M/s. Gemscab Industries Ltd., New Delhi V. DCIT, New Delhi

CO 29/DEL/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5715 (ITAT-DELHI)
• Duration Of Justice: 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-02-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 31-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Depreciation; Additional depreciation

Judgement Text

ITA 2285/DEL/2010 M/S GEMSCAB INDUSTRIES LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NO. 2285/DEL/ 10 ASSTT. YR: 2006-07 DCIT, CIR. 12(1), VS. M/S GEMSCAB INDUSTRIES LT D., NEW DELHI. PREM SADAN, 11, RAJENDRA PLACE, NEW DELHI. PAN/ GIR NO. AAACG5260H C.O. NO. 29/DEL/11 ( IN ITA NO. 2285/DEL/10 ) ASSTT. YR: 2006-07 M/S GEMSCAB INDUSTRIES LTD., VS. DCIT, CIR. 12(1), PREM SADAN, 11, RAJENDRA PLACE, NEW DELHI. NEW DELHI. ( APPELLANT ) ( RESPONDENT ) DEPARTMENT BY : SMT. MONA MOHANTY SR. DR ASSESSEE BY : SHRI MOHIT GUPTA CA O R D E R PER R.P. TOLANI, J.M : THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT( A)-VIII, NEW DELHI DATED 9-3-2010 RELATING TO A.Y. 2006-07 AND THE ASS ESSEE HAS FILED CROSS- OBJECTION. 2. SOLE EFFECTIVE GROUND RAISED BY THE REVENUE IN I TS APPEAL IS AS UNDER: ON THE FACTS AND CIRCUMSTANCES, WHETHER THE LD. CI T(A) WAS JUSTIFIED ON FACTS OF THE CASE AND IN LAW IN DELETI NG THE DISALLOWANCE OF RS. 13,50,000/- MADE BY THE AO WHO HAS RIGHTLY TREATED THE EXPENSE AS SEPARATELY IDENTIFIA BLE WHEREAS THE ASSESSEE AHS TREATED THE SAME AS PART AND PARCE L OF THE WINDMILL ITSELF. ITA 2285/DEL/2010 M/S GEMSCAB INDUSTRIES LTD. 2 3. LEARNED DR RELIED ON THE ORDER OF AO. ON THE OT HER HAND LEARNED COUNSEL FOR THE ASSESSEE AT THE OUT SET CONTENDS TH AT THE ISSUE IN QUESTION PERTAINS TO ALLOWANCE OF HIGHER RATE OF DEPRECIATIO N ON WINDMILL VIS A VIS (A) HT ELECTRICAL YARD WITH VCB OUTDOOR TYPE CT & P T; AND (B) HT TRANSMISSION LINE FROM WINDMILL TO GRID INTERCONNEC TION POINT INCLUDING HT METERING FOR 1.25 MW WINDMILL. AO ALLOWED DEPREC IATION ON WINDMILL BUT LOWER DEPRECIATION HAS BEEN ALLOWED IN RESPECT OF WINDMILL INSTALLATION SET UP BETWEEN THE MILL AND THE POWER GRID. IT IS P LEADED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE ORDER OF ITAT M UMBAI BENCH I IN ITA 555/MUM/2003 - TRUMAC ENGINEERING CO. PVT. LTD. VS. ITO DATED 27-6- 2008, HOLDING THAT HT TRANSMISSION LINES, VACUUM CI RCUIT BREAKERS, DEP STRUCTURES, CABLE CONNECTORS ETC. ARE EQUIPMENTS, W HICH ALSO FORM AN INTEGRAL PART OF FUNCTIONING OF THE WINDMILL. FURTHER RELIAN CE HAS BEEN PLACED ON THE ORDER OF ITAT IN THE CASE OF POONAWALA FINVEST & AG RO (P) LTD. VS. ACIT (2009) 27 SOT 47 (PUNE)(URO), HOLDING THAT INTEGRAL PART OF WINDMILL ARE ELIGIBLE FOR HIGHER RATE OF DEPRECIATION. 4. WE HAVE HEARD RIVAL CONTENTIONS AND HAVE GONE TH ROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. CIT(A) HAS ALLOWED RE LIEF TO ASSESSEE BY HOLDING AS UNDER: 3. WHEN THE FACTS OF THE PRESENT CASE ARE ANALYZED IN THE LIGHT OF ABOVE JUDGMENTS, I DO NOT FIND ANY JUSTIFICATION IN UPHOLDING ITA 2285/DEL/2010 M/S GEMSCAB INDUSTRIES LTD. 3 THE ACTION OF THE AO. A PERUSAL OF THE INVOICES PLA CED BEFORE ME CLEARLY REVEALS THAT THE APPELLANT COMPANY HAD M ADE AN AGGREGATE PAYMENT OF RS. 110 LAKHS TO SUZLON INFRAS TRUCTURE LTD. FOR THE ERECTION AND INSTALLATION OF 1 NO. SUZ LON AS 66.124MV WIND TURBINE GENERATOR WHICH, INTER ALIA, INCLUDED PAYMENTS ON ACCOUNT OF CIVIL WORK, SUPPLY AND INSTA LLATION OF HT ELECTRICAL YARD WITH VCB OUTDOOR TYPE CT & PT AN D HT TRANSMISSION LINE FROM WINDMILL TO GRID INTERCONNEC TION POINT INCLUDING HT METERING, LABOUR CHARGES FOR ERECTION AND INSTALLATION OF WIND MILL AND LABOUR CHARGES FOR FI NAL TESTING AND COMMISSIONING OF WIND MILL ETC. THEREFORE, THE PAYM ENT OF RS. 30 LAKHS WAS ESSENTIALLY INTEGRAL PART OF ERECTION AND INSTALLATION OF THE WIND MILL ITSELF. IT IS A MATTER OF COMMON K NOWLEDGE THAT IN THE ABSENCE OF INSTALLATION OF HT ELECTRICAL YAR D WITH VCB AND HT TRANSMISSION LINES FROM WIND MILL TO GRID INTERCONNECTION POINT, THE WIND MILL ITSELF COULD NOT HAVE BEEN INSTALLED AND COMMISSIONED. THEREFORE, I HOLD THAT THE EXPENDITURE OF RS. 30 LAKHS WAS PART AND PARCEL OF WIND MILL ITSELF AND THEREFORE, WAS ELIGIBLE FOR DEPRECIATION @ 30% AND IT WAS ALSO ELIGIBLE FOR ADDITIONAL DEPRECIATION @ 10% , AS THE WIND MILL WAS INSTALLED IN THE SECOND HALF OF THE F INANCIAL YEAR 2005-06. THEREFORE, THE AO IS DIRECTED TO ALLOW NEC ESSARY RELIEF TO THE APPELLANT COMPANY. 4.1. WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) INA SMUCH AS MUMBAI AND PUNE BENCH OF THE ITAT HAVE CLEARLY HELD THAT HIGHE R RATE OF DEPRECIATION IS ALLOWABLE ON SIMILAR TYPE OF INSTALLATION, SET UP B ETWEEN WIND MILL AND GRID. IN VIEW THEREOF, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 5. APROPOS ASSESSEES CROSS-OBJECTION, IT IS PLEADE D THAT THE SAME IS ONLY IN SUPPORT OF CIT(A)S ORDER. SINCE IN REVENUES AP PEAL WE HAVE UPHELD THE ITA 2285/DEL/2010 M/S GEMSCAB INDUSTRIES LTD. 4 ORDER OF CIT(A), THE CROSS-OBJECTION FILED BY THE A SSESSEE HAS BECOME INFRUCTUOUS AND STANDS DISMISSED ACCORDINGLY. 6. IN THE RESULT, REVENUES APPEAL AS WELL AS ASSES SEES CROSS-OBJECTION ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 08-02-2011. SD/- SD/- ( K.G. BANSAL ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 08-02-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR