DCIT, Jaipur V. GANGAUR EXPORTS (P)LTD., Jaipur

ITA 201/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5155 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 27-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJINDER SINGH
• Assessee Lawyers: SANJEEV KUMAR MATHUR CA DHK
• Keywords: Depreciation

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF;D LN L; DS LE{K BEFORE:SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, J M VK;DJ VIHY LA-@ ITA NO. 201/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 THE DCIT CIRCLE- 6 JAIPUR CUKE VS. M/S. GANGAUR EXPORTS (P) LTD. ANOKHI HAVELI, DADU COLONY JAGATPURA, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAACG 8877 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY: SHRI RAJINDER SINGH, ADDL. CIT -DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SANJEEV KUMAR MATHUR, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14/07/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 14 /07/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST T HE ORDER OF THE LD. CIT(A)-2, JAIPUR DATED 11-12-2014 FOR THE ASSESSME NT YEAR 2008-09 WHEREIN THE REVENUE RAISED FOLLOWING GROUND:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETIN G THE ADDITION OF RS. 69,09,486/- MADE BY THE AO ON ACCOU NT OF DISALLOWANCE OF DEPRECIATION CLAIMED @ 80% IGNORING THE FACT THAT CIVIL STRUCTURES AND INTERNAL/ EXTERNAL P OWER LINES DO NOT CONSTITUTE THE PLANTS. ITA NO. 201/JP/2015 THE DCIT, CIRCLE- 6, JAIPUR VS. M/S. GANGAUR EXPOR TS (P) LTD. JAIPUR . 2 2.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITTED THAT SUCH ISSUE HAS ALREADY BEEN DECIDED BY THE COO RDINATE BENCH IN ASSESSEE'S OWN CASE FOR THE 2011-12. 2.2 THE LD. DR RELIED ON THE ORDER OF THE AO. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT SIMILAR ISSUE IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2011-12 IN ITA NO. 1001/JP/ 2015 HAS BEEN DECIDED BY THE COORDINATE BENCH VIDE ITS ORDER DATE D 17-06-2016 IN FAVOUR OF THE ASSESSEE BY FOLLOWING OBSERVATIONS. 4.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT (A) HAS DECIDED T HIS ISSUE IN PARA 3.4.1 TO 3.4.6 OF HER ORDER BY OBSERVING AS UNDER : - 3.4.1. I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSMENT ORDER AND THE WRITTEN SUBMISSIONS OF THE APPELLANT. THE FACTS OF THIS ISSUE ARE SIMILAR TO THE FACTS IN THE PRECEDIN G YEAR (ASSESSMENT YEAR 2010-11). IN ASSESSMENT YEAR 2020- 11, THE CIT (A)-II, JAIPUR (APPEAL NO. 02/13-14) HAS ALSO D ECIDED THE MATTER BY HOLDING AS UNDER :- THE ISSUE IN QUESTION IS WHETHER THE FOUNDATION, P LINTH STRUCTURE, CRANE PLATFORM, CONTROL ROOM FOR WINDMIL L CAN BE CONSIDERED AS BUILDING OR IS AN INTEGRAL PART OF WINDMILL. SO ALSO, WHETHER ELECTRICAL ITEMS AND INT ERNAL / EXTERNAL LINES FALL UNDER THE HEAD PLANT AND MACHIN ERY DISTINCT FROM A WINDMILL. I HAVE PERUSED THE CASE L AWS CITED BY THE APPELLANT AND THE ASSESSING OFFICER. T HE CASE LAWS WHICH DIRECTLY DEAL WITH THE ISSUE AT HAND ARE : 1. DCIT VS. AMINITY DEVELOPERS AND BUILDERS ITA NO. 1505/PN/2008-09 A.Y. 2008-09 (ITAT-PUNE). ITA NO. 201/JP/2015 THE DCIT, CIRCLE- 6, JAIPUR VS. M/S. GANGAUR EXPOR TS (P) LTD. JAIPUR . 3 2. POONAWALA FINVEST & AGRO (P) LTD. VS. ACIT ITA NO . 188 OF 2006 DATED 26.06.2008 (ITAT-PUNE) 3. CIT-III, AHEMDABAD VS. PARRY ENGINEERING AND ELECTRONICS P VT. LTD. TAX APPEAL NO. 604 OF 2012 DATED 29.01.2013 (HIGH COURT, GUJARAT). 3.4.2. IT HAS BEEN HELD IN THE CASE OF POONAWALA FINVEST (SUPRA)- THE EMPHASIS FOR GRANTING HIGHER RATE OF DEPRECIATION AS FAR AS CIVIL CONSTRUCTION WORK IS CONCERNED, THE NECESSITY WAS TO EXAMINE THE FUNCTIONAL TEST OF THE SAID STRUCTURE. A CATEGORICAL EVIDENCE HAS TO BE PLACED THAT THE STRUCTURE IS NOT A BUILDING BUT IT IS AN INTEGRAL PART OF PLANT AND MACHINERY AS FAR AS THE QUESTION OF DEPRECIATION IN RESPECT OF TRANSFORMER UP TO DP STRUCTURE WAS CONCERNED, THE APPELLANT HAS PAID CERTAIN AMOUNT FOR THE PURPOSE OF SUPPLYING OF ELECTRICAL ITEMS LIKE TRANSFORMER UP TO DP STRUCTURE, INTERNAL LINE UP TO METERING. THIS GADGET WAS FOR TRANSMISSION OF ELECTRICAL POWER GENERATED UP TO SUB-STATION OF MSEB AT SITE. THE ELECTRICAL ENERGY SO PRODUCED BY THE WINDMILL WAS A WASTE IF IT WAS NOT TRANSMITTED TO MSEB SUB-STATIONS. THE FUNCTION OF SUCH UNIT WAS THAT THE ELECTRICITY SO GENERATED WAS REQUIRED TO BE TRANSFERRED AND TRANSMITTED TO CABLE LINE UP TO SUB-STATION, WHERE THE ACTUAL UNITS SO GENERATED WERE STORED AND METERED. SINCE THIS WAS THE FUNCTION OF TRANSFORMER UP TO DP STRUCTURE, HENCE IT OUGHT TO BE HELD AS AN INTEGRAL PART OF THE WINDMILL. 3.4.3. IN THE CASE OF AMINITY BUILDERS AND DEVELOPERS (SUPRA) IT HAS BEEN HELD THAT THERE SHOULD NOT BE QUARREL THAT CIVIL WORK IS INVOLVED IN THE ERECTION OF THE FOUNDATION, BUT EVERY CIVIL WORK CANNOT BE TREATED AS CIVIL WORK AS REQUIRED FOR BRINGING CONSTRUCTION. IN OUR OPINION, COST ON ITA NO. 201/JP/2015 THE DCIT, CIRCLE- 6, JAIPUR VS. M/S. GANGAUR EXPOR TS (P) LTD. JAIPUR . 4 THE FOUNDATION OF THE WIND MILL IS ELIGIBLE FOR THE DEPRECIATION AT THE RATE 80% OR THE RATE WHICH IS APPLICABLE TO THE WIND MILL AS IT IS INTEGRAL PART OF COST OF WIND MILL ERECTION. 3.4.4. IT HAS BEEN HELD IN THE CASE OF PARRY ENGINEERING & ELECTRONICS LTD. (SUPRA) THAT WINDMILL WOULD REQUIRE A SCIENTIFICALLY DESIGNED MACHINERY IN ORDER TO HARNESS THE WIND ENERGY TO THE MAXIMUM POTENTIAL. SUCH DEVICE HAS TO BE FITTED AND MOUNTED ON A CIVIL CONSTRUCTION, EQUIPPED WITH ELECTRIC FITTINGS IN ORDER TO TRANSMIT THE ELECTRICITY SO GENERATED. SUCH CIVIL STRUCTURE AND ELECTRIC FITTINGS, THEREFORE, IT CAN BE WELL IMAGINED, WOULD BE HIGHLY SPECIALIZED. THUS, SUCH CIVIL CONSTRUCTION AND ELECTRIC FITTING WOULD HAVE NO USE OTHER THAN FOR THE PURPOSE OF FUNCTIONING OF THE WINDMILL. ON THE OTHER HAND, IT CAN BE EASILY IMAGINED THAT WINDMILL CANNOT FUNCTION WITHOUT APPROPRIATE INSTALLATION AND ELECTRIFICATION. IN OTHER WORDS, THE INSTALLATION OF WINDMILL AND THE CIVIL STRUCTURE AND THE ELECTRIC FITTINGS ARE SO CLOSELY INTERCONNECTED AND LINKED AS TO FORM THE COMMON PLANT. AS ALREADY NOTED, THE LEGISLATURE HAS PROVIDED FOR HIGHER RATE OF DEPRECIATION OF 80 PER CENT ON RENEWABLE ENERGY DEVISES INCLUDING WINDMILL AND ANY SPECIALLY DESIGNED DEVISE, WHICH RUNS ON WINDMILL. THE CIVIL STRUCTURE AND THE ELECTRIC FITTING, EQUIPMENTS ARE PART AND PARCEL OF THE WINDMILL AND CANNOT BE SEPARATED FROM THE SAME. THE ASSESSEE CLAIM OF HIGHER DEPRECIATION ON SUCH INVESTMENT WAS, THEREFORE, RIGHTLY ALLOWED. 3.4.5. IN VIEW OF THE ABOVE JUDGMENTS, IT IS HELD THAT FOUNDATION, ELECTRICAL ITEMS INTERNAL / EXTERNAL LINES ARE AN INTEGRAL PART OF THE WINDMILL AND ARE SO CLOSELY INTERCONNECTED AND LINKED WITH THE WINDMILL SO AS TO FORM A COMMON PLANT AS WINDMILL. THEREFORE, DEPRECIATION OF THE ABOVE ITA NO. 201/JP/2015 THE DCIT, CIRCLE- 6, JAIPUR VS. M/S. GANGAUR EXPOR TS (P) LTD. JAIPUR . 5 ITEMS HAS TO BE ALLOWED AT THE SAME RATE AS WINDMILL. 3.4.6. IN RESPECT TO THE CIVIL WORK FOR THE CONTROL ROOM ETC. IT HAS BEEN HELD IN THE CASE OF POONAWALA FINVEST (SUPRA) IN THE INSTANT APPEAL NOTHING WAS ON RECORD TO ESTABLISH THAT ON THE TOUCHSTONE OF FUNCTIONAL TEST THE CONTROL ROOM OR SITE DEVELOPMENT EXPENDITURE OR EVEN INTERNAL ROADS, WERE SO DESIGNED THAT THEY COULD ONLY BE USED FOR POWER GENERATION AS DONE BY THE WINDMILL AND MEANT FOR NO OTHER USE. THERE WAS NOTHING ON RECORD, SUCH AS A REPORT FROM A QUALIFIED PERSON TO ESTABLISH THAT THE SITE CONSTRUCTION OF CONTROL ROOM, INTERNAL ROAD, ETC, WAS DESIGNED IN SUCH A MANNER TO FACILITATE THE POWER GENERATION AND DISTRIBUTION OF WINDMILL. IN THIS CASE ALSO, THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THAT THE CIVIL WORK FOR THE CONTROL ROOM, PLINTH PLATFORM OR THE CRANE PLATFORM IS AN INTEGRAL PART OF THE PLANT AND MACHINERY OF WINDMILL. THE CIVIL WORK FOR THE CONTROL ROOM IS A MERE STRUCTURE TO HOUSE THE EQUIPMENT OF THE CONTROL ROOM SINCE THE CIVIL WORK OF THE CONTROL ROOM HAS NOT BEEN SPECIALLY DESIGNED FOR A WINDMILL. THEREFORE, DEPRECIATION ON THE CIVIL WORK FOR THE CONTROL ROOM, PLINTH PLATFORM AND CRANE PLATFORM, SHALL BE ALLOWABLE AT THE RATE APPLICABLE TO A BUILDING. FOLLOWING THE ABOVE JUDGMENT OF MY PREDECESSOR CIT (A)-II, IN THE ASSESSEES OWN CASE FOR THE ASSESSME NT YEAR 2010-11. THE DEPRECIATION ON FOUNDATION, ELECT RICAL ITEMS, INTERNAL / EXTERNAL LINES ARE AN INTEGRAL PA RT OF THE WINDMILL AND DEPRECIATION IS ALLOWED AT THE SAME RA TE AS WINDMILL, AND DEPRECIATION ON THE CIVIL WORK FOR TH E CONTROL ROOM, PLINTH PLATFORM AND CRANE PLATFORM, SHALL BE ALLOWABLE AT THE RATE APPLICABLE TO A BUILDING . THE GROUND OF APPEAL IS PARTLY ALLOWED. ITA NO. 201/JP/2015 THE DCIT, CIRCLE- 6, JAIPUR VS. M/S. GANGAUR EXPOR TS (P) LTD. JAIPUR . 6 THE LD. CIT (A) HAS GIVEN A DETAILED FINDING OF FAC T. THE REVENUE HAS NOT CONTROVERTED THESE FINDINGS. WE, THEREFORE, FIN D NO INFIRMITY IN THE ORDER OF LD. CIT (A), WHICH IS HEREBY UPHELD. THE G ROUND OF THE REVENUE IS REJECTED. RESPECTFULLY FOLLOWING THE DECISION OF ITAT COORDIN ATE BENCH IN ASSESSEE'S OWN CASE (SUPRA), THE ORDER OF THE LD. C IT(A) IS SUSTAINED ON THIS ISSUE. HENCE, THE APPEAL OF THE REVENUE IS DIS MISSED. 3.0 IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/07/201 6. SD/- SD/- YFYR DQEKJ HKKXPUN (LALIET KUMAR) (BHAGCHAND ) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14/07/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CIRCLE- 6, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. GANGAUR EXPORTS (P) LTD. JAIP UR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 201/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR