TaxTMI 
TaxTMI 
2023 (11) TMI 691
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....mmissioner of Income Tax (Appeals)-16 relevant to the AY 2015-16 dt. 17-08-2022 is opposed to law, facts and circumstances of the case. 2. The learned Commissioner of Income Tax (Appeals)-16 has erred in disallowing the investment allowance claimed by the appellant under section 32AC(1A) amounting to Rs. 11,77,36,432/- on Co-generation power plant and Anaerobic Digester. 3. The learned CIT(A) ought to have considered that the Appellant had claimed the allowance only on new asset acquired during the year which is well within the ambit of new asset as defined under section 4 of Section 32AC. 4. The learned CIT(A) without considering the legislative intent to provide incentive benefits to manufactures and intention of inserting sub-section 4 of section 32AC which specifically denies the allowance only for those assets which have been claimed 100% deduction in any previous years and not to restrict the claim in the same year under consideration. 5. For the purposes of this section, "new asset" means any new plant and machinery (other than ship or aircraft) but does not include- I. any plant or machinery which before its installation by the A....
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....espectively, to the total income of the assessee. While completing the assessment, the Ld. AO observed as under:- "6a. On perusal of the records it is noticed that assessee has claimed deduction under section 32AC(1A) of Rs. 38,18,07,764/- while working out the taxable income. The classification of assets on which the deduction is claimed is as below: Plant and machinery Rs. 161,70,34,890/- Electrical Installations Rs. 1,43,30,324/- Co-generation Power Plant Rs. 87,55,92,987/- Anaerobic Digester Rs. 3,84,26,891/- On examining the depreciation chart it is noticed that depreciation at 80% an....
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....aling Rs. 1,43,30,324/- are not eligible for deduction under section 32AC(1A)." 4. Being Aggrieved, the assessee filed 1st appeal before the Ld. CIT(A) unsuccessfully. The Ld. CIT(A) vide order dated 17-08-2022 has rejected the appeal of the assessee by observing that the assessee has already claimed 100% depreciation as by the Ld. AO. Aggrieved further, the assessee filed the present appeal before the Tribunal. 5. Heard both the parties and perused the materials on record. The Ld. AR submitted that the assessee did not claim depreciation allowance in any of the prior years other than A.Y 2015-16 and the restriction not to allow the depreciation allowance with retrospective effect is for new asset only on which previously there was claim for allowance. On the other hand, the Ld. Sr. D.R supported the order of the Ld. CIT(A). Thus, we have to adjudicate and decide as to whether the assessee is eligible for additional depreciation at 20% as claimed. The assessee submitted before the Ld. CIT(A) that, (i) the assessee has acquired and installed the plant and machinery during the financial year 2014-15 and has not claimed any deduction by whatever manner including depreciation dur....
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....on. In the written submission, the assessee stated that assessee had not claim depreciation on those assets in any of previous year. I am not in agreement with this claim of assessee. The Act does not talk of earlier previous year. It talks of any previous year. Therefore, if assessee claimed for 100% depreciation on any asset, those assets will not be entitled for any further allowance under section 32AC of the Act. In the assessment order, the AO excluded electrical installations from the list of plant and machinery. No reason has been given for the same. The AO is therefore directed to allow the claim under section 32AC of the Act for electrical installation. But allowance under section 32AC of the Act for cogeneration power plant and Anaerobic Digester is rejected. Ground is partly allowed. Appeal is partly allowed. 7. The Ld. CIT(A) vide aforesaid observed that, if assessee claimed 100% depreciation on any asset, those assets will not be entitled for any further allowance under section 32AC of the Act. On the other hand, the assessee has been claiming that they had not claimed such allowance in any of the prior previous years. 8. We have carefully considered the submissi....
