2018 (6) TMI 1544

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....re and property trading. Assessee filed the return of income for on 30.09.2010 declaring loss of (-) Rs. 4,32,86,445/-. The return was processed u/s. 143(1) of the Act. During the course of assessment proceedings, the AO noticed that the assessee claimed depreciation on windmill @80%. Considering the same issue of denial of depreciation @80% on the foundation/civil structures relating to windmill in the assessee's own case for A.Y.2009-10, the AO disallowed the claim of depreciation of Rs. 54,19,719/- u/s.32(1) of the Act and held that the claim of depreciation @80% as applicable for windmills cannot be applied for civil structures. AO made the addition of Rs. 4,32,395/- on account of income from house property. Relevant fats include that a....

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.... @10% and since civil works are not specially designed devices, the same are not entitled to higher rate of depreciation? 2. For this and such other reasons as may be urged at the time of hearing, the order of CIT(A) may be vacated and that of the Assessing Officer be restored. 3. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon'ble Tribunal." 5. We heard both the sides on this limited issue of allowing of depreciation @80% for civil structures of the windmill. We also perused the orders of the Revenue authorities and the decisions relied on by both the representatives. We find it relevant to extract the discussion ....

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....rabhu Vs. ACIT ITA No.1294/PN/2014 by ITAT 'B' Bench, dated 28/10/2015 iii) ACIT Vs. Suma Shilipa Limited ITAT Pune (2015) 44 CCH 514. e) Ld AR also submitted that CIT Vs. Sai Udyog Ltd. relied by AO is in no way applicable to the facts of this case. With the above, Ld AR for the appellant requested that additions of Rs. 54,19,719 may kindly be deleted. 3.1.3 At the outset, the observation made by the AO that similar disallowances made for the AY 2009-10 is pending before the Hon'ble ITAT is factually incorrect. Adverting to the merit of the case, the quantum which remains is whether civil work and foundation necessary for installation of wind mill should be considered as integral part or not. If yes, then, depre....

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....as not possible to install the windmill. Similarly, the electric items, components and installation were necessary for the wind mill, because in the absence of these components and electric items it was not possible for the windmill to produce electricity. Therefore, it was also the integral part of the windmill." In this regard Hon'ble ITAT has also held that foundation of civil work is an integral part of windmill on which depreciation @ 80% is to be allowed. The above positions have been decided by Hon'ble ITAT, Pune in the case of Mayura Steels Pvt. Ltd. Vs. ACIT (Supra), in the case of Santosh Kalmesh Prabhu Vs. ACIT (Supra) and in the case of ACIT Vs. Suma Shilipa Limited (Supra). In the case of Mayura Steels Pvt. Ltd. Vs. ....

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....n on such investment was, therefore, rightly allowed." 3.1.4 Hon'ble Bombay High Court in the case of CIT-III, Pune Vs. Cooper Foundry Pvt. Ltd.(Supra) has also held that cement foundation is to be included in the cost of the windmill while granting depreciation @ 80%. Similar issue has been taken by Pune Bench "B" in the case of ACIT Vs. Western Precicast Pvt. Ltd. (Supra) and by Chennai Tribunal in the case of Kutti Spinners (P) Ltd. In view of the foregoing discussion and respectfully following the decisions of Bombay High Court in the case of CIT Vs. Great Eastern Shipping Co. Ltd. reported at 118 ITR 772 (Born) and Challapalli Sugars Ltd. Vs. CIT 98 ITR 167 (SC) and decision of Pune ITAT in the case of Mayura Steels Pvt. Ltd. Vs....