TaxTMI 
TaxTMI 
2017 (12) TMI 1220
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....d on the decision of Hon'ble Supreme Court in the case of Mahalakshmi Sugar Mills Co. Vs. CIT (123 ITR 429) and accordingly disallowed and added back to the income. 4. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition made by the AO holding that the interest liability on unpaid purchase tax would take the character of tax and required to be allowed as deduction on actual payment basis. Accordingly, the appeal of the assessee was dismissed by the Ld.CIT(A). For the sake of clarity, and convenience we extract para No.5.2 of Ld.CIT(A) order which reads as under : "5.2. I have considered the submissions. The interest liability on unpaid purchase tax would fall within the purview of "any sum payable by way of tax, duty, cess or fee (whatever name called wider any law for the time being in farce)." It would not fall within the purview of definition of interest u/s.2(28A) as there is no element of borrowing of money or incurring of debt or availing of credit facilty. Further, one of the purposes of section 43B is to ensure actual payment of the tax, duty fee or cess, etc., in respect of which tax benefit is....
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.... 58439436 5. Stampiping 25.12.08 5605451 80% 15% 2242180 420409 6. Coalgas feeding system 25.12.08 10378869 80% 15% 4151548 778415 7. Coal Handling system 25.12.08 12377145 80% 15% 4950858 928286 8. Substation towerline 25.12.08 107737223 80% 15% 43094889 8080292 TOTAL 308447926 123379170 70615636 The AO disallowed the depreciation claimed by the assessee @80% and reworked the depreciation at 15% except in the case of 12.35 KVA turbine as per the details given. 7. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) dismissed the appeal of the assessee. Aggrieved by the order of the Ld.CIT(A) the assessee filed the appeal before the Tribunal. 8. During the appeal hearing, the Ld.AR stated that this issue is squarely covered by the decision of this Tribunal in assessee's own case for the assessm....
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....ndling system; viii) Sub-station tower line 17. There is no dispute on the allowability of 12.65 KVA turbine for higher rate of depreciation. The dispute relates to other items only. 18. Before we consider each item separately, we extract following New Appendix-I of IT Rules, 1962 effective from assessment year 2006-07 onwards: PART A: TANGIBLE ASSETS (III) Plant and machinery: (8) (ix) Energy saving devices, being - A: Specialised boilers and furnaces (d) High efficiency boilers - (thermal efficiency higher than 75% in case of coal fired and 80% in case of oil/gas fired boilers) D) Cogeneration systems: (a) Back pressure pass out, controlled extraction, extraction cum condensing turbines for co-generation along with pressure boilers. Before going further, we would consider the legal position on the issue. 19. In the case of South Madras Electric Supply Corporation Limited (supra), the Hon'ble Madras High Court has held that higher rate of depreciation to an electric supply corporation would include within its scope depreciation of service connection and parts including o....
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....urther appeal by the assessee, the Tribunal allowed the higher rate of depreciation and development rebate for all the items. In our view, the Tribunal was right in doing so, for by the very nature of the assets in question, we have no doubt that they form part of the refinery plant and are as such entitled to these allowances at the higher rate. Accordingly, we answer question No.3 in the affirmative, that is, in favour of the assessee and against the revenue." 21.1 The proposition laid down is that the higher rate of depreciation should be allowed even on some of the peripheral items when these assets form part of the 'refinery plant' which is eligible for higher rate of depreciation. 22. In the case of DCIT vs. VippySolvex Products Limited (supra), the Hon'ble M.P. HighCourt was considering the case of 100% depreciation on high efficiency boiler. The automatic coal supply system consisting of coal container, coal conveyer, bucket elevator and dust collecting system were considered as integral part of high efficiency boiler and 100% depreciation was directed to be allowed. The Hon'ble Court noted the observations of the Tribunal that the boiler w....
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....rm 'exclusively' was perhaps implied in the order. The fact of the case at hand is different from the case of TTG Industries ltd (supra), wherein, the case of cogeneration system was not considered. Thus, the propositions laid down in this case law do not apply to the facts of the case. 26. Reliance was placed on the decision of Hon'ble Delhi High Court in the case of CIT vs.H.B. Leasing & Finance ltd., 360 ITR 362 (Del). This is a case where the Hon'ble Court held that a tanker or a gas cylinder attached to the body of a truck continued to be a gas cylinder and was, accordingly, entitled to depreciation @ 100%. The arguments of the revenue that parts cannot be segregated for the purpose of claiming depreciation at the different rates on different parts was rejected. In the case at hand the term is used 'system'. Hence, even separate part, which constitutes 'system' are eligible to higher depreciation. This case relied upon by the revenue is of no avail. 27. In the case of Kerala Sponge Iron ltd vs ACIT, 32 ITR (Trib) 0718, relied upon by LdD.R., the Bench was considering the claim of the assessee for higher depreciation on the grou....
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.... that steam piping cannot be used independently or standalone basis. It is an integral part of cogeneration system, hence, eligible for higher depreciation. 32. Coming to the coal & gas feeding system and coal handling system, we apply thedecision of Hon'ble M.P. High Court in the case of VippySolvex Products Ltd (supra) and come to our conclusion that this is an integral part of high efficiency boiler. The very description of nature of the equipment demonstrates that it cannot be independently used and has to be used along with the boiler. Thus, we direct the AO to treat the coal & gas feeding system and coal handling system as integrated part of cogeneration system and allow higher depreciation on the same. 33. With regard expenditure on Sub-station power line, we cannot agree with the contentionof the appellant that expenditure incurred on substation power line is also part of the cogeneration system. This expenditure is necessary for onward distribution of the power generated in a cogeneration system and hence cannot be considered as an integral part of the cogeneration system. 34. We now consider the additional ground raised by the assessee on th....