ACIT, Trichy V. Sangu Chakra Hotels Pvt. Ltd., Trichy

ITA 1351/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96171 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2015
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 07-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2014
• Court: TRIBUNAL
• Department Lawyers: MILIND MADHUKAR BHUSARI
• Keywords: Depreciation; Cost of acquisition; Assessment record
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI ... , . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1351 /MDS./2014 ( !' #' / ASSESSMENT YEAR :2008-09) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I(1), TRICHY VS. M/S.SANGU CHAKRA HOTELS PVT LTD., COLLECTOR OFFICE ROAD, CANTONTMENT,TRICHY 620 001. PAN AADCM 2094 G ( / APPELLANT ) ( / RESPONDENT ) $% & ' / APPELLANT BY : MR.MILIND MADHUKAR BHUSARI, CIT DR ()$% & ' / RESPONDENT BY : MR.PHILIP GEORGE, ADVOCATE * + & ,- / DATE OF HEARING : 07.09.2015 .# & ,- /DATE OF PRONOUNCEMENT : 14.10.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A), TIRUCHIR APALLI DATED ITA NO.1351 /MDS/2014 2 29.01.2014 IN ITA NO.188/2010-11/CIT(A)/TRY PASSED UNDER SEC.143(3) READ WITH SECTION SEC. 250 OF THE ACT. 2. THE REVENUE HAS RAISED SIX ELABORATE GROUNDS IN ITS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE REVENUE I S AGGRIEVED BY THE ORDER OF THE LD. CIT (A), WHO HAD ALLOWED THE DEPRE CIATION OF ` 3,78,00,000/- ON THE COST OF WIND MILL OF ` 9,45,00,000/- AND HAD ENTERTAINED FRESH EVIDENCE FILED BEFORE HIM WITHOUT OBSERVING RULE 46A OF THE INCOME TAX RULES,1962. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A PRIVATE LIMITED COMPANY, ENGAGED IN THE BUSINESS OF RUNNIN G TOURIST HOTEL AT TRICHY/TANJORE/MADURAI, FILED ITS RETURN OF INCOME ON 21.09.2008 ADMITTING TOTAL INCOME AS ` 70,10,580/-. SUBSEQUENTLY, THE RETURN WAS TAKEN FOR SCRUTINY AND ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ON 30.12.2010 WHEREIN THE LD. A.O DISALLO WED THE CLAIM OF DEPRECIATION ` 3,78,00,000/- ON THE COST OF WIND MILL ` 9,45,00,000/- BECAUSE THE WIND MILL WAS NOT ACQUIRED DURING THE R ELEVANT PREVIOUS YEAR. ITA NO.1351 /MDS/2014 3 4. THE LD. ASSESSING OFFICER HAD ARRIVED AT THE CO NCLUSION THAT THE ASSESSEE HAD NOT ACQUIRED THE WINDMILL COSTING ` 9,45,00,000/- DURING THE RELEVANT PREVIOUS YEAR BECAUSE OF THE FOLLOWING REASONS:- A) THE INVOICE FOR SALE OF THE WINDMILL WAS DATED 31.03.2008 I.E. THE LAST DATE OF THE RELEVANT PREVIOUS YEAR. B) THE ASSESSEE HAD PAID ONLY ` 1,86,00,000/- OUT OF THE TOTAL COST OF THE WINDMILL ` 9,45,00,000/- AS ON 31.03.2008. C) THE BALANCE AMOUNT OF ` 7,79,00,000/- WAS PAID DURING THE MONTH OF MAY & JUNE 2008 AS FOLLOWS:- D) THE AGREEMENT WITH TNEB FOR SALE OF POWER WAS DA TED 29.03.2008 AND THE APPROVAL OF THE SAME WAS COMMUNICATED BY TH E S.E TIRUNELVELI/TNEB ON 22.04.2008. E) THE OFFICE OF S.E. TNEB HAS NOT RESPONDED TO THE QUERY