Dr. Santosh Kamlesh Prabhu, Kolhapur V. Assistant Commissioner of Income-tax,

ITA 1294/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0936 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 16-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Depreciation; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 1294/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2008-09 DR. SANTOSH KALMESH PRABHU, 1971, C-WARD, LAXMIPURI, MAHARNA PRATAP CHOWK, KOLHAPUR. PAN : AAUPP6602R ....... / APPELLANT ' / V/S. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, KOLHAPUR / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI B.C. MALAKAR / DATE OF HEARING : 20-10-2015 / DATE OF PRONOUNCEMENT : 28-10-2015 * / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR DATED 13-01 -2014 FOR THE ASSESSMENT YEAR 2008-09. 2. THE FACTS OF THE CASE AS EMANATING FROM THE RECORD ARE: THE ASSESSEE IS A DOCTOR BY PROFESSION. THE ASSESSEE HAS IN STALLED WINDMILL DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2008-09. THE ASSESSEE 2 ITA NO. 1294/PN/2014, A.Y. 2008-09 FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YE AR ON 30-09-2008 DECLARING LOSS OF RS.69,32,877/-. THEREAFTER, TH E ASSESSEE FILED REVISED RETURN OF INCOME ON 03-10-2009 DECLARING TAXA BLE INCOME OF RS.73,52,950/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. ACCORDINGLY, NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISS UED TO THE ASSESSEE ON 21-08-2009. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS C LAIMED DEPRECIATION ON CERTAIN COMPONENTS / CONSTITUENTS OF WIND MILL VIZ. CIVIL WORK, MEDA PROCESSING FEE, MEDA APPLICATION FEE, ELECTRICAL INSTALLATION, LABOUR CHARGES FOR INSTALLATION AND FINAL TESTIN G, ETC. AT THE RATE OF 80%. THE ASSESSING OFFICER DISALLOWED HIGHER RATE OF DEPRECIATION ON THE AFORESAID COMPONENTS AND THUS, MADE ADDITION OF RS.24,53,450/-. AGGRIEVED BY THE ASSESSMENT ORDER DATED 31-12-2010, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMP UGNED ORDER UPHELD THE FINDINGS OF ASSESSING OFFICER AND DISMISSED T HE APPEAL OF THE ASSESSEE. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE FINDINGS OF THE COMMISSIONER OF INCOME T AX (APPEALS) IN DISALLOWING THE HIGHER RATE OF DEPRECIATION ON THE COMPONENTS / CONSTITUENTS OF THE WINDMILL. 3. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED, THAT THE COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN RESTRICTING THE RATE OF DEPRECIATION CLAIMED AT 80% ON FOUN DATION, ELECTRICAL INSTALLATION AND OTHER RELATED COMPONENTS OF WINDM ILL. THE LD. AR SUBMITTED THAT APART FROM WINDMILL UNIT, THE ASSESSEE HAD CLAIMED DEPRECIATION @ 80% ON THE FOLLOWING COMPONENTS:- 3 ITA NO. 1294/PN/2014, A.Y. 2008-09 SR. NO. PARTICULARS BUILDING AMOUNT RS. PLANT & MACHINERY AMOUNT RS. 1. INSTALLATION, CIVIL WORK 13,78,381 8,69,216 2. MEDA PROCESSING