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....6/Chny/ 2022: 10. The Registry has noted that there was a delay of 25 days in filing of the appeal, however, the Bench has condoned that delay admitting the affidavit as filed by the Department. 11. The grounds of appeal of the Department are as follows:- 1. The order of the ld. Commissioner of .T. (Appeals) is erroneous on facts of the case and in law. 2. The Ld. CIT(A) erred in holding that higher depreciation @ 80% is allowable even in respect of those machineries which do not form part of Part A (ii) (8) (ix) D of New Appendix-1 of the depreciation table given in the IT Rules and which is contrary to the rate of depreciation prescribed in Rule 5 of IT Rules. 2.1 The learned CIT(A) ought to have appreciated the fact that, only those machineries as mentioned in part A (ii)(8)(x) D of new Appendix-1 of IT Rules, forming part of co-generation units shall be eligible for higher depreciation @ 80%, and all other machineries would be eligible for normal depreciation as applicable to plant and machinery. 3. The learned CIT(A) erred in allowing deduction u/s. 32AC(1A) of the IT Act on electrical installations, without appreciating the fact that ....
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....ation system 3. Organic rakine cycle power system 4. Low inlet pressure small steam turbines. 14. Against the order of the Ld. AO, the assessee preferred appeal before the learned CIT(A) successfully. Being aggrieved, the Department filed the present appeal before the Tribunal. 15. It was the submission of the assessee before the Ld. CIT(A) that, the above mentioned assets are part and parcel of cogeneration unit. The details functions of such assets were explained to the Ld. CIT(A) as stated at page Nos. 5 to 6 of the Ld. CIT(A)'s order. The assessee also relied on the decision of the Hon'ble ITAT, Vishakhapatnam passed in the case of Sarvaraya Sugars Limited vs. DCIT [ITA No. 577/VIZ / 2014, decision of the ITAT, Chennai passed in the case No. ITA 1289 / Chny / 2019 of DCIT vs. Bannari Amman Sugars Ltd. and decision of the Hon'ble M.P. High Court passed in the case of DCIT vs. VippySolvex Products Ltd [164 taxman 483]. The Ld. CIT(A) considered the aforesaid decisions in his order at page Nos. 6 to 10 and thereafter has passed his order in favour of the assessee. 16. The ITAT, Chennai vide order dated 21-03-2022 in ITANo.1289/Chny/2019 have decided t....
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....terized control system used to control the production line in the industry. In a sugar - Co generation plant, the controller elements are not centrally located. DCS helps in routing the control consistently. It is a system used to automate the energy flows within the factories and hence, it is evident that it is falling under the heading "Instrumentation and Monitoring System for monitoring energy flows" in the category "Automatic Electrical Load Monitoring System". The same is eligible for claiming 80% Depreciation. d. Air compressor The air compressor is a device that converts power into kinetic energy, by compressing and pressurizing the air. This pressurized air is used to rotate the turbine and in turn power is produced. This is an integral part of power generation plant and hence falls under the 80% depreciation slab. e. Ash handling systems: The ash produced from combustion of coal and bagasse, is to be disposed off rightly. In order to do that the ash handling system is used. This transports the ash from the furnace to the ash yards. This is one of the strenuous tasks in a cogeneration plant and since this does hand in hand with the power....
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....tion 32AC(1A) of the Act. Similarly, in respect of the Anaerobic Digester unit, 100% of the cost of the which is allowed as deduction, is not eligible to be considered in the deduction under section 32AC(1A) of the Act. Also Electrical installation totaling Rs. 1,43,30,324/- are not eligible for deduction under section 32AC(1A)." 20. From the aforesaid, it is clear that, the Ld. AO did not assign specific reason for disallowing the claim of the assesse on the asset of Electrical installation. On the other hand, regarding the plant and machinery, cogeneration power plant and Anaerobic Digester, the claim for depreciation was disallowed by the Ld. AO by assigning specific reasons. Further, the claim of the assessee is that they did not claim for depreciation prior to the AY 2015-16. 21. The Ld. AO during the assessment proceeding noticed that the assessee has claimed deduction under section 32AC(1A) of Rs. 38,18,07,764/- while working out the taxable income. The classification of assets on which the deduction is claimed is as below: Plant and machinery &nbs....