2019 (10) TMI 779

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....a common order, treating appeal no.251 of 2013, for the assessment year 2007-08, as the leading appeal. 3. All the appeals are filed on the same question of law, which read as under: "Whether the Income Tax Appellate Tribunal is justified in law and facts in holding that the assessee was entitled to claim depreciation on the fixed assets acquired on transfer scheme 2003 which was not yet finalized/ascertained on the fact that the actual assets are not identifiable and not being used as well as their full title have not been transferred to the assessee ?" 4. Brief facts of the case are, that U.P. Electricity Regulatory Commission (in short "UPERC") was formed under the provisions of U.P. Electricity Reforms Act, 1999 by Government of U.P., as a first step for reforming and restructuring the power sector in the State. 5. The erstwhile U.P. State Electricity Board (in short "UPSEB") was unbundled into three distinct legal and separate entities through the First Reforms Transfer Scheme, dated 14.1.2000, which are as under: (i) U.P. Power Corporation Ltd. (in short "UPPCL"), vested with the function of transmission and distribution of power within the State. ....

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....erred to the Company as per the Transfer Scheme, 2003. 11. While making the assessment for the assessment year 2004-05 the assessing officer disallowed the depreciation claimed by the respondent-assessee on the assets transferred to it under the U.P. Transfer of Distribution Undertaking Scheme, 2003. 12. CIT(A), however, considering the fact allowed the appeal of the respondent-assessee, which was affirmed by the Tribunal. The order of the Tribunal was challenged by the Department before this Court. 13. Present dispute relates to the assessment years 2007-08, 2008-09, 2009-10, 2010-11, 2011-12 and 2012-13. In all these years the assessing authority had disallowed the depreciation claimed by the assessee on the assets transferred to it pursuant to the Scheme of 2003. 14. Sri Gaurav Mahajan, learned counsel appearing for the Department submitted that Section 32 of the Income Tax Act provides for depreciation in respect of building, machinery, plant or furniture, being tangible assets. He relied upon sub-section 1(ii) of Section 32 of the Act, which provides that depreciation shall be granted only when the assessee owned, wholly or partly and used for the purpose of busine....

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...., it is not in dispute that the UPPCL was divided into four new distribution Companies under the Transfer Scheme, 2003 by Government notification dated 12.8.2003. The respondent-assessee is one of the four distribution Companies. It is further not in dispute that the Transfer Scheme, 2003 provided for the assets, which included the fixed assets, but no break up of assets values and itemwise was provided in the Transfer Scheme, 2003, as such the respondent-assessee had appointed an auditor to make itemwise opening balance of the assets and liabilities, which according to the respondent-assessee themselves was submitted by the auditors to them on 4.12.2015. 20. The contention of the counsel for the Department regarding the depreciation, which has been disallowed by the assessing officer on the balance assets acquired on the date of Transfer Scheme, 2003, as the assets was was not identifiable at the relevant point of time, needs consideration. 21. In the light of the fact that the auditors themselves had submitted report to the respondent-assessee on 4.12.2015 and the assets so acquired under the Transfer Scheme, 2003 came to be identifiable only in the assessment year 2016-17.....

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2019 (10) TMI 779