The ACIT(OSD)., Circle-5, Ahmedabad V. Precision Technofab & Engineering Ltd., Ahmedabad

ITA 167/AHD/2012

• Counselvise Citation: 16720514 RSA 2012
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-11-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 19-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: S N SOPARKAR WITH B S KAUR
• Keywords: Capital asset; Depreciation; Cost of acquisition; Capital expenditure
• Section: 143(3); 234B; 14A; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND SHRI A. MOHAN ALAN KAMONY, AM) ITA NO.3200/AHD/2011 AND 167/AHD/2012 (A.Y.: 2008-09 AND 2009-10) THE A. C. I. T. (OSD), CIRCLE-5, 5 TH FLOOR, PRATYAKSH KAR BHAVAN, PANJARA POLE, AMBAWADI, AHMEDABAD VS M/S. PRECISION TECHNOFAB & ENGINEERING , 7-C, SURYARATH, PANCHWATI, ELLISBRIDGE, AHMEDABAD P. A. NO. AAACP 6754 D (APPELLANT) (RESPONDENT) C. O. NO.91 AND 92/AHD/2012 (IN ITA NO.3200/AHD/11 AND 167/AHD/2012) M/S. PRECISION TECHNOFAB & ENGINEERING , 7-C, SURYARATH, PANCHWATI, ELLISBRIDGE, AHMEDABAD P. A. NO. AAACP 6754 D VS THE A. C. I. T. (OSD), CIRCLE-5, 5 TH FLOOR, PRATYAKSH KAR BHAVAN, PANJARA POLE, AMBAWADI, AHMEDABAD (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY SHRI Y. P. VERMA, SR. DR ASSESSEE BY SHRI S. N. SOPARKAR WITH B. S. KAUR, AR DATE OF HEARING: 23-11-2012 DATE OF PRONOUNCEMENT: 11-01-2013 O R D E R PER A. MOHAN ALANKAMONY: THE REVENUE HAS FILED THESE TWO APPEALS AGAINST DIFFERENT ORDERS OF THE LEARNED CIT (A)-XI, AHMEDABAD IN (I) APPEAL NO. CIT(A)-XI/18/R-5/1011 DATED 07-10-20 11 FOR THE ASSESSMENT YEAR 2008-09 AND (II) NO. CIT(A)-XI/251/ ADDL. CIT R-5/10-11 DATED 14-11-2011 FOR THE ASSESSMENT YEAR 2009-10 RE SPECTIVELY, PASSED 2 U/S 250 READ WITH SECTION 143(3) OF THE ACT. THE AS SESSEE HAS FILED THE CROSS OBJECTIONS AGAINST THE AFORESAID ORDERS OF TH E LEARNED CIT(A). SINCE THE FACTS AND ISSUES INVOLVED IN BOTH THE CONSECUTI VE ASSESSMENT YEARS ARE SIMILAR AND IDENTICAL THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONV ENIENCE. ITA NO.3200/AHD/2011 (REVENUES APPEAL FOR AY: 2008-09) 2. IN THIS APPEAL, THE REVENUE HAS RAISED FOUR GROU NDS WHEREIN GROUND NO.3 AND 4 ARE GENERAL IN NATURE AND DO NOT SURVIVE FOR ADJUDICATION. THE SURVIVING GROUNDS NO.1 AND 2 RAISED BY THE REVENUE ARE REPRODUCED HEREIN UNDER FOR REFERENCE: 1. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRE D IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.63,365/ - MADE ON BY THE ASSESSING OFFICER U/S 14A OF THE I. T. ACT. 2. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF ASSESSEES CLAIM OF DEPRECIATION @80% ON THE CIVIL WORK, ELECTRIC INSTA LLATION AND OTHER DEVELOPMENT EXPENSES PERTAINING TO THE INSTAL LATION OF THE WINDMILLS. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF FABRICATION, ERECTION, S UPPLY, COMMISSIONING AND INSTALLATION OF GATES, WINDMILL AND OTHER RELAT ED ITEMS, FILED ITS RETURN OF INCOME ON 19 TH SEPTEMBER, 2008 DECLARING INCOME OF RS.2,44,56,590 /-. THE CASE WAS SELECTED FOR SCRUTINY AND SUBSEQUENTLY , ASSESSMENT ORDER WAS PASSED BY THE LEARNED AO DETERMINING THE TOTAL TAXABLE INCOME OF THE ASSESSEE AT RS.2,60,37,980/- WHEREIN CERTAIN DISALL OWANCES WERE MADE BY HIM WHICH HAS TRIGGERED THESE APPEALS. 3 4. GROUND NO.1:- DELETING DISALLOWANCE OF RS.63,365/- U/S 14A OF THE ACT. THE LEARNED AO ON VERIFICATION OF THE DETAILS FOUND THAT THE ASSESSEE MADE INVESTMENT OF A SUM OF RS.1,56,74,182 /- IN SHARES, BONDS, IMMOVABLE PROPERTIES, IN CAPITAL OF JOINT VENTURE P ARTNERSHIP FIRMS AND GRATUITY FUND INVESTMENTS. THE LEARNED AO ASKED THE ASSESSEE AS TO WHY DISALLOWANCE U/S 14A OF THE ACT READ WITH PROVISION S OF RULE 8D MAY NOT BE MADE IN RESPECT OF SUCH INVESTMENTS MADE FOR EAR NING TAX FREE INCOME. IN RESPONSE TO THE ABOVE QUERY, THE ASSESSEE REPLIE D THAT:- (I) RS.3,00,000/- WAS INVESTED IN UNLISTED FINANCE COMPANY FOR ENABLING THE ASSESSEE TO ACCESS FUNDS THROUGH IT. (II) RS.16,53,800/- WAS PAID FOR BOOKING OF TWO FLA TS FOR STAFF HOUSING PURPOSES. (III) RS.30,00,285/- WAS PLEDGED AS BONDS WITH VARI OUS GOVERNMENT AUTHORITIES FOR OBTAINING REGISTRATION O F RELEVANT CATEGORY OF CONTRACTOR WITH A VIEW TO FURTHER THE B USINESS OF THE ASSESSEE. (IV) RS.1,70,784/- WAS INVESTED OUT OF GRATUITY FUN DS OF THE EMPLOYEES. (V) RS.1,05,49,313/- WAS INVESTED AS CAPITAL FOR PA RTNERSHIP IN JOINT VENTURE COMPANIES AND (VI) THUS ALL THE INVESTMENTS MADE BY THE ASSESSED COMPANY WERE IN THE NATURE OF TRADE INVESTMENTS WITH OBJECT IVE OF FURTHERING THE BUSINESS INTEREST OF THE ASSESSEE CO MPANY AND HENCE DISALLOWANCE U/S 14A OF THE ACT IS NOT REQUIR ED TO BE MADE FOR THE ABOVE INVESTMENTS. 