FEE 3,00,000 3. MEDA APPLICATION FEE 1,800 4. ELECTRICAL INSTALLATION 21,52,709 5. LABOUR CHARGES FOR ERECTION AND INSTALLATION 10,56,184 6. LABOUR CHARGE FOR FINAL TESTING 67,416 7. KEEPING THE AREA VACANT FOR F R EE ACCESS 9,00,000 8. OTHER PRE - OPERATION EXPENSES CAPITALIZED 5,00,000 3.1 THE CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF DCIT VS. SUSHANT M. JADHAV IN ITA NO.166/PN/2012, ASSESSMENT YEA R 2008-09 DECIDED ON 26-04-2013 IN SIMILAR CONTROVERSY BY FOLLOWING TH E DECISION OF TRIBUNAL IN THE CASE OF M/S. WESTERN PRECICAST PVT. LTD. VS. JCIT, DECIDED ON 30-01-2013 HAD ALLOWED THE CLAIM OF DEPRECIATION @ 80% ON ALL THE ABOVE SAID COMPONENTS, EXCEPT ON KEEPING THE ARE A VACANT FOR FREE ACCESS. THE LD. AR IN ORDER TO STRENGTHEN HIS SUBM ISSIONS, HAS ALSO PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. COOPER FOUNDRY PVT. LTD. IN INCOME TAX APPEAL NO.1326 OF 2010 DECIDED ON 14.06.2011 AND THE DECISION OF TRIBUNAL IN THE CASE OF POONAWALLA FINVEST & AGRO PVT. LTD., REPORTED IN 118 TTJ 6 8. 4. ON THE OTHER HAND SHRI B.C. MALAKAR REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIO NER OF INCOME TAX (APPEALS) AND PRAYED FOR DISMISSING THE APPEAL OF ASSESS EE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE LD. AR HAS PLACED RELIANCE IN SUPPORT OF HIS SUBMISSIONS. THE ASSESSEE HAS I NSTALLED WINDMILL AND HAS CLAIMED DEPRECIATION @ 80% ON WINDMILL AND O THER 4 ITA NO. 1294/PN/2014, A.Y. 2008-09 COMPONENTS / CONSTITUENTS OF WINDMILL. THE ASSESSING OFFICER RESTRICTED THE CLAIM OF DEPRECIATION ON THE FOLLOWING COMPONE NTS OF WINDMILL AS UNDER:- SR. NO. PARTICULARS DEPRECIATION CLAIMED @ 80% RS. 10% ALLOWED BY AO ON RS. 15% ALLOWED BY AO ON RS. 1. INSTALLATION, CIVIL WORK 22,47,597 13,78,381 8,69,216 2. MEDA PROCESSING FEE 3,00,000 3,00,000 3. MEDA APPLICATION FEE 1,800 1,800 4. ELECTRICAL INSTALLATION 21,52,709 21,52,709 5. LABOUR CHARGES FOR ERECTION AND INSTALLATION 1056,184 10,56,184 6. LABOUR CHARGE FOR FINAL TESTING 67,416 67,416 7. KEEPING THE AREA VACANT FOR FREE ACCESS 9,00,000 9,00,000 8. OTHER PRE - OPERATION EXPENSES CAPITALIZED 5,70,205 5,00,000 6. THE LD. AR HAS DRAWN SUPPORT FROM THE ORDER OF CO-O RDINATE BENCH IN THE CASE OF DCIT VS. SUSHANT M. JADHAV (SUPRA) TO SHOW THAT DEPRECIATION @ 80% IS ALLOWABLE ON ALL THE ABOVE COMPONENT S OF THE WINDMILL, EXCEPT EXPENDITURE ON KEEPING THE AREA VACANT FOR FREE ACCESS. WE FIND THAT IN THE CASE OF DCIT VS. SUSHANT M. JADHAV (SU PRA), THE CO- ORDINATE BENCH AFTER PLACING RELIANCE ON THE DECISION OF M/S . WESTERN PRECICAST PVT. LTD. VS. JCIT (SUPRA), HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE ORDER OF TR IBUNAL IN ITA NO.166/PN/2012 READS AS UNDER:- 5. WE HAVE HEARD THE PARTIES. WE FIND THAT THE ID ENTICAL ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE CASE OF M/S. WESTERN PRECICAST PVT. LTD. VS. JCIT, RANGE-I, SANGLI, ITA NO. 1495/P N/2011 ORDER DATED 30-01-2013. THE TRIBUNAL FOLLOWED THE DECISION IN THE ASSESSEE OWN CASE FOR THE A.Y. 2007-08. THE OPERATIVE PART OF T HE TRIBUNALS DECISION IS AS UNDER: 4. WE HAVE HEARD THE RIVAL PARTIES. THE LD. COUNSE L SUBMITS THAT IN ASSESSEES OWN CASE FOR THE A.Y. 2007-08, THE ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL AND HAS ALLOWED THE CLAI M OF ASSESSEES ON DEPRECIATION AT 80% ON THE FOUNDATION, ERECTION AND INSTALLATION COST OF THE WIND MILL. THE LD. COUNSE L HAS FILED THE COPY OF THE TRIBUNAL ORDER IN ASSESSEES OWN CASE F OR THE A.Y. 2007-08. WE HAVE ALSO HEARD THE LD. D.R. WE FIND THAT THE ISSUE 5 ITA NO. 1294/PN/2014, A.Y. 2008-09 OF THE RATE OF DEPRECIATION APPLICABLE TO THE COST OF FOUNDATION OF ERECTION AND COMMISSIONING HAS ALREADY BEEN CONSIDE RED BY THE TRIBUNAL IN ASSESEES OWN CASE FOR THE A.Y. 2007-08 . THE TRIBUNAL HAS HELD THAT FOUNDATION IS THE INTEGRAL P ART OF THE WIND MILL AND SAME IS ELIGIBLE FOR DEPRECIATION AT THE R ATE WHICH IS APPLICABLE TO THE WIND MILL. IN THE SAME WAY THE T RIBUNAL ALSO ALLOWED THE DEPRECIATION RATE WHICH IS APPLICABLE T O THE WIND MILL FOR THE ERECTION AND INSTALLATION COST OF THE WIND MILL. THE OPERATIVE PART OF THE TRIBUNAL ORDER IS AS UNDER:- 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN ORDER TO APPRECIATE THE DISPUTE, THE FOLLOWING BREAK-UP OF E XPENSES ON ACCOUNT OF ERECTION AND COMMISSION OF WINDMILL I I. E. WINDMILL INSTALLED IN THE PRECEDING ASSESSMENT YEAR 2006-07 WOULD BE NECESSARY AS CONTAINED IN PARA 2.5 OF ORDER OF THE CIT(A):- S.NO. DATE NATURE OF WORK EXPENDITURE RS. 1. 30-03-2006 TOWARDS SUPPLY AND INSTALLATION OF HT ELECTRICAL YARD WITH VCB, OUTDOOR TYPE CT & PT AND HT TRANSMISSION LINE FROM WINDMILL TO GRID INTERCONNECTION POINT INCLUDING HT METERING FOR 1.25 MW WINDMILL AT LOCATION NO. K437 AT ABOVE SITE ADDRESS. 30,93,500/- 2. 30-03-2006 LABOUR CHARGES TOWARDS FINAL TESTING AND COMMISSIONING FOR 1.25 MW WINDMILL AT LOC NO. K437. 1,10,200/- 3. 30-03-2006 TOWARDS LABOUR CHARGES FOR WORK EXECUTED, FOR ERECTION AND INSTALLATION OF WINDMILL CONSISTING OF : UNLOADING AND SAFE KEEPING OF MATERIAL, ASSEMBLY, ERECTION AND INSTALLATION OF WINDMILL TOWER AND WIND TURBINE GENERATOR FOR 1.25 MW WINDMILL AT LOCATION NO K-437 AT ABOVE SITE ADDRESS. 14,32,600/- 4. 04-03-2006 PROCESSING FEES 2,58,970/- 5. 31-12-2005 MEDA PROCESSING AND APPLICATION FEES 6,28,750/- 6. 31-03-2006 CONTRIBUTION TOWARDS COMMON POWER EVACUATION INFRASTRUCTURE FACILITY 37,50,000/- 8. IN RESPECT OF ABOVE SIX COMPONENTS OF COST OF WI NDMILL CLAIMED BY THE ASSESSEE, THE ASSESSING OFFICER ALLOWED DEPRECI ATION AT 15% 6 ITA NO. 1294/PN/2014, A.Y. 2008-09 AND NOT AT 80% AS CLAIMED BY THE ASSESSEE. THE CIT (A) HOWEVER, CONSIDERED THE ITEMS OF COSTS AT NO 1 TO 5 QUALIFYI NG FOR HIGHER RATE OF DEPRECIATION BEING INTEGRAL PART OF WINDMILL. I N SO FAR AS ITEM NO. 1 IS CONCERNED, THE COST OF RS. 30,93,500/- IS TOWARDS SUPPLY OF ELECTRICAL ITEMS OF THE WINDMILL ITSELF. THE CI T(A) HAS OBSERVED THAT SUCH COST IN THE INSTALLATION OF WINDMILL HAS BEEN FOUND BY THE TRIBUNAL IN THE CASE OF POONAWALA FINVEST AND A GRO PVT. LTD. (SUPRA) AS AN INTEGRAL PART OF THE WINDMILL COST AN D THEREFORE, FOUND TO BE ELIGIBLE FOR DEPRECIATION EQUIVALENT TO THAT OF THE WINDMILL. NO DECISION TO THE CONTRARY HAS BEEN BRO UGHT TO OUR NOTICE AND THEREFORE, FOLLOWING THE PRECEDENT IN TH E CASE OF POONAWALA FINVEST AND AGRO PVT. LTD. (SUPRA), WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE CIT(A) WHICH WE HERE BY AFFIRM. 9. TO THE SIMILAR EFFECT IS THE NATURE OF COST ENUM ERATED IN ITEMS NO. 2 AND 3 RELATING TO LABOUR CHARGES FOR ERECTION AND INSTALLATION OF WINDMILL. SUCH EXPENDITURE FORMS INTEGRAL PART OF COST OF THE WINDMILL AND THEREFORE, THERE IS NO MISTAKE ON THE PART OF THE CIT(A) TO HAVE CONSIDERED SUCH EXPENDITURE AS ELIGI BLE FOR DEPRECIATION AT 80%. 5. WE THEREFORE FOLLOWING THE ORDER OF THE TRIBUNAL CITED SUPRA HOLD THAT BOTH THE PARTIES BELOW WERE NOT JUSTIFIED IN C ALCULATING AND DISALLOWING THE DEPRECIATION ON THE COST OF FOUNDAT ION, COMMISSIONING AND ERECTION OF THE WIND MILL. ACCOR DINGLY, WE ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DEL ETE THE ADDITION MADE BY THE A.O. BY MAKING THE DISALLOWANC E TOWARDS ALLEGED EXCESS CLAIM OF DEPRECIATION. 6. IN OUR OPINION, THE LD.CIT(A) HAS RIGHTLY ALLOWE D THE CLAIM OF THE ASSESSEE, AS ISSUE ARISING FROM THE GROUNDS TAKEN B Y THE REVENUE COVERS IN FAVOUR OF THE ASSESSEE BY THE DECISION CITED (SU PRA). WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) , AND ACCORDINGLY THE SAME IS CONFIRMED. 7. SINCE THE ISSUE RAISED IN THE PRESENT APPEAL IS IDENTICA L, WE HOLD THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEPRECIATION @ 80% ON THE FOLLOWING COMPONENTS / CONSTITUENTS OF WINDMILL:- SR. NO. PARTICULARS 1. INSTALLATION, CIVIL WORK 2. MEDA PROCESSING FEE 3. MEDA APPLICATION FEE 4. ELECTRICAL INSTALLATION 5. LABOUR CHARGES FOR ERECTION AND INSTALLATION 6. LABOUR CHARGE FOR FINAL TESTING 7 . OTHER PRE - OPERATION EXPENSES CAPITALIZED 7 ITA NO. 1294/PN/2014, A.Y. 2008-09 THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF THE CO-ORDINATE BENCH. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY AC CEPTED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON WEDNESDAY, THE 28 TH DAY OF OCTOBER, 2015. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 28 TH OCTOBER, 2015 GCVSR/RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A), KOLHAPUR. 4. ' / THE CIT-I / II, KOLHAPUR / CIT (CENTRAL), PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, ! % // TRUE COPY // %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE