2015 (7) TMI 642

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....l. 3. The learned CIT(A) erred in considering the Transformer, HT, Electrical supply unit as integral part of Wind Mill". 2. When the notice was issued and the case was taken up for hearing, none appeared on behalf of assessee. So appeal is being decided after hearing the Ld. DR, exparte assessee-respondent. 3. Briefly stated, assessee is engaged in the hotel business and forayed into the business of Wind Mill Power Generation. It admitted income of Rs. 60,19,060/- under normal provisions and deemed income of Rs. 4,08,79,035/- u/s. 115JB of the Income Tax Act [Act]. In the course of scrutiny assessment, Assessing Officer (AO) disallowed partdepreciation claimed at 80% of wind mill on other Plant & Machinery items such as Transforme....

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....nt & Machinery held by AO as neither specialized nor part and parcel of windmill not qualifying for depreciation at higher rate of 80% : 1. Windmill Project included following Three bills (enclosed) of Rs. 60,92,845. 1. Component & Accessories of Renewable Energy Device 1700KV A, 33/0.690KV Copper Wound Transformer with all fittings - Rs. 13,91,000. 2. Installation (with Material) of electrical line for power transmission and metering in respect of your windfarm project consisting of one WTG for your 1.50 MW Windmill at Location No. R232- Rs. 19,45,845. 3. Electrical Items, components of renewable energy device/windmill, in respect of windfarm project consisting of one WTG for your 1.5 Mw Windmill at Location No. R232- Rs. 27,56....

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....R is that the expenditure under contention is incurred on assets which are integral part of the capital asset i.e., the wind mill and is eligible for higher depreciation. The AR relied on the decision of Hon'ble ITAT in the case of ACIT Vs. Rakesh Gupta (Chd-Trib) 60 SOT 0081 where on a similar issue, it was held that expenditure related to generation and transmission facilities would be part of the capital asset and eligible for higher rate of depreciation. Respectfully following the ratio of above decision, it is held that the expenditure under consideration is on the assets which are integral part of the wind mill and accordingly eligible for higher rate of depreciation. The addition made by Assessing Officer is deleted". 6. After....

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.... is generated at places which are usually intractable and near which the consumption of that energy is not possible. Therefore, this energy has to be 'transmitted' with the use of a 'transmission system' which further requires a 'distribution system' to make use of that energy. Therefore, the generation, the transmission and distribution of energy, in fact is the 'Wind-Mill'. Without the combination of the above three systems, the idea of wind mill will not became viable. Without the system No. (ii) and (iii), the wind mill cannot even be commissioned. Since the electricity cannot be stored, one cannot simply go on generating it in the air and let it be wasted. Therefore, the expenditure incurred towards syst....

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....n perusal of the invoices raised towards sale of wind mill equipment and erection and commissioning of the same, it is to be noted that the price has been charged for supply, erection and commissioning of wind electrical generators. The seller of the wind mill equipment has also issued a certificate, a copy of which is at page 38 of the paper book, wherein it is clarified that the equipment supplied by them to assessee is not just wind electric generator but the complete wind mill unit consisting of the following components: 1. Gear Box & its related accessories, 2. Blades, 3. Tower, 4. Generator & its related accessories, 5. Power cables, 6. Communication Cables, 7. Main Bearing and Shaft, 8. Electronic Controllers, and 9. Power (Main) Pan....

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....wind mill equipment on which depreciation is allowable @ 100% as per the statutory provision. On a perusal of the assessment order, it is clear that AO without controverting the evidences and materials brought on record by assessee, has arbitrarily come to a conclusion that wind electric generators is an electric equipment eligible for depreciation @ 25%. Even at the time of hearing before us, ld. DR has not brought any contrary evidence to conclusively prove the fact that the equipment on which assessee claimed depreciation at 100% is not an integral part of the wind mill. In the aforesaid view of the matter, considering the fact that the materials brought on record clearly demonstrate that assessee has claimed depreciation at 100% on wind....