5. THE LEARNED AO CONSIDERING THE SUBMISSION O F THE ASSESSEE DISALLOWED AN AMOUNT OF RS.63,365 BEING 0.50% OF TH E TOTAL INVESTMENT OF RS.12,67,29,095/- BY OBSERVING AS UNDER: 4 I HAVE GONE THROUGH THE REPLY OF THE ASSESSEE WHIC H APPEARS TO BE NOT FULLY ACCEPTABLE. THE CONTENTION OF THE ASSESSE E IN RESPECT OF THE INVESTMENT IN SHARES AND ACTUAL INVESTMENT MADE IN THE JOINT VENTURE PARTNERSHIP FIRMS CLEARLY FALLS WITHIN THE PURVIEW OF SECTION 14-A. HOWEVER, THE EXPLANATION OF INVESTMENT IN GRATUITY FUND AMOUNTING TO RS.1,70,784/- APPEARS TO BE CONVINCING, BUT NOT FOR THE BALANCE INVESTMENT. HENCE, THE DISALLOWANCE U/S 14-A READ W ITH RULE 8-D IS WORKED OUT AS UNDER:- PARTICULARS 31/3/2008 31/03/2007 AMOUNT AMOUNT INVESTMENTS INVESTMENT IN SHARES (UNQUOTED) 300000 300000 INVESTMENT IN BONDS 3000285 1369500 INVESTMENT IN IMMOVABLE PROPERTIES 1653800 1653800 INVESTMENT IN CAPITAL OF JOINT VENTURE 10549313 6519121 PARTNERSHIP FIRMS 15503398 9842421 AVERAGE INVESTMENT = 15503398 + 9842421 = 126729095 2 DISALLOWABLE BEING 0.50% = 63,365/-. THUS AN AMOUNT OF RS.63,365/- IS BEING DISALLOWED A S PER THE PROVISIONS OF SECTION 14-A RWR 8-D AND IS BEING AD DED BACK TO THE INCOME OF THE ASSESSEE. 5.1 THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E THE LEARNED CITA). THE LEARNED CIT(A) AFTER CAREFUL SUBMISSIONS OF BOT H THE PARTIES HELD IN PARA 3.2 TO PARA 3.5 OF HIS ORDER AS UNDER: 3.2 I HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS. I HAVE ALSO GONE THROUGH THE SUBMISSIONS OF THE APPELLANT. IT IS SEE N THAT INVESTMENTS IN SOME OF ITEMS IN RESPECT OF WHICH DISALLOWANCE U /S. 14A HAS BEEN MADE ARE NOT COVERED BY THE PROVISIONS OF SECTION 1 4A SINCE INCOME FROM THESE ASSETS ARE TAXABLE AS PER THE PROVISIONS OF I. T. ACT. APPELLANT HAD CONTENDED HAT INVESTMENT IN SHARES OF RS.3,00,000/- HAS NOT YIELD ANY TAX FREE INCOME AND ACCORDINGLY N O DISALLOWANCE SHOULD BE MADE IN RESPECT OF THESE INVESTMENTS U/S. 14A OF THE I. T. 5 ACT. AFTER CAREFUL CONSIDERATION, I AM NOT INCLINED TO AGREE WITH THE ARGUMENTS OF THE LD. A. R. THE BASIC CONDITIONS FOR DISALLOWANCE U/S. 14A ARE THAT INVESTMENTS SHOULD YIELD TAX FREE INCO ME. THE DISALLOWANCE U/S. 14A CAN BE MADE EVEN IF TAX FREE INCOME HAS NOT BEEN RECEIVED DURING THE YEAR UNDER CONSIDERATION. IN VIEW OF THIS, I AM OF THE CONSIDERED VIEW THAT A.O. HAS RIGHTLY MAD E DISALLOWANCE U/S. 14A OF THE I. T. ACT. 3.3. APPELLANT CONTENDED THAT INVESTMENT IN JOINT V ENTURE PARTNERSHIP FIRM IS A BUSINESS INVESTMENT. IT HAS D ONE CONTRACT WORK IN THIS JOINT VENTURE PARTNERSHIP FIRM. INCOME FROM THESE PROJECTS ARE SUBJECT TO THE PROVISIONS OF I. T. ACT. AFTER CAREF UL CONSIDERATION, I AM INCLINED TO AGREE WITH CONTENTIONS OF THE LD. A.R. IN MY CONSIDERED VIEW, INVESTMENT IN JOINT VENTURE PARTNERSHIP FIRM IS A BUSINESS INVESTMENT AND INCOME GENERATED FROM THIS VENTURE I S TAXABLE AS PER THE PROVISIONS OF INCOME-TAX ACT AND ACCORDINGLY DI SALLOWANCE U/S. 14A IS NOT WARRANTED THE A. O. IS DIRECTED TO DELET E THE DISALLOWANCE MADE U/S. 14A ON THIS INVESTMENT. 3.4 IN ADDITION TO THE ABOVE TWO ITEMS, THE A. O. H AS ALSO MADE DISALLOWANCE U/S. 14A ON THE FOLLOWING AMOUNTS: (I) INVESTMENT IN BONDS RS.30,00,285/- (II) INVESTMENT IN IMMOVABLE PROPERTIES RS.16,53 ,800/- APPELLANT HAS NOT MADE ANY SUBMISSION AGAINST THESE DISALLOWANCES. IN VIEW OF THIS, I HOLD THAT APPELLA NT IS NOT AGGRIEVED BY THESE DISALLOWANCES. IN VIEW OF THIS, DISALLOWAN CE MADE U/S. 14A ON THESE AMOUNTS IS CONFIRMED. 3.5 AS A RESULT OF THIS ORDER DISALLOWANCE U/S. 14A IN RESPECT OF THE FOLLOWING INVESTMENTS IS CONFIRMED: (I) INVESTMENT IN SHARES RS. 3,00,000/- (II) INVESTMENT IN BONDS RS.30,00,285/- (III) INVESTMENT IN IMMOVABLE PROPERTIES RS.16,53 ,800/- RS.49,54,085/- NO DISALLOWANCE IS WARRANTED U/S.14A ON THE INVESTM ENT OF OTHER ASSETS. THE A. O. IS DIRECTED TO RECOMPUTED THE DIS ALLOWANCE U/S 14A AND ALLOW RELIEF TO THE ASSESSEE AS PER ABOVE D IRECTIONS. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 6 6. DURING THE COURSE OF HEARING BEFORE US, THE LEAR NED DR SUPPORTED THE ORDER OF THE LEARNED AO. ON THE OTHER HAND THE LEARNED AR ARGUED BEFORE US CITING THE BALANCE SHEET OF THE ASSESSEE FORMING PART OF THE PAPER BOOK (PAGE 36) THAT THE ASSESSEE HAD ITS OWN SHARE CAPITAL FOR THE ASSESSMENT YEAR 2008-09 OF RS.8,14,52,100/- AND RES ERVES AND SURPLUS OF RS.7,88,11,055/- WHILE AS THE INVESTMENT TAKEN INTO CONSIDERATION BY THE LEARNED AO FOR INVOKING PROVISIONS OF SECTION 14A O F THE ACT IS FOR RS.1,55,03398/- WHICH IS FAR BELOW THE AGGREGATE OF ITS RESERVES AND SURPLUS. IT WAS, THEREFORE, PRAYED THAT THE ADDITIO N MADE AND SUSTAINED BY THE REVENUE INVOKING SECTION 14A OF THE ACT MAY BE DELETED. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW ALONG WITH THE PAPE R BOOK PRODUCED BEFORE US AND ALSO TAKEN NOTE OF THE C. O. FILED BY THE ASSES SEE . AT THE OUTSET, ON VERIFYING THE BALANCE SHEET OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 PL ACED ON PAGE 36 OF THE PAPER BOOK, AS POINTED BY THE LEARNE D AR, THE ASSESSEES SHARE CAPITAL AND RESERVES & SURPLUS ARE RS.8,14,52 ,100/- AND RS.7,88,11,055/- RESPECTIVELY. THE ASSESSEE ALSO HA S A DEFERRED TAX LIABILITY AMOUNTING TO RS.74,25,804/-. EVEN AFTER D EDUCTING THE DEFERRED TAX LIABILITY FROM THE AGGREGATE OF ASSESSEES SHARE CA PITAL AND RESERVES & SURPLUS THE AMOUNT LEFT OUT WILL BE MUCH MORE THAN THE AMOUNT INVESTED BY THE ASSESSEE BEING RS.1,55,03398/- BASED ON WHICH T HE LEARNED AO HAS INVOKED THE PROVISIONS OF SECTION 14A OF THE ACT. S INCE THE ASSESSEE HAS UTILIZED ITS OWN CAPITAL AND RESERVES FOR MAKING SU CH INVESTMENT, SECTION 14A OF THE ACT WILL NOT BE ATTRACTED BECAUSE THERE IS NO EXPENDITURE INCURRED BY THE ASSESSEE IN RESPECT OF SUCH INVESTM ENT MADE THE INCOME ARISING FROM WHICH DOES NOT FORM PART OF TOTAL INCOME UNDER THE ACT. THEREFORE, WE HEREBY DELETE THE ADDITION MADE BY THE LEARNED AO A ND THE ADDITION 7 SUSTAINED BY THE LEARNED CIT(A) INVOKING SECTION 14 A OF THE ACT. ACCORDINGLY, THIS GROUND RAISED BY THE REVENUE IS D ISMISSED. 8. GROUND NO.2:- DELETING DISALLOWANCE OF ASSESSEES CLAIM OF DEPRECIATION @80% ON THE CIVIL WORK, ELECTRIC INSTA LLATION AND OTHER DEVELOPMENT EXPENSES PERTAINING TO INSTALLATION OF WINDMILLS. THE LEARNED AO ON VERIFICATION OF THE DETAILS FOUND THA T THE ASSESSEE HAD CLAIMED DEPRECIATION ON THE ENTIRE WDV OF WINDMILL @80% AMOUNTING TO RS.1,52,97,950/- FOR THE TOTAL INVESTMENT MADE AMOU NTING TO RS.3,82,44,875/- WHICH INCLUDED CIVIL WORK, ELECTRI C INSTALLATION AND OTHER DEVELOPMENT EXPENSE AND THE SAME IS NOT ALLOWABLE S INCE THE WINDMILL WAS USED BY THE ASSESSEE LESS THAN A PERIOD OF 180 DAYS. THE LEARNED AO, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN WHY TH E CLAIM OF THE ASSESSEE MAY NOT BE DISALLOWED WHICH READS AS UNDER : THE ASSESSEE HAS CLAIMED DEPRECIATION @40% ( I.E. 50% OF 80%) ON THE ENTIRE INVESTMENT WHEREAS THE DEPRECIATION O N INVESTMENTS ON CIVIL WORK, ELECTRIC WORK, INSTALLATION OF ELECT RICITY, LABOUR CHARGES, PAYMENT OF GEDA AND DEVELOPMENT CHARGES WHICH ARE N OT INTEGRAL PART OF THE WIND MILL IS ALLOWABLE AT NORMAL RATE, I.E. 7.5% (50% OF 15%). AS THE DEPRECIATION ON THESE INVESTMENTS ARE ALLOWABLE AT THE NORMAL RATES, EXPLAIN WHY THE EXCESS DEPRECIATION M AY NOT BE DISALLOWED. IN RESPONSE THERETO THE ASSESSEE SUBMITTED THAT THE TOTAL ADDITION TO BLOCK ASSETS COMPRISING TO THE WINDMILL DURING THE YEAR U NDER CONSIDERATION WAS FOR RS.3,82,44,875/- AND IN ADDITION TO THIS THE AS SESSEE HAD ALSO PAID RS.3,70,000/- AGAINST COST OF ACQUISITION OF LEASEH OLD LAND FOR A PERIOD OF 20 YEARS ON WHICH THE WINDMILLS HAD BEEN INSTALLED. ACCORDINGLY, THE ASSESSEE HAD WRITTEN OFF PROPORTIONATE AMOUNT OF RS .3,018/- IN THE PRESENT YEAR. IT WAS FURTHER STATED THAT THE ASSESSEE HAD C LAIMED DEPRECIATION @ 40% (50% OF 80%) ON RS.3,82,44,875/- AGAINST THE CO ST OF CAPITAL ASSETS 8 COMPRISING IN THE WINDMILL. THE ASSESSEE ALSO SUB MITTED ITEM WISE JUSTIFICATION OF INCLUSION OF EACH ITEM IN THE WIND MILL FOR CLAIMING HIGHER DEPRECIATION AS UNDER: PARTY NAME AMOUNT JUSTIFICATION SUZLON INFRASTRUCTURE SERVICES LTD. 938000 COMPONENT & ACCESSORIES OF RENEWABLE ENERGY DEVICE TRANSFORMER : 750 KVA / 33 KV AS THE NARRATION STATE THIS COMPRISES COST OF COMPONENT OF THE WIND MILL AND BECOMES A PART THEREOF, HENCE THE COST THEREOF NEEDS TO BE INCLUDED IN THE WIND MILL SUZLON ENERGY LTD. 4000000 WINDMILL COMPONENTS FOR GENERATION OF ELECTRICITY, (SUPPLY OF ROTOR BLADES OF SUZLON WTG 0.60 MW, S52_L_600_50_STVCS_IND WIND TURBINE GENERATOR (SET OF 3 BLADES) AS THE NARRATION STATES THIS COMPRISES OF COST OF COMPONENT OF THE WIND MILL AND BECOMES A PART THEREOF, HENCE THE COST THEREOF NEEDS TO BE INCLUDED IN THE WIND MILL. SUZLON ENERGY LTD. 27881950 SUPPLY OF SUZLOON S52_600_50_75_SRVCS_IND WIND TURBINE GENERATOR COMPRISING MAINLY OF :* NACELLE *HUB *CONTROLLER (MICRO PROCESSOR)* * TOWER AND HARDWARE AS THE NARRATION STATES THIS COMPRISES OF COST OF COMPONENT OF THE WIND MILL AND BECOMES A PART THEREOF, HENCE THE COST THEREOF NEEDS TO BE INCLUDED IN THE WIND MILL. SUZLOON INFRASTRUCTURE LTD. 1188769 INSTALLATION OF ONE WTG FOR YOUR 0.60 MW WINDMILL AT LOCATION NO.M-472 AT ABOVE SITE AS THE NARRATION INDICATES IT IS IN RESPECT OF SUPPLY OF VARIOUS COMPONENTS RELATED TO THE WIND MILL, ESPECIALLY DESIGNED TO SUIT THE MILL ONLY, HENCE THE COST THEREOF NEEDS TO BE INCLUDED IN THE WIND MILL. SUZLOON INFRASTRUCTURE SERVICES LTD. 1338454 CIVIL WORK INCLUDING FOUNDATION & ALLIED WORKS IN RESPECT OF WINDFARM PROJECT CONSISTING OF ONE NO.WTG FOR YOUR 0.60 MW WINDMILL AND INSTALLATION OF ELECTRICAL LINE FOR POWER TRANSMISSION AND METERING IN RESPECT OF YOUR WINDFARM PROJECT CONSISTING OF ONE WTG FOR YOUR 0.60 MW WINDMILL AT LOCATION NO.472 AT ABOVE SITE ADDRESS AS THE NARRATION INDICATES IT COMPRISES OF SERVICES IN RESPECT OF LAYING FOUNDATION AND INSTALLATION & ERECTION OF WIND MILL THEREON; AS A WIND MILL IS NOT EXPECTED TO WORK WITHOUT A FOUNDATION AND ERECTION IT IS AN INTEGRAL COST OF THE WIND MILL ONLY. IT ALSO INCLUDES THE COST OF CABLING AND METERING IN RESPECT OF THE WIND MILL. AS A WIND MILL CANNOT DO A COMMERCIAL ACTIVITY WITHOUT CABLES THERETO AND WITHOUT PROVISION TO METER THE POWER GENERATED FROM THE SAME, THIS COST IS AN INTEGRAL COST OF THE WIND MILL ONLY. SUZLOON INFRASTRUCTURE LTD. 813904 AS THE NARRATION INDICATES, IT 9 ELECTRICAL ITEMS, COMPONENTS OF RENEWABLE ENERGY DEVICE/WIND MILL, IN RESPECT OF WINDFARM PROJECT CONSISTING OF ONE WTG FOR YOUR 0.60 MW WINDMILL AT LOCATION NO.M-472 AT ABOVE SITE ADDRESS COMPRISES OF COST OF SUPPLY OF VARIOUS COMPONENTS OF THE WIND MILL HENCE THE COST THEREOF NEEDS TO BE INCLUDED IN THE WINDMILL. SUZLON GUJARAT WIND PARK LTD. 1800000 AS PER GUIDELINES OF GEDA @RS.30 LACS PER MW PAYABLE BY YOU IN RESPECT OF REIMBURSEMENT OF POWER EVACUATION FACILITIES & INFRASTRUCTURE CREATED FOR INSTALLATION OF 0.600 MW WIND TURBINE GENERATOR AT MOTISINDHODI SITE TA. & DIST. KUTCH AND BEING NON-REFUNDABLE. AS THE NARRATION INDICATES, IT COMPRISES OF PROPORTIONATE COST OF THE INFRASTRUCTURE CREATED BY THE DEVELOPER OF THE WIND MILL FARM, WITHOUT SUCH INFRASTRUCTURE AN WIND MILL CANNOT BE OPERATIONAL, HENCE THE COST THEREOF NEEDS TO BE INCLUDED IN THE WIND MILL. SUZLON GUJARAT WIND PARK LTD. 50000 BEING THE AMOUNT OF PROCESSING CHARGES FOR 1.500 MW WIND TURBINE GENERATOR BEING INSTALLED AT MOTI SINDHODI SITE, TAL. & DISCT. KUTCH IN RESPECT OF 1 WTG THIS PAYMENT HAS BEEN MADE TOWARDS THE CHARGES OF PROCESSING CHARGES OF THE WIND MILL, IT IS THUS DIRTECTLY RELATED TO OPERATIONALISING THE WIND MILL, HENCE THE COST THEREOF NEEDS TO BE INCLUDED IN THE WIND MILL. SUZLON INFRASTRUCTURE SERVICES LTD. 67416 SISL/GJ/ST/2007-08/285 HIS PAYMENT HAS BEEN MADE TOWARDS THE CHARGES OF FINAL TESTING AND COMMISSIONING OF THE WIND MILL, IT IS THUS DIRECTLY RELATED TO OPERATIONALISIING THE WIND MILL, HENCE THE COST THEREOF NEEDS TO BE INCLUDED IN THE WIND MILL. NATIONAL INSURANCE CO. LTD. INSURANCE PREMIUM 166382 THIS PAYMENT HAS BEEN MADE TOWARDS THE COST OF INSURING THE WIND MILL, IT IS THUS DIRECTLY RELATED TO SECURING AND OPERATIONALISING THE WIND MILL, HENCE THE COST THEREOF NEEDS TO BE INCLUDED IN THE WIND MILL THUS THE ASSESSEE SUBMITTED THAT ALL THE ABOVE COMP ONENTS OF THE WINDMILL COSTING AT RS.3,82,44,875/- ARE INTEGRAL P ART OF THE WINDMILL AND ASSESSEE IS ELIGIBLE FOR CLAIMING 40% (50% OF 80%) DEPRECIATION ON THE SAME. IN SUPPORT OF ITS CLAIM, THE ASSESSEE ALSO RE LIED ON THE DECISION IN THE CASE OF (I) ADDL. CIT VS MADRAS CEMENT LTD. (MA D.), 110 ITR 281 AND (II) CIT VS DELHI AIRPORT SERVICES PVT. LTD., (2001 ) 170 CTR 534 (DELHI). 