineering & Electronics, ITA No. 3317/Ahd/2011 dated 2nd March 2012, in which it is held that the foundation is a part of the turbine and is eligible for the rate of depreciation which is applicable to the wind mill. We ....
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....e is not applicable in the present case." 5.1 Facts of the case, in brief, are that the Assessing Officer during the course of assessment proceedings observed that the assessee has claimed expenditure of Rs. 57,82,634/- on account of "Directors commission". The Assessing Officer asked the assessee to furnish the details of this expenditure and asked the assessee to establish the basis for this claim. It was explained that the commission has been paid to the directors on the basis of a resolution passed at the EGM (Extraordinary General Meeting) of the members of the company. A copy of the same was also filed before the Assessing Officer. However, the Assessing Officer was not satisfied with the explanation given by the assessee. He noted that apart from this resolution passed by the Directors of the company, there is no other evidence regarding the necessity of the payment. There is no such justification for such huge payment to the directors in the current year due to the following reasons : i. This payment is for the first time. ii. There is no change in the turnover or profitability of the company as compared to earlier year operations. iii. Directors have not ren....
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....sions cited before him the Ld.CIT(A) deleted the addition by observing as under : "71. I have given careful consideration to the submissions of the appellant and also the facts of the case. The issue before the Hon'ble Bombay High Court in the case of CIT Vs. Dempo & Co. Pvt. Ltd. (2011) 196 Taxman 193 was whether a subsidiary company is related person within the meaning of the provisions of section 40A(2)(b) (ii). It was held that the object of section 40A(2) is to prevent diversion of income. Section 40A(2) was added to the Income-tax Act by way of an amendment made by the Finance Act 1968. It is only when payment is made by the assessee to the related person mentioned in clause (b) of section 40A(2) that the assessing officer gets jurisdiction to disallow the expenditure or a part of expenditure which is considered to be excessive or unreasonable. Since the subsidiary company was not a member of the holding company, Dempo & Co. Pvt. Ltd., the provisions of clause (d) of section 40A(2)(b) were not attracted. Thus the Hon'ble Court did not decide on the issue at hand, i.e., whether the provisions of section 40A(2)(b) will be attracted when both the payer and the payee fall in t....
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....ed the payment of such commission to the Directors u/s.40A(2)(a) of the I.T. Act and on appeal, the Ld.CIT(A), following various decisions, deleted the addition on the ground that the provisions of section 40A(2) are not attracted when both payer and payee fall in the same tax bracket. 8.1 It is the case of the Revenue that the Directors have not shown receipt of said commission through their respective returns for A.Y. 2008-09. Further, it is also the case of the Revenue that there is no evidence as to the nature of services rendered by the Directors justifying such huge commission payment. It is the case of the assessee that the Directors have rendered services and the commission has been paid on the basis of resolution passed at the EGM. It is also the submission of the Ld. Counsel for the assessee that the Assessee as well as the Directors fall under the same tax rate and there is no attempt to evade tax. From the copies of the assessment orders passed u/s.143(3)/263 on 19-12-2012 in case of Shri P.J. Jadhav and on 24-09-2013 in case of the other directors we find the Assessing Officer has brought to tax such commission income in the hands of the respective directors which w....
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....Cummins India Ltd. approved the hike in cost of KP Cylinder Heads. The rate difference agreed upon was passed on to the suppliers of castings. It is thus proved that the rate difference invoice raised by M/s Saroj Castings Pvt. Ltd. and paid by the appellant is for compensating the increase in raw material prices and that too after Cummins India Ltd. had approved of the same. Hence, the appellant has sufficiently proved that payment to M/s Saroj Castings Pvt. Ltd. had incurred during the course of commercial dealings and hence, it is not covered by the provisions of section 40A(2)(b) of the Act. 77. In view of the above discussion I hold that the Assessing Officer was not justified in making the disallowance under section 40A(2)(b) of Rs. 23,67,789/- and the same is deleted. Ground no. 4 is allowed." 10.1 Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 11. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. From the copy of the assessment order which show the breakup of Rs. 23,67,789/- raised by M/s. Saroj Castings Pvt. Ltd.,....
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.... the above grounds are identical to Grounds of appeal Nos. 1 & 2 by the Revenue is ITA No.1078/PN/2012. We have already decided the issue and the grounds raised by the Revenue have been dismissed. Following the same ratio, the above ground raised by the Revenue is accordingly dismissed. 15. Ground of appeal No.4 by the Revenue reads as under : "4. On the facts and in the circumstances of the case, and in law, the CIT(A) Kolhapur erred in deleting the addition made u/s 43B of Rs. 13,00,408/- towards payment of sales tax paid for earlier years, by allowing additional ground without giving any opportunity to the AO to examine and rebut this evidence, as required to be given under Sub-Rule (3) of Rule 46A." 15.1 Facts of the case, in brief, are that the assessee, vide its letter dated 16-08-2012 had requested the Assessing Officer to allow the claim of Rs. 13,00,408/- being earlier year's Sales-tax payment, which was inadvertently not claimed in its original return. However, since the claim was not made through a revised return and also as the time limit prescribed under section 139(5) had lapsed, the assessing officer turned down the request made. In doing so he relied on....
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....ied by me.] 23. Thus it is clarified that the decision in Goetze India (supra) was limited to the power of the assessing authority to entertain a claim for deduction otherwise than by a revised return and did not impinge on the powers of the appellate authorities. I have already referred to the decisions in Additional Commissioner of Income-tax v. Gurjargravures P. Ltd., 11978] 111 ITR 1 (SC), Jute Corporation of India Limited v. CIT [1991] 187 ITR 688 (SC), Amalgamated Electricity Company Limited v. Commissioner of Income-tax, [1974] 97 ITR 334 (Bom)(FB), and National Thermal Power Company Limited v. CIT [1998] 229 ITR 383 (SC) which clearly uphold the principal enunciated in the case of CIT v. Kanpur Coal Syndicate[1964] 53 ITR 225 (SC), in which the Hon'ble Supreme Court held as under- "If an appeal lies, Section 31 of the Act describes the powers of the Appellate Assistant Commissioner in such an appeal. Under Section 31(3)(a) in disposing of such an appeal the Appellate Assistant Commissioner may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment; under clause (b) thereof he may set aside the assessment and direct the Income Tax Offi....