2019 (12) TMI 774

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.... law. (i) Whether the Tribunal committed an error of law in allowing depreciation on wind mills which was not actually put to use? (ii) Whether the Tribunal is right in law holding that the depreciation claimed against the amount paid towards acquisition of leasehold rights over land for a period of 30 years, is a revenue expenditure and is eligible for deduction under Section 37(1) of the Income Tax Act, 1961? 4. With consent of learned counsel for the parties, the same is heard finally. 5. Facts giving rise to filing of this appeal briefly stated are that the respondent is a partnership firm which is engaged in business of iron mines and trading in iron ore. An action under Section 132 was initiated on 26.10.2007 i....

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.... depreciation on the wind mills. Being aggrieved by the order passed by the Commissioner of Income Tax (Appeals), the assessee as well as the revenue preferred appeals before the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal by an order dated 13.06.2014 upheld the claim of the assessee and allowed its appeal, whereas the appeal filed by the revenue was dismissed. In the aforesaid factual background, this appeal has been filed. 7. Learned counsel for the revenue submitted that the Income Tax Appellate Tribunal grossly erred in holding that the depreciation claimed against the amount paid towards acquisition of lease hold rights over the land for a period of 30 years, is a revenue expenditure and is thus eligible for ded....

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.... perused the record. 11. The Assessing Officer by taking into account the expression "used", Section 32 of the Act has held that the aforesaid expression denotes actual use and not merely ready for use. Accordingly, the Assessing Officer has held that the assessee claim for depreciation on the wind mills is not admissible as per provisions of Section 32 of the Act. Aforesaid finding has been affirmed in appeal by the Commissioner of Income Tax (Appeals). However, the Tribunal has held that after introduction of the concept of 'block of assets' with effect from 01.11.1988, the question of use of assets for the purpose of depreciation has become irrelevant. 12. In support of the aforesaid submission, Income Tax Appellate Tribunal has pl....

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....ome a new separate part of block of asset, insofar as calculation of depreciation is concerned. 14. Thus, the Income Tax Appellate Tribunal has held that the assessee is entitled to claim depreciation on the value of wind mills. We are in agreement with the view taken by the Income Tax Appellate Tribunal for the reasons which we have mentioned supra. Accordingly, the first substantial question of law is answered in the affirmative and in favour of the assessee and against the revenue. 15. So far as second substantial question of law is concerned, the Tribunal has held that the claim of the assessees cannot fall within the purview of Section 30 of the Act because the aforesaid provision only contains rent paid on the building. The clai....