RAISED BY THE LD. ASSESSING OFFICER TO CLARIFY AS TO HOW SALE AGREEMENT OF SL. NO. DATE OF PAYMENT AMOUNT( `) 1 06.05.2008 59,00,000 2 30.06.2008 7,00,00,000/- 3 TOTAL 7,59,00,000/- ITA NO.1351 /MDS/2014 4 POWER COULD BE ENTERED WITH THE ASSESSEE BY THE TNE B ON 29.03.2008 WHEN THE ASSESSEE HAS PURCHASED THE WIND MILL VIDE INVOICE DATED 31.03.2008. F) NO SPECIFIC EVIDENCE WAS PRODUCED EITHER BY THE SELLER OR BY THE BUYER OF THE WINDMILL THAT THE PROPERTY HAS PASSED HANDS BEFORE 31.03.2008. G) BY THE TEST OF PREPONDERANCE OF PROBABILITIES, IT COULD BE CONSTRUED THAT THE WINDMILL WOULD HAVE PASSED HANDS ONLY DURI NG THE FINANCIAL YEAR 2008-09 RELEVANT TO THE ASSESSMENT YEAR 2009-1 0. 5. ON APPEAL, THE LD. CIT (A) HELD THE ISSUE IN FA VOUR OF THE ASSESSEE BY GRANTING THE CLAIM OF DEPRECIATION TO THE ASSESSEE FOR ` 3,78,00,000/- BY OBSERVING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE; THE ARGUMENTS RELIED UPON BY THE ASSESSING OFFICER FOR THE DISALLOWANCE AND ALSO THE ARGUMENTS ADVANCED BY THE APPELLANT. THE APPELLANT HAS ESTABLISHED THE FA CT THAT THE ORDER FOR THE ACQUISITION OF THE WIND MILL STARTED AS EARLY AS ON 02.02.2008. THE APPELLANT HAS ALSO ESTABLISHED THE PASSING OF CONSIDERATION BY IT S OWN RESOURCES TO THE EXTENT OF RS. 186.00 LAKHS BEFORE 31.03.2008. THE SAME IS VERIFIABLE FROM THE COPY OF THE BANK ACCOUNT OF THE APPELLANT WITH SBI. IT IS A LSO SEEN FROM THE TERM LOAN ACCOUNT COPY FURNISHED BY THE APPELLANT THAT THE SA ID BANK HAS DEBITED THE APPELLANT A SUM OF RS. 700.00 LAKHS ON 24.03.2008, BY WAY OF DISBURSEMENT OF TERM LOAN AND HAS EVEN CHARGED INTEREST OF RS. 1,68 ,767/- FOR THE PERIOD 24.03.2008 TO 3 1.03.2008, ON SUCH DISBURSEMENT. TH E DOCUMENT CONVEYING THE ITA NO.1351 /MDS/2014 5 LAND TO THE APPELLANT VIDE SALE DEED DT. 07.03.2008 ALSO CONFIRMS THAT THE PHYSICAL POSSESSION WAS HANDED OVER ON THE SAID DAT E. THE ASSESSING OFFICER HAS NOT PRODUCED ANY MATERIAL TO CONTROVERT THE FOLLOWING FACTS: 1) THE LETTER DT. 29.03.2008 APPROVING THE TRANSFER OF THE WIND MILL IN FAVOUR OF THE APPELLANT. 2) THE PAYMENT OF NAME TRANSFER FEE BY THE APPELLAN T VIDE THE RECEIPT ISSUED BY TNEB NO- 137846 DT. 28.03.2008. 3) THE ENTERING OF THE ENERGY PURCHASE AGREEMENT WI TH TNEB ON 29.03.2008. 4) THE GENERATION OF ELECTRICITY FROM SUCH WIND MIL L W.E.F. 29.03.2008 AND ADJUSTMENT OF SUCH GENERATION IN THE BILL ISSUED BY TNEB FOR THE MONTH OF APRIL 2008. THE FACT THAT THE WIND MILL WAS INSTALLED AND COMMI SSIONED AT THE SITE IS ALSO ESTABLISHED BY THESE EVIDENCES PRODUCED AND AS ARGU ED BY THE APPELLANT THE ISSUE OF INVOICE ON 31.03.2008 CANNOT VITIATE ALL T HESE EVIDENCES. THE APPELLANT PLACED HIS RELIANCE IN SUPPORT OF ITS CLAIM FOR DEP RECIATION ON THE RATIOS HELD IN THE CASE OF MYSORE MINERALS LTD VS CIT 239 ITR 775 AND CIT VS KENCES CONSTRUCTION (P) LTD 236 ITR 503. ON ANALYZING THE CASE LAWS MENTIONED WHEREIN IT WAS HELD THAT WHEN THE ASSESSEE EVEN IF HE HAS MADE ONLY PART PAYMENT OF THE SALE CONSIDERATION AND ALSO EVEN THE ACTUAL DEED OF CONVEYANCE WAS NOT EXECUTED IN ITS FAVOR THE ASSESSEE WAS ENTI TLED TO DEPRECIATION ON THE ASSETS WHICH FORM PART OF BLOCK OF ASSETS AT THE EN D OF THE YEAR AS SHOWN IN DEPRECIATION SCHEDULE IN THE BALANCE SHEET AS WELL AS IN HIS BOOKS OF ACCOUNTS THIS VIEW WAS HELD IN THE CASE OF MYSORE MINERALS L TD VS CIT AS MENTIONED SUPRA. SIMILARLY THE HONORABLE MADRAS JURISDICTIONA L HIGH COURT ALSO HELD A VIEW WHICH IS IN FAVOR OF THE ASSESSEE THAT THE ASSESSEE HAVING TAKEN OVER POSSESSION OF THE WIND MILL AND THE INCOME FROM THE WIND MILL HAVING BEEN ASSESSED IN THE ASSESSEES HANDS, THE ASSESSEES CL AIM OF DEPRECIATION ON WIND MILL IS ALLOWABLE NOTWITHSTANDING THE FACT THAT THE WIND MILL ARE STILL UNDER HYPOTHECATION WITH THE BANK IN THE NAME OF TRANSFER OR COMPANY. IN THE SECOND CASE REFERRED ABOVE WHEREIN THE ASSESSEE CLAIMED TH AT IT HAD PURCHASED THE WINDMILLS FROM ITS SISTER COMPANY AND IT HAD BEEN D ULY RECORDED IN THE ASSESSEES BOOKS OF ACCOUNTS AND THE ENTIRE CONSIDE RATION HAS ALSO BEEN PAID BY THE ASSESSEE. THE ENTIRE BANK LOAN WHICH WAS TAK EN BY THE SISTER COMPANY WAS ALSO DISCHARGED BY THE ASSESSEE. THEREFORE THE ASSESSEE IS THE OWNER FOR THE PURPOSE OF THE IT ACT AND THE ASSESSEE IS ENTIT LED TO CLAIM DEPRECIATION. THIS WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE WINDMILLS ARE STILL UNDER HYPOTHECATION WITH THE BANK AND THE APPLICATI ON TO THE TAMIL NADU ITA NO.1351 /MDS/2014 6 ELECTRICITY BOARD WAS MADE ONLY BY THE SISTER COMPA NY AND THE LOAN TAKEN FROM THE BANK CONTINUE TO APPEAR AS LIABILITY IN THE BOO KS OF THE SISTER COMPANY. THERE WAS NO EVIDENCE TO SHOW THAT THERE WAS A TRANSFER O F THE WINDMILLS AND THAT FOR THE SAME PROPERTY I.E., WINDMILLS, DEPRECIATION HAS BEEN CLAIMED BOTH BY THE SISTER COMPANY AND BY THE ASSESSEE. HENCE THE ASSES SING OFFICER DISALLOWED THE CLAIM OF DEPRECIATION. ON APPEAL IT WAS FOUND T HAT POSSESSION HAD BEEN HANDED OVER TO THE ASSESSEE BY THE SISTER COMPANY W HICH IS THE TRANSFEROR AND AN INVOICE HAD BEEN RAISED BY THE TRANSFEROR COMPAN Y ON THE ASSESSEE. A BOARD RESOLUTION HAD ALSO BEEN PASSED BY THE ASSESSEE FOR THE PURPOSE OF WINDMILLS. THE WINDMILLS HAD BEEN USED FOR THE BUSINESS OF THE APPELLANT AND THE INCOME GENERATED ON SUCH BUSINESS WAS ADMITTED FOR ASSESSM ENT BY THE ASSESSEE. THE APPELLATE AUTHORITY ALSO FOUND THAT THE ASSESSEE IS A LEGAL OWNER OF THE WINDMILLS AND THE POSSESSION OF THE PROPERTY WAS ALSO HANDED OVER TO THE ASSESSEE AND THE FACT THAT THE WINDMILLS ARE STILL HYPOTHECATED WITH THE BANK IN THE NAME OF THE TRANSFEROR COMPANY, OR THE FACT THAT THE AGREEMENT WITH THE TNEB WAS IN THE NAME OF THE TRANSFEROR COMPANY COULD NOT CHANGE THE POSITION. THE APPELLATE AUTHORITY IN THE REFERRED CASE MENTIONED ALSO CONCL UDED THAT THE ENTIRE BANK LOAN AVAILED OF BY THE TRANSFEROR COMPANY WAS REPAID BY THE ASSESSEE AND NOT THE TRANSFEROR COMPANY. THEREFORE THE APPEAL WAS ALLOWE D. EVEN THE TRIBUNAL DISMISSED THE REVENUES APPEAL BY HOLDING THAT THE ASSESSEE AS THE OWNER OF THE WINDMILL AND HELD THAT WHEN THE INCOME FROM THE WIN DMILL IS ASSESSED IN THE HANDS OF THE ASSESSEE, ALL RELATED EXPENSES AND DEP RECIATION THEREON HAVE TO BE ALLOWED. THE HONORABLE MADRAS HIGH COURT HAS ALSO U PHELD THE CONTENTION OF THE ASSESSEE FOR THE CLAIM OF THE APPELLANT FOR DEPRECI ATION ON THE GROUND THAT THE POSSESSION OF WINDMILL IS WITH THE ASSESSEE, THE LO AN HAS BEEN DISCHARGED BY THE ASSESSEE AND THE INCOME FROM THE PROPERTY IS ASSESS ED IN THE HANDS OF THE ASSESSEE. THE JURISDICTIONAL HIGH COURT ON ASCERTAI NING THE SISTER COMPANY HAS NOT CLAIMED THE DEPRECIATION ON THE ASSETS TRANSFER RED TO THE ASSESSEE COMPANY AND ALLOWED THE CLAIM OF THE ASSESSEE. THE STANDARD TEXTILES, KARUR VS DY. COMMISSIONER OF INCOME TAX, CIRCLE TIRUCHIRAPALLI ORDER DATED 22/06/2011 IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVANCE IS THAT DEPRECIATION OF RS.76 LAKHS CLAIMED ON WIND MILL WAS DISALLOWED FOR THE REASON THAT ONLY TRIAL PRODUCTION WAS DONE AND WIND MILL WAS NOT CON NECTED TO THE POWER GRID. THE ASSESSEE ENGAGED IN THE BUSINESS OF EXPORTING C OTTON FABRICS HAD IN THE RELEVANT PREVIOUS YEAR CLAIMED DEPRECIATION ON A WIND MILL. ASSESSEE PRODUCED A LETTER ISSUED BY THE EXECUTIVE ENGINEER, TAMIL NADU ELECTRICITY BOARD (TNEB), WHICH STATED THAT THE WIN D MILL WAS COMMISSIONED ON 05.03.05. AS PER THE ASSESSEE, THE TRIAL PRODUCTION WAS STARTED AND IT WAS NOT NECESSARY TO PRODUCE ELECTRI CITY FOR THE WHOLE OF THE YEAR FOR CLAIMING DEPRECIATION. HOWEVER, THE ASSESS ING OFFICER WAS OF THE ITA NO.1351 /MDS/2014 7 OPINION THAT AS PER THE AGREEMENT ENTERED INTO BY T HE ASSESSEE WITH THE MEMBER (GENERATION) TNEB,WIND MILL WOULD BE CONNECT ED TO THE POWER GRID ONLY ON COMMISSIONING OF 22 KV ENERCON FEEDER. THEREFORE, AS PER THE ASSESSING OFFICER, WIND MILL COULD NOT BE CONSI DERED CONNECTED TO THE GRID TILL THE TRANSFORMER WAS COMMISSIONED. ASSESSE E HAVING NOT PUT THE WIND MILL TO ACTUAL USE, DEPRECIATION COULD NOT BE ALLOWED. IN THE APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (A), SUBMISSION OF THE ASSESSEE WAS THAT COMMISSIONING CERTIFICATE ISS UED BY THE EXECUTIVE ENGINEER(TNEB) ON 08.03.05 CLEARLY MENTIONED THAT I T WAS TIED UP WITH THE TNEB GRID. AS PER THE ASSESSEE, THE SAID CERTIF ICATE ALSO MENTIONED INITIAL READING AS ON 05.03.05.ASSESSEE ARGUED THAT USE OF MACHINE FOR TRIAL PRODUCTION WAS AS MUCH USE OF A MACHINE THAT WOULD ENTITLE IT TO CLAIM DEPRECIATION. ACCORDING TO IT THERE WAS NO RE QUIREMENT THAT WIND MILL SHOULD KEEP ON PRODUCING POWER EVERY DAY OF TH E YEAR AND EVEN IF IT HAD PRODUCING POWER ONLY FOR A MOMENT, IT WOULD BE ELIGIBLE FOR CLAIM OF DEPRECIATION. THE AR OF THE APPELLANT HAS OBJECTED THE CONTENTION OF THE ASSESSING OFFICER IN DISALLOWING THE DEPRECIATION C LAIMED ON THE GROUND THAT THE WIND MILL WAS NOT PUT IN USE. THE AC HAS N OT CONSIDERED THE EVIDENCE PRODUCED BEFORE HIM ESTABLISHING THE WIND MILL GENERATION BEING CONNECTED TO THE ELECTRICITY GRID BEFORE 31.03.2005 AND GENERATING THE ELECTRICITY AND ALSO RECEIVING THE PAYMENT FROM THE TAMILNADU ELECTRICITY BOARD. THE WIND MILL TURBINE GENERATOR (WTG) WAS CO NNECTED TO THE GRID FOR COMMISSIONING OF 22KV ENERCON FEEDER AND THE FE EDER WAS COMMISSIONED BEFORE 31.03.2005. ADMITTEDLY THE EXECUTIVE ENGINEER OPERATION AND MAI NTENANCE FOR TNEB VIDE ITS LETTER DT. 08.03.05 HAD GIVEN THE COMMISSIONING CER TIFICATE TO THE ASSESSEE AND THE SAID COMMISSIONING CERTIFICATE ALSO REFLECTED T HERE IN THE INITIAL READING ON 05.03.05. THERE IS NO CASE FOR THE REVENUE SUCH INI TIAL READING WAS ZERO, IT CANNOT BE PRESUMED THAT CERTIFICATE ISSUED BY THE E XECUTIVE ENGINEER STATING THAT THE WIND MILL WAS TIED UP WITH TNEB GRID WAS FABRIC ATED. THE AR OF THE APPELLANT FURTHER ARGUED THAT THE AO CANNOT PRESUME THAT THER E WAS NO PRODUCTION OF WIND MILL AT ALL AFTER ITS COMMISSIONING ON 05.03.05 UP TO 31.03.05. IN OUR OPINION, ASSESSEE HAD CLEARLY ESTABLISHED USE OF THE WIND MI LL FOR PRODUCTION OF ELECTRICITY. ELECTRICITY AS A PRODUCT, UNLIKE OTHER TANGIBLE MAT ERIAL, WOULD BE THE SAME WHETHER IT RESULTS OUT OF A TRIAL PRODUCTION OR OF A COMMERCIAL PRODUCTION. NOBODY WOULD ATTEMPT TO TOUCH A ELECTRICAL WIRE CARRYING P OTENTIAL DIFFERENCE, JUST FOR A REASON THAT THE ELECTRICITY CHARGED THERE IN, WAS F ROM THE TRIAL PRODUCTION OF A GENERATOR UNIT AND NOT FOR COMMERCIAL PRODUCTION. E LECTRICITY AS A COMMODITY REMAINS THE SAME WHETHER IN TRIAL PRODUCTION OR COM MERCIAL PRODUCTION. RULES RELATING TO NECESSITY OF ESTABLISHING COMMENCEMENT OF COMMERCIAL PRODUCTION CANNOT BE TRANSPORTED TO A CASE WHERE THE COMMODITY PRODUCED IS ELECTRICITY. ITA NO.1351 /MDS/2014 8 ASSESSEE WAS CLEARLY ELIGIBLE FOR DEPRECIATION AND IT WAS UNJUSTLY DENIED BY THE ASSESSING OFFICER. ON VERIFYING THE RELEVANT RECORDS, THE OBJECT OF AL LOWING HIGHER RATE OF DEPRECIATION ON WIND MILL IS TO ENCOURAGE THE USE O F ENERGY SAVING AND NONCONVENTIONAL ENERGY GENERATOR DEVICES. THE HIGHE R ALLOWANCE OF DEPRECIATION AT 80 TO 100% ALLOWED BY THE LEGISLATURE IS FOR THE PURPOSE OF PROMOTING AND ENCOURAGING THE USE NONCONVENTIONAL DEVICE OF ENERG Y GENERATION. KEEPING IN VIEW OF THE FOLLOWING JUDICIAL PRECEDENTS WHEREIN T HE DEPRECIATION CLAIMED BY THE ASSESSEES HAVE BEEN ALLOWED. 1. TAM!! NADU CHOIRDIDE VS.DCIT (2006) 98 LTD I (CH ENNAL) 2. CHETTINADU CEMENT CORPORATION LTD., IN ITA I029/ MDS/2005 3. ATLOST EXPOIT ENTERPRISES VS. DCIT TRICHY 4. M/S.VELATHAL SPINNING MILLS PRIVATE LTD., VS. AC IT, SALEM ITA NO.202 & 203/MDS/2010. 5. STANDARD TEXTILES, KAUR VS. DCIT, TRICHY 6. P.MEENAKSHISUNDARAM VS. DCIT1N ITA NO.26/MDS/200 9 SEVERAL COURTS HAVE HELD THAT AS PER THE JUDICIAL P RECEDENTS AS MENTIONED ABOVE WHEREIN THE DEPRECIATION CLAIMED BY THE ASSESSEE HA S BEEN ALLOWED IN FULL AS PER LAW. THE APPELLANT HAS ARGUED THAT ON SIMILAR LINES THE ASSESSING OFFICER MAY BE DIRECTED TO ALLOW THE CLAIM OF THE APPELLANT AS GEN UINE AND DO THE JUSTICE. ON HAVING GONE THROUGH VARIOUS CASE LAWS REFERRED B Y THE APPELLANT WHICH ARE SQUARELY APPLICABLE TO THE FACTS OF THE CASE AND TH E CLAIM MADE BY THE APPELLANT OF DEPRECIATION ON THE WINDMILLS WHICH WERE SHOWN A S ASSETS IN THE DEPRECIATION SCHEDULE IN ITS BLOCK OF ASSETS AS ON 3 1.03.2008, AS WELL AS VARIOUS SUBMISSIONS MADE IN FAVOR OF THE CLAIM FOR DEPRECIATION, IT IS AMPLY MADE CLEAR THAT THE APPELLANT HAD PAID AN ADVANCE OF RS. 20,00,000/- FO R PURCHASE OF WINDMILL OF 1500 KV CAPACITY FROM MIS SIMRAN WIND PROJECT P LTD . AT A COST OF RS. 9,45,00,000/- WERE ON 02.02.2008, SUBSEQUENTLY ON 1 4.02.2008 A FURTHER AMOUNT OF RS.1,66,00,000/- HAS BEEN PAID BY THE COMPANY TO THE SUPPLIER OF WINDMILL. FURTHER THERE WAS A SANCTION OF TERM LOAN OF RS. 7, 00,00,000/- BY STATE BANK OF INDIA FOR ACQUISITION OF WINDMILL ON 19.03.2008 WHI CH HAS BEEN DISBURSED BY THE STATE BANK OF INDIA ON 24.03.2008. THERE WAS ALSO S UBSEQUENT PAYMENT OF RS. 59,00,000/- ON 25.03.2008 BY THE APPELLANT COMPANY TO THE SUPPLIER. ON DELIVERY AS WELL AS INSTALLATION OF WINDMILL AND GE NERATION OF ELECTRICITY AND ENTERING OF APPROVAL FOR TRANSFER OF THE WINDMILL T O THE APPELLANT COMPANY BY THE TNEB ON 29.03.2008 ITSELF PROVED THAT THE WINDMILL HAS BEEN KEPT ON OPERATION ITA NO.1351 /MDS/2014 9 AND STARTED GENERATING ELECTRICITY DURING THE FY RE LEVANT TO THE AY 2008-09 HAS BEEN COMMENCED AND THEREFORE THE APPELLANT IS ELIGI BLE TO CLAIM THE DEPRECIATION ON THE WINDMILL AT RS. 3,78,00,000/-. THUS, THE ASS ESSING OFFICER IS NOT JUSTIFIED IN DENYING THE DEPRECIATION WITHOUT ANALYZING VARIOUS MATERIALS BROUGHT ON RECORD. THUS, THE APPELLANT HAS NOT ONLY ESTABLISHED THE AC QUISITION OF THE ASSET BUT ALSO THE PUTTING THE WINDMILL INTO USE FOR GENERATION OF ELECTRICITY FROM THE ASSET ACQUIRED BEFORE 31.03.2008. THE FACT THAT SECTION 3 2 OF THE ACT NOWHERE STIPULATES THAT AN ASSESSEE IN ORDER TO CLAIM DEPRE CIATION OUGHT TO HAVE PAID THE FULL COST OF ACQUISITION OF DEPRECIABLE ASSET. TAKI NG INTO ACCOUNT THE FACTS OF THE CASE, THE MATERIALS PLACED ON RECORD AND ALSO RELYI NG UPON THE DECISIONS IN THE CASES CITED SUPRA, THE ASSESSING OFFICER IS NOT JUS TIFIED IN DENYING THE CLAIM OF THE APPELLANT FOR DEPRECIATION. THEREFORE THE ASSES SING OFFICER IS DIRECTED TO DELETE THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION CLAIMED BY THE APPELLANT AT RS. 3,78,00,000/-. 6. BEFORE US, LD. D.R ARGUED IN SUPPORT OF THE ORD ER OF THE LD. ASSESSING OFFICER BY REITERATING THE FINDINGS OF TH E LD. ASSESSING OFFICER WHILE AS THE LD. A.R. RELIED ON THE ORDER O F THE LD. CIT (A). 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER B OOK CONTAINING PAGES 01 TO 72 FILED BY THE ASSESSEE. THE FOLLOWING FACTS ARE APPARENT FROM THE CASE AND NOT DISPUTED BY THE REVE NUE: (I) THE INVOICE FOR THE SALE OF WINDMILL WAS DATED 31.03.2008 I.E. RELEVANT TO THE ASSESSMENT YEAR 2008-09. ITA NO.1351 /MDS/2014 10 (II) THE ASSESSEE HAD PAID ` 1.86 CRORES OUT OF TOTAL CONSIDERATION OF ` 9.45 CRORES DURING THE RELEVANT PREVIOUS YEAR AND B ALANCE AMOUNT WERE PAID DURING THE SUBSEQUENT ASSESSMENT YEAR. (III) THE AGREEMENT ENTERED WITH THE TAMILNADU EL ECTRICITY BOARD FOR SALE OF POWER WAS DATED 29.03.2008 WHICH ALSO FALLS DURING THE RELEVANT ASSESSMENT YEAR. (IV) THE REVENUE HAS ONLY APPLIED THE TEST OF PREP ONDERANCE OF PROBABILITY IN COMING TO THE CONCLUSION THAT THE AS SESSEE HAD PURCHASED THE WINDMILL ONLY DURING THE ASSESSMENT Y EAR 2009-10 AND NOT DURING THE ASSESSMENT YEAR 2008-09. FROM THE ABOVE IT IS EVIDENT THAT THE WINDMILL WAS PURCHASED DURING THE FAG END OF THE PREVIOUS YEAR 2007-08 WHI CH LED TO SUSPICION OF THE REVENUE THAT THE WINDMILL WOULD HA VE BEEN PURCHASED DURING THE SUBSEQUENT ASSESSMENT YEAR 200 9-10 AND THEREFORE, DENIED THE BENEFIT OF DEPRECIATION FOR T HE ASSESSMENT YEAR 2008-09. ITA NO.1351 /MDS/2014 11 8. ON APPEAL, THE LD. CIT (A) MADE THE FOLLOWING C ATEGORICAL FINDINGS IN HIS ORDER AND ALLOWED THE APPEAL OF THE ASSESSEE. I) THE ASSESSEE HAD ESTABLISHED THE FACT THAT THE ORDER FOR THE ACQUISITION OF WINDMILL WAS PLACED AS EARLY AS ON 0 2.02.2008. II) THE ASSESSEE HAD PAID ` 1,86,00,000/- FROM HIS OWN SOURCE TOWARDS THE PURCHASE OF WINDMILL BEFORE 31.03.2008. III) THE TERM LOAN ACCOUNT OF THE BANK REVEALED TH AT THE ASSESSEE HAD PROCURED TERM LOAN OF ` 7/- CRORES ON 24.03.2008 FOR THE PURCHASE OF WINDMILL AGAINST WHICH THE ASSESSEE HAD PAID INT EREST OF ` 1,68,769/- FOR THE PERIOD 24.03.2008 TO 31.03.2008. IV) THE DOCUMENT CONVEYING THE PURCHASE OF LAND BY THE ASSESSEE WAS DATED 07.03.2008 AND ON THE SAME DATE POSSESSIO N OF THE LAND WAS TAKEN OVER BY THE ASSESSEE. V) THE DECISION IN THE CASE MYSORE MINERALS LTD., VS. CIT REPORTED IN 239 ITR 775 AND THE DECISION OF THE CASE CIT VS. KE NCES CONSTRUCTIONS PVT LTD., REPORTED IN 236 ITR 503 WHE REIN IT WAS HELD THAT EVEN WHEN THE ASSESSEE HAD MADE PART PAYMENT T OWARDS THE SALE CONSIDERATION, THE CLAIM OF DEPRECIATION IS AL LOWABLE. FURTHER IT WAS HELD THAT WHEN THE POSSESSION OF THE WINDMILL W AS TAKEN OVER BY ITA NO.1351 /MDS/2014 12 THE ASSESSEE AND THE INCOME FROM THE WINDMILL IS AS SESSED AS ITS INCOME THE CLAIM OF DEPRECIATION CANNOT BE DENIED. VI) THE ASSESSEE HAD MADE PAYMENT TO THE SUPPLIER OF THE WINDMILL FOR ` 59/- LAKHS ON 25.03.2008. VII) THE DELIVERY AS WELL AS THE INSTALLATION OF TH E WINDMILL AND THE GENERATION OF THE ELECTRICITY HAD TAKEN PLACE BEFOR E 31.03.2008. 9. ON PERUSING THE PAPER BOOK FIELD BY THE ASSESSEE , WE FIND THAT SUFFICIENT EVIDENCE WERE BEFORE THE REVENUE BASED O N WHICH THE LD. CIT (A) HAD COME TO A CONCLUSION THAT THE WINDMILL HAS BEEN PURCHASED BEFORE 31.03.2008 AND COMMISSIONED. PAP ER BOOK PAGE NO.2 RECEIPT FOR ` 20/- LAKHS DATED 14.02.2008 MENTIONING THAT THE AMOUNT WAS RECEIVED ON 02.02.2008 FROM M /S. SIMRAN WIND PROJECT P LTD., PAPER BOOK PAGE NO.3 RECEIPT FOR ` 20/- LAKHS FROM M/S.SIMRAN WIND PROJECT P LTD., DATED 02.02.2008, P AGE NOS.4 & 5 EXTRACT OF THE MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS DATED 08.02.2008 FOR PURCHASING THE WINDMILL FROM M /S. SIMRAN WIND PROJECT P LTD., PAPER BOOK PAGE NOS.6 TO 10 PURCHASE ORDE R FOR PROCURING THE WINDMILL FROM M /S. SIMRAN WIND PROJECT P LTD., DATED 14.02.2008, ITA NO.1351 /MDS/2014 13 PAPER BOOK PAGE NOS.11 & 12 RECEIPT FROM M /S. SIMRAN WIND PROJECT P LTD., FOR ` 1,66,00,000/- DATED 17.03.2008, PAPER BOOK PAGE NOS .13 TO 26 SALE DEED FOR THE PURCHASE OF THE LAND DATED 07.03.2008 ON WHICH WINDMILL IS ERECTED, PAPER BOOK PAGE NOS.32 T O 41 SANCTION LETTER AND PROOF FOR DISBURSEMENT OF LOAN FROM STAT E BANK OF INDIA DATED 19.03.2008 AMOUNTING TO ` 7/- CRORES, PAGE NOS.44 TO PAGE 53 - DOCUMENTS ISSUED BY TAMIL NADU ELECTRICITY BOARD FOR PURCHASE OF POWER GENERATED BY THE WINDMILL FROM THE ASSESSEE A ND PROOF FOR HAVING PURCHASED THE POWER FROM THE ASSESSEE BEFORE 31.03.2008, PAGE NO.61 INVOICE DATED 31.03.2008 FROM M /S. SIMRAN WIND PROJECT P LTD., ON THE NAME OF THE ASSESSEE FOR PUR CHASE OF THE WINDMILL. THE GENUINENESS OF THESE DOCUMENTS COULD NOT BE SATISFACTORILY CONFRONTED BY THE REVENUE. MOREOVER WE DO NOT FIND RULE 46A BEING VIOLATED BY THE LD.CIT(A) BECAUSE TH E LD A.R HAS CERTIFIED THAT ALL THE ABOVE DOCUMENTS WERE BEFORE THE BOTH THE REVENUE AUTHORITIES AND THE SAME COULD NOT BE PROVE D OTHERWISE BY THE LD.D.R BY PRODUCING THE ASSESSMENT RECORDS. FUR THER IT IS APPARENT FROM THE ORDER OF THE LD.A.O THAT HE HAD P LACED MORE RELIANCE ON THE THEORY OF PREPONDERANCE OF PROBABIL ITIES BECAUSE ITA NO.1351 /MDS/2014 14 MANY OF THE MATERIAL EVENTS HAD OCCURRED DURING THE FAG END OF THE PREVIOUS YEAR WHICH ARISE SOME SUSPICION. IN THESE CIRCUMSTANCES, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE O RDER OF THE LD. CIT (A) WHO HAD ARRIVED AT HIS DECISION BASED ON THE AB OVE MENTIONED DOCUMENTS AND CERTAIN JUDGMENTS OF THE HIGHER JUDIC IARY WHICH ARE IN SUPPORT OF THE CASE OF THE ASSESSEE CONSIDERING THE FACTS OF THE CASE. HENCE WE HEREBY UPHOLD THE ORDER OF THE LD. CIT (A) . 10. IN THE RESULT, THE APPEAL OF REVENUE IS DISMIS SED. ORDER PRONOUNCED ON 14 TH OCTOBER, 2015 AT CHENNAI. SD/- SD/- ( . . . ) ( N.R.S.GANESAN ) ( . '#$ %' ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 14 TH OCTOBER, 2015. K S SUNDARAM. & (,/0 1 0#, /COPY TO: 1. $% /APPELLANT 2. ()$% /RESPONDENT 3. * 2, ( ) /CIT(A) 4. * 2, /CIT 5. 05 (,6! /DR 6. ' 7+ /GF