TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 1047
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....pellate Tribunal is correct in law in sustaining the action of the respondent in rejecting the claim of additional depreciation as a consequence to the rejection of depreciation on the facts and in the circumstances of the case?" 2. The assessee is a partnership firm engaged in the business of manufacture of safety matches; it filed its return of income for the Assessment Year under consideration 2005-06 on 31.03.2005, admitting a total income of Rs. 23,47,370/-. The return was processed under Section 143(1) of the Act and subsequently, the case was selected for scrutiny and after discussion, the assessment was completed under Section 143(3) of the Act, by an order dated 21.09.2007. Two issues arose in the assessment proceedings, which were decided against the assessee viz., the claim for depreciation in respect of one wind mill established by the assessee and the claim for additional depreciation on the very same wind mill. The Assessing Officer was of the view that the assessee did not generate the electricity before the end of the assessment year ie., on 31.03.2005 and what was generated was less than one unit and the actual generation took place on 31.03.2004 and therefore, th....
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....hat the assessee had effected supply of electricity to the Board on 31.03.2005. Further, statement was recorded from the Executive Engineer of the Board under Section 133(b) of the Act, wherein he appears to have stated, generation not started but work is over. Armed with this statement, the assessing officer stated that production of electricity as on 31.3.2005 was less than one unit and at best could be treated as trial production and the assessee having not produced electricity before 31.03.2005, cannot be stated to have put the wind mill to use for the purpose of business. It is not in dispute that the certificate issued by the competent authority states that electricity was generated on 31.3.2005, however the amount of electricity which was generated was only 0.080 units. This, according to the assessing officer, is insufficient as it can be considered only as a trial run, but actual generation of electricity took place much after 31.3.2005. The Tribunal concurred with the findings of the Assessing Officer, but had referred to the aforementioned four decisions. In our considered opinion, all the four decisions cannot be applied to the facts of the present case. 6. In the case....
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.... Manufacturers Cororation Ltd. v. CIT[1957] 31 ITR 203 (Bom), it was observed that the expression "used" in Section 10(2)(vi) of the Indian Income-tax Act, 1922 (hereinafter referred to as "the old Act") corresponding to Section 32 of the Act has to be given a wider meaning. The expression includes passive as well as active user. In CIT v. Dalmia Cement Ltd. [1945] 13 ITR 415 (Patna) and CIT v. Viswanath Bhaskar Sathe [1937] 5 ITR 621 (Bom), it was observed that depreciation might be allowed in certain cases even though the machinery was not in use or was kept idle. The question whether the word "used" would include both passive as well as active user was left open by the apex court in Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265. The words "used for the purposes of the business" are capable of a larger and a narrower interpretation. If the expression "used" is construed strictly, it can be taken as connoting or requiring the active employment or the actual working of a machinery, plant or building in the business. On the other hand, the wider meaning will include not only cases where the machinery, plant, etc., are actively employed but also cases where there is, what may be....
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....the line of business activity of the assessee was manufacture of safety matches and establishing a wind mill was a new line of business. In fact, this cannot be a ground to non suit the assessee, as similar issue raised by the Revenue in "CIT -Vs- Hi Tech ARAI Ltd., (2010) 236 CTR 0321" , was rejected. Paragraph No.5 of the judgment reads as follows. "5. In the case on hand, the assessee is stated to have set up two wind mills in addition to the already existing four wind mills and thereby increased its power generation capacity by above 50%. It is true that the assessee is a company engaged in the business of manufacture of oil seeds, moulded rubber parts, reed value assemblies apart from generation of power. After the installation of the additional wind mills, both prior to as well as after the installation of the additional wind mills, the assessee was using wind energy for generating power for its capitative consumption apart from selling the surplus power generated to the Tamil Nadu Electricity Board. As far as application of Section 32(1)(iia) of the Act, is concerned, what is required to be satisfied in order to claim the additional depreciation is that the setting up of a....