10 8.1 THE LEARNED AO AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE ALLOWED DEPRECIATION AT ORDINARY RATE AT 7.5 (50% O F 15% ON THE WDV OF MACHINERY AND OTHER INVESTMENT AMOUNTING TO RS.34,2 2,252/- AND ON THE BALANCE WDV OF RS.3,48,22,623/- THE LEARNED AO ALL OWED 40% DEPRECIATION. THUS, THE LEARNED AO DISALLOWED EXCES S DEPRECIATION CLAIM OF RS.11,12,032/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. HOWEVER, HIS FINDINGS ARE REPRODUCED HEREIN UNDER F OR REFERENCE: I HAVE GONE THROUGH THE REPLY OF THE ASSESSEE CARE FULLY BUT APPEARS TO BE NOT ACCEPTABLE BECAUSE IT IS NOT DISPUTED THA T THESE INVESTMENTS ARE MADE. IT IS ALSO UNDISPUTED THAT TH ESE EXPENSES WERE MADE IN RELATION TO PURCHASE OF THE MACHINERY OR INSTALLATION CHARGES OR THE SANCTION EXPENSES ARE NOT CONNECTED WITH THE BUSINESS OF WINDMILL. THEE EXPENSE WERE CERTAINLY R ELATED TO THE BUSINESS OF THE WINDMILL ACTIVITIES THOUGH THESE E XPENSE ARE TREATED AS CAPITAL EXPENDITURE IN NATURE AND DEPREC IATION IS ALLOWABLE ON THESE INVESTMENTS BUT THE NORMAL DEPRECIATION IS ALLOWABLE ON THE MACHINERIES OTHER THAN THE WINDMILL ITSELF, THE OTH ER INVESTMENTS RELATING TO THE CIVIL WORK, LABOUR CHARGES FOR TEST ING PROCESSING AND APPLICATION FEES TO MEDA AND DEVELOPMENT CHARGES. T HE DETAILS OF CAPITAL EXPENDITURE ON WHICH THE NORMAL DEPRECIATIO N IS ALLOWABLE IS AS UNDER: - SUZLOON INFRASTRUCTURE SERVICES LTD. 1338454 CIVIL WORK INCLUDING FOUNDATION & ALLIED WORKS IN RESPECT OF WINDFARM PROJECT CONSISTING OF ONE NO.WTG FOR YOUR 0.60 MW WINDMILL AND INSTALLATION OF ELECTRICAL LINE FOR P OWER TRANSMISSION AND METERING IN RESPECT OF YOUR WINDFARM PROJECT CO NSISTING OF ONE WTG FOR YOUR 0.60 MW WINDMILL AT LOCATION NO.472 AT ABOVE SITE ADDRESS SUZLOON INFRASTRUCTURE LTD. 813904 ELECTRICAL ITEMS, COMPONENTS OF RENEWABLE ENERGY DE VICE/WIND MILL, IN RESPECT OF WINDFARM PROJECT CONSISTING OF ONE WTG FOR YOUR 0.60 MW WINDMILL AT LOCATION NO.M-472 AT ABOVE SITE ADDRESS SUZLON GUJARAT WIND PARK LTD. 1800000 11 AS PER GUIDELINES OF GEDA @RS.30 LACS PER MW PAYABL E BY YOU IN RESPECT OF REIMBURSEMENT OF POWER EVACUATION FAC ILITIES & INFRASTRUCTURE CREATED FOR INSTALLATION OF 0.600 MW WIND TURBINE GENERATOR AT MOTISINDHODI SITE TA. & DIST. KUTCH AN D BEING NON- REFUNDABLE. SUZLON GUJARAT WIND PARK LTD. 50000 BEING THE AMOUNT OF PROCESSING CHARGES FOR 1.500 MW WIND TURBINE GENERATOR BEING INSTALLED AT MOTI SINDHODI SITE, TAL. & DISCT. KUTCH IN RESPECT OF 1 WTG SUZLON INFRASTRUCTURE SERVICES LTD. 67416 SISL/GJ/ST/2007-08/285 NATIONAL INSURANCE CO. LTD. INSURANCE PREMIUM 166382 THUS, THE DEPRECIATION ON INVESTMENT OF RS.3422252/ - WHICH IS NOT CONSIDERABLE AS THE INTEGRAL PART OF THE WDV IS ALL OWED AT NORMAL/ORDINARY RATES IS ALLOWABLE AS FAR AS THE DECISION OF THE HONBLE COURTS AS CI TED BY THE ASSESSEE IS CONCERNED, WITH DUE RESPECT OF THE HON BLE COURTS, THESE ARE NOT ACCEPTABLE BECAUSE ALL ARE ON DIFFERE NT ISSUES. THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF ADDL. CIT VS. MADRAS CEMENT LTD. 110 ITR 281 IS RELATING TO I SSUE OF TREATING THE CONCRETE FOUNDATION IN THE ROTARY KILN AS PLANT WHEREAS IN CASE UNDER CONSIDERATION IT IS RELATING TO THE HIGHER RA TE OF DEPRECIATION AFTER TREATING CERTAIN INVESTMENTS AS INTEGRAL PART OF WINDMILL SO IT IS ON DIFFERENT ISSUE AND NOT APPLICABLE. THE DECISIO IN OF THE LD. TRIBUNAL MUMBAI IN THE CASE OF TRUMAC ENGG CO. P. L TD. VS ITO IS RELATING TO ELECTRIC FITTING FEE PAID TO GEDA WHERE AS IN THE CASE UNDER CONSIDERATION THERE IS NO ISSUE OF SUCH PAYME NT. IN THIS CASE THE ISSUE IS RELATING TO PROCESSING AND APPLICATION FEE WHICH IS NOT FOR ELECTRIC FITTING. MOREOVER, IT IS NOT A DECISION OF THE JURISDICTIONAL HIGH COURT. THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DELHI AIRPORT SERVICES 170 CTR 534 IS RELAT ING TO TREAT THE AIR CONDITIONER OF BUS AS PLANT WHEREAS THE ISSUE IN TH E CASE UNDER CONSIDERATION IS NOT THE SIMILAR. BESIDES, THE ABOV E DISCUSSION NO CASE OF THE HONOURABLE JURISDICTIONAL HIGH COURT HA S BEEN CITED BY THE ASSESSEE. AFTER THE ABOVE DISCUSSIONS, THE DEPR ECIATION ON THE WDV OF MACHINERY AND OTHER INVESTMENTS AMOUNTING TO RS.34,22,252/- IS ALLOWED AT ORDINARY RATE AT 7.5% (50% OF 15%) AND THE DEPRECIATION ON THE BALANCE WEDV AMOUNTING TO R S.34822623/- 12 IS ALLOWED AT 40%. THEREFORE, THE ALLOWABLE DEPRECI ATION IS CALCULATED AS UNDER: 34822623 40% RS. 13929049/- 3422252 7.5% RS. 256669/- RS.14185718/- DEPRECIATION CLAIMED RS.15297950/- EXCESS RS. 1112232/- UNDER THESE CIRCUMSTANCES, EXCESS CLAIM OF DEPRECIA TION OF RS.11,22,032/- ARE DISALLOWED AND ADDED TO THE INCO ME OF THE ASSESSEE. THE PENALTY PROCEEDINGS U/S 271 (1) ( C ) ARE BEING INITIATED SEPARATELY FOR FURNISHING INACCURATE PART ICULARS OF THE INCOME. 8.2 WHEN THE MATTER WAS BROUGHT UP BEFORE THE LEARN ED CIT(A) IN APPEAL, HE AFTER CONSIDERING THE RIVAL SUBMISSIONS AND THE ORDER OF THE LEARNED AO DELETED THE ADDITION RELYING ON RULE 5(1 ) AND APPENDIX I OF THE INCOME TAX RULES, 1962. HIS FINDINGS IN PARA 5.2 AN D 5.3 OF THE ORDER IS REPRODUCED HEREIN UNDER FOR REFERENCE: 5.2 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. I HAVE ALSO GONE THROUGH THE A. O. AND SUBMISSIONS OF THE APPEL LANT. IT IS SEEN THAT DEPRECIATION ON THE BLOCK OF ASSETS IS TO BE A LLOWED AS PER RULE 5 (1) AND APPENDIX I OF THE I. T. RULES, 1962. DEPREC IATION AT THE RATE OF 80% ON WIND MILL IS PRESCRIBED AS PER SUB CLAUSE VIII(I) TO MAJOR HEAD III OF PART A TO APPENDIX I. SUB CLAUSE VIII O F THIS APPENDIX READS AS UNDER:: VIII RENEWABLE ENERGY DEVICES BEING - A.. B I WIND MILLS AND ANY SPECIALLY DESIGNED DEVICES W HICH RUN ON WIND MILLS. 5.3 UNAMBIGUOUS READING OF THE ABOVE PROVISIONS REV EALS THAT DEPRECIATION IS TO BE ALLOWED ON RENEWABLE ENERGY D EVICES WHICH INCLUDES WIND MILLS. THUS, AS PER PROVISIONS OF I. T. ACT., DEPRECIATION @ 80% IS TO BE ALLOWED ON THE ENTIRE DEVICE WHICH I S CAPABLE OF GENERATING ELECTRICITY USING WIND ENERGY. THIS WAY, ACT DOES 13 ENVISAGE TO DISSECT A DEVICE INTO PARTS AND TO ALLO W DEPRECIATION ON DIFFERENT RATES. SINCE THE CIVIL AND ELECTRIC WORK IS NECESSARY FOR INSTALLATION OF WIND MILL AND FORM PART AND PARCEL OF RENEWABLE ENERGY DEVICE, ACCORDINGLY DEPRECIATION ON WIND MILL HAS T O BE ALLOWED @ 80%. IN VIEW OF THE ABOVE MENTIONED POSITION OF LAW , I AM INCLINED TO AGREE WITH THE SUBMISSIONS OF THE LD. A.R. THE LD. A. R. HAS FURTHER RIGHTLY PLACED ON THE CASES OF ADDL. CIT V/S. MADRA S CEMENT LTD. (MAD.) 110 ITR 281 AND CIT V/S. DELHI AIRPORT SERVI CES P. LTD. (2001) 170 CTR 534 (DEL.). IN VIEW OF THE ABOVE STA TED POSITION OF LAW, DISALLOWANCE OF DEPRECIATION OF RS.11,12,232/- IS NOT TENABLE. ACCORDINGLY, THE A. O. IS DIRECTED TO DELETE THE SA ME. THIS GROUND OF APPEAL IS ALLOWED. 8.3 NOW, THE REVENUE IS IN APPEAL BEFORE US AGAINST THIS ORDER OF THE LEARNED CIT(A). 8.4 THE LEARNED DR RELIED ON THE ORDER OF THE LEARN ED AO AND SUBMITTED THAT THE SAME MAY BE SUSTAINED. ON THE OTHER HAND THE LEARNED AR SUPPORTED THE ORDER OF THE LEARNED CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSION, PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND CONSIDERED THE MATERIALS PR ODUCED BEFORE US ALONG WITH THE PAPER BOOK. AT THE OUTSET, ON THIS I SSUE WE ARE REMINDED OF THE DIRECT DECISION OF THE ITAT, PUNE BENCH IN THE CASE OF POONAWALA FINVEST & AGRO (P) LTD. VS ACIT REPORTED IN 118 TTJ (PUNE) 68 : (2008) 12 DTR 211 WHEREIN IT IS HELD AS UNDER: THE EMPHASIS FOR GRANTING HIGHER RATE OF DEPRECIAT ION AS FAR AS CIVIL CONSTRUCTION WORK IS CONCERNED, THE NECESSARY IS TO EXAMINE THE FUNCTIONAL TEST OF THE SAID STRUCTURE. A CATEGORICA L EVIDENCE HAS TO BE PLACED HAT THE STRUCTURE IS NOT A BUILDING BUT IT I S AN INTEGRAL PART OF THE PLANT AND MACHINERY. SUCH AN EVIDENCE OR FINDIN G IS ABSENT IN THIS APPEAL. NOTHING IS ON RECORD TO ESTABLISH THAT ON THE TOUCHSTONE OF FUNCTIONAL TEST THE CONTROL ROOM OR SITE DEVELOP MENT EXPENDITURE OR EVEN INTERNAL ROADS WERE SO DESIGNED THAT THEY CAN ONLY BE USED FOR POWER GENERATION AS DONE BY THE WIND MILL AND MEANT FOR NO OTHER USE. THERE IS NOTHING ON RECORD, SUCH AS A REPORT F ROM A QUALIFIED 14 PERSON TO ESTABLISH THAT THE SITE CONSTRUCTION OF C ONTROL ROOM, INTERNAL ROAD ETC. WERE DESIGNED IN SUCH A MANNER TO FACILIT ATE THE POWER GENERATION AND DISTRIBUTION OF WINDMILL. NATURALLY A MACHINERY DOES NOT REQUIRE PROTECTION SO INSTALLED IN A BUILDING B UT SUCH A BUILDING CANNOT BE SAID TO BE A PART AND PARCEL OF THE MACHI NERY. RESULTANTLY THE CLAIMS FAIL ON FUNCTIONAL TEST. BUILDING OF CON TROL ROOM, INTERNAL ROADS ETC. BEING CIVIL CONSTRUCTION WORK IN NATURE ARE NOT AT PAR WITH THE WINDMILL AS FAR AS THE PERIOD OF DIMINUTION I S CONCERNED. MOREOVER, SOMETIMES TO PROMOTE A PARTICULAR ACTIVIT Y THE STATUTE PROVIDES CERTAIN INCENTIVES IN THE SHAPE OF HIGHER DEPRECIATION. ONE HAS TO KEEP IN MIND SUCH AN INTENTION OF THE LEGISL ATURE AS WELL. HOWEVER, NO SUCH INTENTION HAS EVEN BEEN EXPRESSED IN THE LEGISLATURE TO PROVIDE HIGHER RATE OF DEPRECIATION IN RESPECT OF STRUCTURE SURROUNDING THE WINDMILL. RATHER THE APPE NDIX AND THE DEPRECIATION SCHEDULE HAS CATEGORICALLY WORDED THAT WINDMILLS AND ANY SPECIALLY DESIGNED DEVICES WHICH RUN ON WIND MI LLS ARE QUALIFIED FOR 100 PER CENT RATE OF DEPRECIATION. SINCE THE CI VIL WORK OF CONTROL ROOM, THE SITE DEVELOPMENT AND THE INTERNAL ROAD DE VELOPMENT ARE NOT SPECIALLY DESIGNED DEVICES HENCE ARE NOT ENTITL ED FOR 100 PER CENT DEPRECIATION. CIT VS. ANAND THEATRES (200) 1 60 CTR (SC) 492 : (2000) 244 ITR 192 (SC) APPLIED ; CIT VS HERDILLA CHEMICALS LTD. (1993) 144 CTR (BOM) 145 : 1995) 216 ITR 742(B OM), CIT VS. KARNATAKA POWER CORPORATION (2000) 162 CTR 249 : (2 001) 247 ITR 268(SC), CIT VS DELHI AIRPORT SERVICE (2001) 170 CT R (DEL) 534 : (2002) 255 ITR 91 (DEL) AND ITO VS SAMINRAN MAJUMDA R (2006) 101 TTJ 501 DISTINGUISHED. (PARAS 12 & 15) AS FAR AS THE QUESTION OF DEPRECIATION IN RESPECT O F TRANSFORMER UPTO DP STRUCTURE IS CONCERNED, THE APPELLANT HAD PAID A SU9M OF RS.7,00,000 FOR THE PURPOSE OF SUPPLYING OF ELECTRI CAL ITEMS LIKE TRANSFORMER UPTO DP STRUCTURE, INTERNAL LINE UPTO M ETERING. THE SAID PAYMENT WAS MADE TO SUPPLIER OF GADGET. THE GADGET IS FOR TRANSMISSION OF ELECTRICAL POWER GENERATED UPTO SUB -STATION OF MSEB AT SITE. THE ELECTRICAL ENERGY SO PRODUCED BY THE W IND MILL IS A WASTE IF IT IS NOT TRANSMITTED TO MSEB SUB-STATION. THE F UNCTION OF SUCH UNIT IS THAT THE ELECTRICITY SO GENERATED IS REQUIRED TO BE TRANSFERRED AND TRANSMITTED TO CABLE LINE UPTO SUB-STATION, WHERE T HE ACTUAL UNITS SO GENERATED ARE STORED AND METERED. SINCE THIS THE FU NCTION OF TRANSFORMER UPTO DP STRUCTURE, HENCE OUGHT TO BE HE LD AS AN INTEGRAL PART OF THE WINDMILL. THE OTHER REASONS SUCH AS THE PERIOD DURING WHICH A MACHINERY GETS DEPRECIATED, DOES ALSO APPLY IN CASE OF THIS 15 MACHINERY. THEREFORE, THE APPELLANT IS CONSEQUENTLY ENTITLED FOR HIGHER RATE OF DEPRECIATION AS PRESCRIBED IN IT RUL ES. CONCLUSION: DEPRECIATION RATE WIND MILLS OR ANY SPECIALLY D ESIGNED DEVICES WHICH RUN ON THE WIND MILLS THERE BEING N OTHING ON RECORD TO ESTABLISH THAT CIVIL WORK OF CONTROL ROOM , SITE DEVELOPMENT AND INTERNAL ROADS ADJUNCT TO A WINDMIL L WERE SPECIALLY DESIGNED SO AS TO FACILITATE POWER GENERA TION IN THE WINDMILL OR DISTRIBUTION THEREOF, SAME ARE NOT ENTI TLED TO 100 PER CENT DEPRECIATION AS APPLICABLE TO WINDMILL CLAIM OF ASSESSEE FAILS ON THE TOUCHSTONE OF FUNCTIONAL TEXT HOWEVE R, AS REGARDS TRANSFORMER UPTO DP STRUCTURE, THE SAME IS GADGET F OR TRANSMISSION OF POWER GENERATED BY WINDMILL UPTO SU B-STATION OF MSEB AT SITE, AND IS INTEGRAL PART OF THE WINDMI LL ELIGIBLE FOR 100 PER CENT DEPRECIATION. 10. IN THE LIGHT OF THE ABOVE REFERRED DECISION OF THE PUNE BENCH OF THE TRIBUNAL, WE REMIT BACK THIS ISSUE TO THE FILE OF L EARNED AO TO PASS APPROPRIATE ORDER AS PER LAW AND MERITS KEEPING IN PARITY WITH THE DECISION OF THE TRIBUNAL. THUS, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 11. IN THE RESULT, THE REVENUES APPEAL FOR THE ASS ESSMENT YEAR 2008-09 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO.167/AHD/2012 (REVENUES APPEAL FOR AY 2009-10) 12. IN THIS APPEAL FOR THE ASSESSMENT YEAR 2009-10, THE REVENUE HAS RAISED 4 GROUNDS WHEREIN GROUNDS NO.3 AND 4 ARE GEN ERAL IN NATURE AND DO NOT SURVIVE FOR ADJUDICATION. THE SURVIVING GROUNDS NO. 1 AND 2 RAISED BY THE REVENUE IN THE PRESENT YEAR UNDER CONSIDERATION ARE EXACTLY SIMILAR AND IDENTICAL EXCEPT THE FIGURES, WITH THE GROUNDS RAIS ED BY THE REVENUE IN THE 16 ASSESSMENT YEAR 2008-09. BOTH THE PARTIES ALSO ACKN OWLEDGED THAT THE FACTS OF THE CASE ARE IDENTICAL IN BOTH THE ASSESSM ENT YEARS AND, THEREFORE, THE ORDER OF THE TRIBUNAL ON THESE ISSUES FOR THE A SSESSMENT YEAR 2008-09 MAY BE FOLLOWED WHILE DECIDING THE APPEAL FOR THE A SSESSMENT YEAR 2009- 10. IN VIEW OF THE SUBMISSIONS OF EITHER PARTY WE H EREIN BELOW PROCEED TO CONSIDER THE GROUNDS RAISED BY THE REVENUE. 13. GROUND NO.1: DELETING DISALLOWANCE OF RS.7,73,000/- U/S 14A OF THE ACT. FOR THIS RELEVANT ASSESSMENT YEAR ALSO WE FIND FRO M THE ANNUAL ACCOUNTS SUBMITTED BY THE ASSESSEE IN PAGE NO.13 OF THE PAPER BOOK THAT ITS SHARE CAPITAL AND RESERVES BEING RS.8,34,52,100 /- AND RS.14,83,03828/- RESPECTIVELY AGGREGATING TO RS.23, 17,55,928/- WHICH FURTHER REDUCED BY DEFAULT TAX LIABILITY OF RS.1,15 ,85,973/- IS SUBSTANTIALLY MORE THAN THE AMOUNT OF INVESTMENT MADE BY THE ASSE SSEE BEING RS.1,57,42,310/- BASED ON WHICH PROVISIONS OF SECTI ON 14A OF THE ACT IS INVOKED BY THE LEARNED AO. FOLLOWING THE DECISION R ENDERED BY US FOR THE EARLIER YEAR IN THE ASSESSEES OWN CASE ON THE IDEN TICAL FACTS CITED SUPRA, WE HEREBY DELETE THE ADDITION MADE BY THE LEARNED A O AND THE ADDITION SUSTAINED BY THE LEARNED CIT(A) INVOKING SECTION 14 A OF THE ACT. ACCORDINGLY, THIS GROUND RAISED BY THE REVENUE IS D ISMISSED. 14. GROUND NO.2: DELETING DISALLOWANCE OF ASSESSEES CLAIM OF DEPRECIATION @80% ON THE CIVIL WORK, ELECTRIC INSTA LLATION AND OTHER DEVELOPMENT EXPENSES PERTAINING TO INSTALLATION OF WINDMILLS. 15. THIS IDENTICAL GROUND IN THE EARLIER YEAR IS RE MITTED BACK TO THE FILE OF THE LEARNED AO BY US HEREINABOVE WITH DIRECTION TO PASS APPROPRIATE ORDER ON MERITS AND LAW FOLLOWING THE ORDER OF ITAT PUNE BENCH CITED SUPRA. ACCORDINGLY, THE ORDER PASSED IN THE EARLIER YEAR B Y US HEREINABOVE IS SUSTAINED FOR THIS RELEVANT ASSESSMENT YEAR ALSO. 17 16. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. C. O. NO.91 AND 92/AHD/2012 (ASSESSEES CO FOR AY 2008-09 AND 2009-10) 17. GROUNDS NO.2 AND 3 RAISED BY THE ASSESSEE IN C. O. NO.91/AHD/2012, FOR THE ASSESSMENT YEAR 2008-9 ARE NOT PRESSED AND THE SAME ARE DISMISSED AS NOT PRESSED. GROUNDS NO.1, 4 AND 5 RAISED BY THE ASSESSEE IN C.O. NO.91/AHD.2012 FOR THE ASSESSMENT YEAR 20008-09 ARE IDENTICAL AND SIMILAR TO THE GROUNDS NO.1, 2 AND 3 RAISED IN C.O. NO.92/AHD/2012 FOR THE ASSESSMENT YEAR 2009-10. THE SAME ARE REPRODUCED HEREIN UNDER FOR REFERENCE: (I) LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN CO NFIRMING DISALLOWANCE ON PRESUMPTIVE BASIS U/S 14A OF EXPENS ES INCURRED ON SHARES, INVESTMENT IN BONDS/INVESTMENT IN IMMOVABLE PROPERTIES. (II) LEVY OF INTEREST U/S 234B AND 234C OF THE ACT UNJUSTIFIED. (III) LEVY OF PENALTY U/S 271 (1) (C) OF THE ACT IS UNJUSTIFIED. 18. SINCE THE ISSUE WITH RESPECT TO ADDITION MADE B Y INVOKING SECTION 14A OF THE ACT IS DELETED BY US FOR BOTH THE ASSESS MENT YEARS IN THE REVENUES APPEALS CITED SUPRA, THIS GROUND RAISED BY THE ASSESSEE IN THE CROSS OBJECTIONS FOR BOTH THE ASSESSMENT CONSEQUENT LY STANDS ALLOWED. THE ISSUE OF IMPOSITION OF INTEREST U/S 234B AND 23 4C OF THE ACT IS CONSEQUENTIAL IN NATURE AND DISMISSED AS SUCH FOR B OTH THE ASSESSMENT YEARS WHILE AS THE ISSUE RELATING TO LEVY OF PENAL TY U/S 271 (1) (C) OF THE ACT IS PREMATURE AND THEREFORE, DISMISSED FOR BOTH THE ASSESSMENT YEARS. 18 19. IN THE RESULT THE BOTH THE CROSS OBJECTIONS FIL ED BY THE ASSESSEE ARE PARTLY ALLOWED. 20. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11-01-2013 SD/- SD/- (D. K. TYAGI) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANTA LAKSHMIKANTA LAKSHMIKANTA LAKSHMIKANTA DEKA/ DEKA/ DEKA/ DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASSTT. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 26-12-12/09-01-13 DIRECT ON COMPUTER 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 01-01-13 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DISPATCH OF THE ORDER: