Dy.CIT, Cir.3, Pune, Pune V. Shri Shrikant S. Mahale, Pune

ITA 163/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 66978 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y K BHASKAR
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI .G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO. 163/PN/2012 : (ASSTT. YEAR : 2008-09) DY. CIT CIR. 3 PUNE ... APPELLAN T VS. SHRI SHRIKANT S. MAHALE FLAT NO. 5 AAIM APARTMENT 2163 SADASHIV PETH, PUNE-411 030 PAN AAXPM 6169 P RESPO NDENT APPELLANT BY : SHRI Y.K. BHASKAR RESPONDENT BY : SHRI NIKHIL PATHAK DATE OF HEARING : 14-05-2013 DATE OF PRONOUNCEMENT : 29-5-2013 ORDER PER R.S. PADVEKAR, JM IN THIS APPEAL, THE REVENUE HAS CHALLENGED IMPUGN ED ORDER OF THE LD. CIT(A)-II PUNE DATED 25-10-2011 FOR THE A.Y. 2008-0 9. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS. 1. THE LD. CIT(A) GROSSLY ERRED IN ALLOWING DEPREC IATION ON THE CIVIL WOK AND ELECTRIC ITEMS AND ON FEES PAID TO THE MAHARASH TRA ENERGY DEVELOPMENT AGENCY (MEDA) @ 80% HOLDING THAT THE SA ME FORMED PART OF THE WINDMILL. 2. THE LD. CIT(A) GROSSLY ERRED IN FAILING TO APPRE CIATE THAT AS PER CLAUSE III(8)(XIII)(1) 2. WE HAVE HEARD THE PARTIES. DURING THE YEAR UNDE R CONSIDERATION THE ASSESSEE PURCHASED THREE WINDMILLS FROM T.S. WINDPO WER DEVELOPERS AND CAPITALIZED THE EXPENDITURE TO THE EXTENT OF RS. 3, 49,29,477/- ON WHICH DEPRECIATION @ 80% WAS CLAIMED WHICH IS WORKED OUT TO RS. 1,85,8 8,780/-. THE A.O CALLED FOR THE DETAILS IN RESPECT OF EXPENSES WHICH WERE FILED BY THE ASSESSEE WHICH ARE REPRODUCED IN THE FORM OF CHART IN THE ASSESSMENT O RDER. THE A.O HAS RESERVATION FOR ALLOWING THE DEPRECIATION @ 80% ON THE ENTIRE C OST CAPITALIZED BY THE ASSESSEE, AS IN HIS OPINION, ALL CAPITALIZED EXPENDITURE WAS NOT PERTAINING TO THE WINDMILL DIRECTLY. THE A.O REFERRED TO THE DECISION OF ITAT PUNE BENCH IN THE CASE OF POONAWALLA FINVEST AGRO PVT. LTD. VS. ACIT (ITA NO. 188/PN/2006 DATED 26-6- 2008). THE A.O HAS NOTED THAT ITEMS OF EXPENDITURE LIKE POWER EVACUATION FACILITIES, ITA . NO. 163//PN/2012 SHRI SHRIKANT S MAHALE A.Y. 2008-09 PAGE OF 3 2 LINE WORK, ELECTRICAL ITEMS ETC. ARE NOT PART OF EL ECTRICITY GENERATING APPARATUS BUT A PART OF ELECTRICITY SELECTION APPARATUS. THE A.O ALSO NOTED THAT THE EXPENDITURE TOWARDS ERECTION AND COMMISSIONING OF THE WINDMILL S WAS MAINLY LAYING UP CABLE FROM GENERATION POINT TO THE GRID OF ELECTRICITY DE PARTMENT AND RELATING TO ELECTRICAL ITEMS ETC., SUCH AS HUBS, CONNECTING CABLES/WIRES W ITH TURBINE, CONTROL ROOMS MACHINES AND THE SAME CANNOT BE SAID TO BE INTEGRAL PART OF THE WINDMILL. IN THE OPINION OF THE A.O, DIFFERENT RATES OF DEPRECIATION IS APPLICABLE TO ELECTRICAL ITEMS, TRANSFORMERS, ERECTION AND COMMISSIONING, REGISTRA TION, STAMP DUTY AND MEDA CHARGES ETC. THE WORKING MADE BY THE A.O IN THE FO RM OF CHART IS AT PAGE 11 OF THE ASSESSMENT ORDER. THE A.O FINALLY RESTRICTED THE D EPRECIATION AT RS. 1,33,25,480/- INSTEAD OF RS. 1,85,88,780/- AS CLAIMED BY THE ASSE SSEE AND DISALLOWED RS. 52,63,300/-. 3. THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD. CI T(A). THE LD. CIT(A) ALLOWED THE DEPRECIATION ON CIVIL WORK CONTAINING T HE EXPENDITURE INCURRED ON CONSTRUCTION OF FOUNDATION OF THE WINDMILL AT 80% I N PLACE OF 10%/5% ALLOWED BY THE A.O. IN RESPECT OF ELECTRICAL ITEMS AND TRANSFORME RS, THE LD. CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE THAT DEPRECIATION IS TO BE AL LOWED AT 80% AS THE SAID ITEMS ARE INTEGRAL PART OF WINDMILL. IN RESPECT OF MEDA FEE ALSO, THE LD. CIT(A) ALLOWED THE CLAIM OF ASSESSEE AT 80%. THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD PARTIES AND PERUSED THE RECORDS. WE FIND THAT SO FAR AS CIVIL WORK ON FOUNDATION IS CONCERNED THE SAME STANDS COV ERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT III PUNE VS. COOPER FOUNDRY PVT. LTD. (INCOME-TAX APPEAL NO. 1326 OF 20 10 DATED 14-6-2011). SO FAR AS THE ELECTRICAL ITEMS AND FEES TO MEDA, WE FIND THAT THE SAME IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT PUN E IN THE CASE OF DY. CIT CIR. 1 SANGLI VS. WESTERN PRECICAST PVT. LTD. (ITA NO. 890 /PN/2011 DT. 31-12-2012) AS WELL AS THE DECISION OF AHMEDABAD BENCH OF TRIBUNAL IN T HE CASE OF ACIT (OSD) VS. ITA . NO. 163//PN/2012 SHRI SHRIKANT S MAHALE A.Y. 2008-09 PAGE OF 3 3 PARRY ENGINEERING & ELECTRONICS P. LTD. (ITA NO. 33 17/AHD/2011, ORDER DATED 2-3- 2012). IN OUR OPINION, NO INTERFERENCE IS CALLED FO R IN THE ORDER OF THE LD. CIT(A). 5. WE ACCORDINGLY CONFIRM THE ORDER OF THE LD. CIT( A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH MAY 2013 SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 29 TH MAY 2013 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT II PUNE 4. THE CIT(A)- II PUNE 4. THE D.R. B BENCH, PUNE 5. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE