Dy.CIT, Cir.-3, Pune, Pune V. Sushant M.Jadav, Pune

ITA 166/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 66860 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Depreciation; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.166/PN/2012 ASSESSMENT YEAR : 200 8 - 0 9 DY. CIT, CIRCLE-3, PUNE VS. SUSHANT M. JADAV PLOT NO. 67, MAHATMA SOCIETY, KOTHRUD, PUNE (APPELLANT) (RESPONDENT) PAN NO. AAPPJ9013M APPELLANT BY: MS. ANN KAPTHUAMA RESPONDENT BY: SHRI NIKHIL PATHAK DATE OF HEARING : 10-04-2013 DATE OF PRONOUNCEMENT : 26-04-2013 ORDER PER R.S. PADVEKAR, JM:- THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNE D ORDER OF THE LD.CIT(A)-II, PUNE DATED 24-10-2011 FOR THE A.Y. 2008-09. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUND: THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROS SLY ERRED IN ALLOWING DEPRECIATION ON THE CIVIL WORK AND ELECTRIC ITE MS AND ON FEES PAID TO THE MAHARASHTRA ENERGY DEVELOPMENT AGEN CY (MEDA) @ 80% HOLDING THAT THE SAME FORMED PART OF THE WINDMILL. 2. THE ISSUE IS WHETHER THE LD.CIT(A) JUSTIFIED IN HOLDING TH AT THE ASSESSEE IS ENTITLED FOR 80% DEPRECIATION ON THE CIVIL WORK AND ELECTRICAL ITEMS AND ON FEES PAID TO THE MEDA FOR BEING PART OF THE WINDMILL. 3. THE BRIEFLY STATED FACTS ARE AS UNDER. THE ASSESSEE HAS PURCHASED 3 WINDMILLS FROM TS WINDPOWER DEVELOPERS TOWARDS WHICH THE ASSESSEE HAS CAPITALIZED COST OF RS.3,51,16,920/-. ON THE SAID AMOUNT THE ASSESSEE HAS CLAIMED DEPRECIATION @ 80% WHICH WAS WORKED OUT TO RS.1,86,05,388/-. THE ASSESSEE HAS GOT COMMISSIONED THOSE WINDMILLS ON 01-10-2007. THE ASSESSING OFFICER HAD RESERVATION IN RESPECT OF ALLOWING THE DEPRECIATION @ 80% ON THE EXPENDITURE ON THE CIVIL WORK, ELECTRICAL ITEMS, TRANSFORMERS, ERECTION AND COMMISSIONING ETC . THE 2 ITA NO.166/PN/2012, SUSHANT M. JADAV, PUNE ASSESSING OFFICER, THEREFORE, DISALLOWED SUM OF RS.52,52,024 BY R EDUCING THE RATE OF DEPRECIATION ON SOME OF THE ITEMS, MORE PARTIC ULARLY THE CIVIL WORK, ELECTRICAL ITEMS ETC. BY HOLDING THAT THE SAID EXPENDIT URE IS NOT A PART OF THE WINDMILLS. THE ASSESSEE CARRIED THE ISSUE BEFOR E THE LD.CIT(A) AND THE LD.CIT(A) HELD THAT THE CIVIL WORK AND FOUND ATION OF THE WINDMILL IS A PART OF WINDMILL AND HENCE, THE ASSESS IS ENT ITLED FOR DEPRECIATION @ 80%. THE LD.CIT(A) FOLLOWED THE DECISION OF TH E ITAT, PUNE IN THE CASE OF COOPER FOUNDRY PVT. LTD. ITA NO. 14 37/PN/2007 DATED 29-05-2009. 4. SO FAR AS THE ELECTRICAL ITEMS ARE CONCERNED, LD.CIT(A) FOLLO WED THE DECISION OF ITAT, PUNE IN THE CASE OF POONAWALLA FINVEST & A GRO PVT. LTD. 188 TTJ 68 (PUNE) AND ALLOWED THE CLAIM OF THE ASSESSEE @ 80%. SO FAR AS THE FEES PAID TO MEDA, THE SAME IS ALSO RETREATED TH E PART OF THE WINDMILL IS EXPENDITURE ONLY. LD.CIT(A) ALSO OBSERVED THAT OTHERW ISE ALSO SAME IS IN THE NATURE OF REVENUE EXPENDITURE. BEING AGG RIEVED THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE PARTIES. WE FIND THAT THE IDENTICAL IS SUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE CASE OF M/S. WEST ERN PRECICAST PVT. LTD. VS. JCIT, RANGE-I, SANGLI, ITA NO. 1495/PN/2011 ORDER DATED 30-01-2013. THE TRIBUNAL FOLLOWED THE DECISION IN THE ASSES SEE OWN CASE FOR THE A.Y. 2007-08. THE OPERATIVE PART OF THE TRIB UNALS DECISION IS AS UNDER: 4. WE HAVE HEARD THE RIVAL PARTIES. THE LD. COUNSEL SU BMITS THAT IN ASSESSEES OWN CASE FOR THE A.Y. 2007-08, THE I SSUE HAS BEEN CONSIDERED BY THE TRIBUNAL AND HAS ALLOWED TH E CLAIM OF ASSESSEES ON DEPRECIATION AT 80% ON THE FOU NDATION, ERECTION AND INSTALLATION COST OF THE WIND MILL. THE LD . COUNSEL HAS FILED THE COPY OF THE TRIBUNAL ORDER IN AS SESSEES OWN CASE FOR THE A.Y. 2007-08. WE HAVE ALSO HEARD THE LD. D.R. WE FIND THAT THE ISSUE OF THE RATE OF DEPRECIAT ION APPLICABLE TO THE COST OF FOUNDATION OF ERECTION AND COMMISSIONING HAS ALREADY BEEN CONSIDERED BY THE TRI BUNAL IN ASSESEES OWN CASE FOR THE A.Y. 2007-08. THE TRIBUNAL HAS HELD THAT FOUNDATION IS THE INTEGRAL PART OF THE WIND MILL AND SAME IS ELIGIBLE FOR DEPRECIATION AT THE RATE WHICH IS APPLICABLE TO THE WIND MILL. IN THE SAME WAY THE TRIBUNAL ALSO ALLOW ED THE DEPRECIATION RATE WHICH IS APPLICABLE TO THE WIND MILL FOR 3 ITA NO.166/PN/2012, SUSHANT M. JADAV, PUNE 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 SUBMISSIONS . IN ORDER TO APPRECIATE THE DISPUTE, THE FOLLOWING BREAK-UP OF EXP ENSES 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 WIN DMILL CLAIMED BY THE ASSESSEE, THE ASSESSING OFFICER ALLOWED DEPRECIA TION AT 15% AND NOT AT 80% AS CLAIMED BY THE ASSESSEE. TH E CIT(A) HOWEVER, CONSIDERED THE ITEMS OF COSTS AT NO 1 TO 5 QUALIFYING FOR HIGHER RATE OF DEPRECIATION BEING IN TEGRAL PART OF WINDMILL. IN SO FAR AS ITEM NO. 1 IS CONCERNED, THE COST OF RS. 30,93,500/- IS TOWARDS SUPPLY OF ELECTRICAL ITEMS OF TH E WINDMILL ITSELF. THE CIT(A) HAS OBSERVED THAT SUCH COST IN THE INSTALLATION OF WINDMILL HAS BEEN FOUND BY THE TRIBUN AL IN THE CASE OF POONAWALA FINVEST AND AGRO PVT. LTD. (SUPRA) A S AN INTEGRAL PART OF THE WINDMILL COST AND THEREFORE, FOUND TO BE ELIGIBLE FOR DEPRECIATION EQUIVALENT TO THAT OF THE WI NDMILL. NO DECISION TO THE CONTRARY HAS BEEN BROUGHT TO OUR NO TICE AND THEREFORE, FOLLOWING THE PRECEDENT IN THE CASE OF POON AWALA FINVEST AND AGRO PVT. LTD. (SUPRA), WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE CIT(A) WHICH WE HEREBY AF FIRM. 4 ITA NO.166/PN/2012, SUSHANT M. JADAV, PUNE 9. TO THE SIMILAR EFFECT IS THE NATURE OF COST ENUMER ATED IN ITEMS NO. 2 AND 3 RELATING TO LABOUR CHARGES FOR ERECTION A ND INSTALLATION OF WINDMILL. SUCH EXPENDITURE FORMS INTEG RAL PART OF COST OF THE WINDMILL AND THEREFORE, THERE IS NO MIS TAKE ON THE PART OF THE CIT(A) TO HAVE CONSIDERED SUCH EXPEN DITURE AS ELIGIBLE FOR DEPRECIATION AT 80%. 5. WE THEREFORE FOLLOWING THE ORDER OF THE TRIBUNAL CITE D SUPRA HOLD THAT BOTH THE PARTIES BELOW WERE NOT JUSTIFIED IN CALCULATING AND DISALLOWING THE DEPRECIATION ON THE COS T OF FOUNDATION, COMMISSIONING AND ERECTION OF THE WIND M ILL. ACCORDINGLY, WE ALLOWED THE ISSUE IN FAVOUR OF THE ASS ESSEE AND DELETE THE ADDITION MADE BY THE A.O. BY MAKING THE DISALLOWANCE TOWARDS ALLEGED EXCESS CLAIM OF DEPRECIATION. 6. IN OUR OPINION, THE LD.CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE, AS ISSUE ARISING FROM THE GROUNDS TAKEN BY THE REVENUE COVERS IN FAVOUR OF THE ASSESSEE BY THE DECISION CITED (SUPRA). WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A), AND AC CORDINGLY THE SAME IS CONFIRMED. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 26-04-2013. SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER RK/PS PUNE, DATED: 26 TH APRIL, 2013 COPY TO 1 DEPARTMENT 2 ASSESSEE 3 THE CIT(A) - II, PUNE 4 THE C C IT , PUNE 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE