M/s. Chettinad Cement corporation Ltd., CHENNAI V. JCIT, CHENNAI

ITA 2036/CHNY/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7817 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 05-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-11-2012
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset; Depreciation; Additional depreciation; Cost of acquisition; Revised return; Revenue expenditure; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.2036/MDS/2012 / ASSESSMENT YEAR : 2009-10 M/S CHETTINAD CEMENT CORPORATION LTD 4 TH FLOOR, RANI SEETHAI BUILDING 603, ANNA SALAI CHENNAI 600 006 VS. T HE JT. COMMISSIONER OF INCOME-TAX LARGE TAXPAYER UNIT CHENNAI [PAN AAACC 3130A ] ( %& / APPELLANT) ( '(%& /RESPONDENT) ./ I.T.A.NO.2107/MDS/2012 / ASSESSMENT YEAR : 2009-10 THE D Y . COMM ISSIONER OF INCOME-TAX LARGE TAXPAYER UNIT CHENNAI VS. M/S CHETTINAD CEMENT CORPORATION LTD 4 TH FLOOR, RANI SEETHAI BUILDING 603, ANNA SALAI CHENNAI 600 006 ( %& / APPELLANT) ( '(%& /RESPONDENT) ASSESSEE BY : SHRI S. SRIDHAR, ADVOC ATE DEPARTMENT BY : SHRI PATHLAVATH PEERYA, CIT / DATE OF HEARING : 05 - 01 - 2016 / DATE OF PRONOUNCEMENT : 04 - 0 3 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER BOTH THE APPEAL OF THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE SAME ORDER OF THE COMMISSIONER OF INCOME- ITA NO. 2036 & 2107/12 :- 2 -: TAX(APPEALS), LARGE TAXPAYER UNIT, CHENNAI, DATED 1 6.8.2012 FOR ASSESSMENT YEAR 2009-10. THEREFORE, WE HEARD THE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. LET US FIRST TAKE UP THE ASSESSEES APPEAL I.T.A.NO . 2036/MDS/2012. 3. THE FIRST ISSUE ARISES FOR CONSIDERATION IS ENHANCE D DEDUCTION U/S 80IA OF THE ACT RELATING TO THE CAPTIVE POWER P LANT BASED ON THE MARKET RATE OF THE ELECTRICITY IN THE COMPUTATION O F TAXABLE TOTAL INCOME. 4. SHRI S.SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT INITIALLY, THE ASSESSEE CLAIMED DEDUCTION U/S 80I A AT ` 7,51,10,949/- IN THE ORIGINAL RETURN. HOWEVER, BY WAY OF REVISED RETURN, THE DEDUCTION WAS ENHANCED TO ` 60,86,19,121/-. ACCORDING TO THE LD. COUNSEL, THE ENHANCEMENT OF DEDUCTION WAS DUE TO RE VISION OF RATE OF THE ELECTRICITY GENERATED BY THE ASSESSEE FOR CAPT IVE CONSUMPTION. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE CLAIMED ` 7/- PER UNIT IN THE REVISED RETURN. PLACING RELIANCE ON THE BILL P AID TO THE ELECTRICITY BOARD OF THE STATE GOVERNMENT, THE LD. COUNSEL SUBM ITTED THAT THE ELECTRICITY BOARD WAS CHARGING ELECTRICITY AT ` 7/- PER UNIT. THE ASSESSEE HAS ALSO FILED A COPY OF THE OFFER LETTER FROM M/S AMMAN-TRY STEELS PVT. LTD FOR PURCHASE OF ELECTRICITY AT ` 7/- PER UNIT. HOWEVER, THIS CLAIM OF THE ASSESSEE AT THE MARKET RATE OF E LECTRICITY FOR CLAIMING ITA NO. 2036 & 2107/12 :- 3 -: DEDUCTION UN 80IA WAS REJECTED AND THE ASSESSING OF FICER RESTRICTED THE CLAIM AT ` 3.50 PER UNIT. ACCORDING TO THE LD. COUNSEL, FOR DETERMINING THE COST OF ELECTRICITY GENERATED FOR C APTIVE CONSUMPTION, THE MARKET RATE HAS TO BE TAKEN INTO CONSIDERATION. THE MARKET RATE MEANS, THE ELECTRICITY WHICH IS AVAILABLE IN THE OP EN MARKET FOR PURCHASE. THE ELECTRICITY PRODUCED BY M/S AMMAN- TRY STEELS PVT. LTD IS AVAILABLE FOR PURCHASE @ ` 7/- PER UNIT. HAD THE ASSESSEE PURCHASED ELECTRICITY FROM M/S AMMAN- TRY STEELS PVT. LTD INSTEAD OF GENERATING ITS OWN ELECTRICITY THROUGH W INDMILL, THEN THE ASSESSEE HAS TO PAY ` 7/- PER UNIT. IN FACT, THE ASSESSEE IS ALSO PAYING ` 7/- PER UNIT TO THE TAMIL NADU ELECTRICITY BOARD(T NEB). THEREFORE, THE COST OF ELECTRICITY SHALL BE TAKEN A T ` 7/- PER UNIT. REFERRING TO THE ORDER OF THE CIT(A), THE LD. COUNS EL SUBMITTED THAT IN FACT, THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE U/S 80IA. WHAT WAS REJECTED BY THE CIT(A) IS IN RESPECT OF ENHANCE D CLAIM OF ELECTRICITY AT ` 7/- PER UNIT. THEREFORE, ACCORDING TO THE LD. COU NSEL, THE CIT(A) IS NOT JUSTIFIED IN RESTRICTING THE COST OF ELECTRICITY AT ` 3.50 PER UNIT. 5. ON THE CONTRARY, SHRI PATHLAVATH PEERYA, LD. DR SUB MITTED THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80IA OF THE ACT TO THE EXTENT OF ` 7.51 CRORES. THE DEDUCTION ON ACCOUNT OF PROFIT O N WINDMILL WAS CLAIMED AT ` 2,21,91,464/-. THE DEDUCTION ON ACCOUNT OF ITA NO. 2036 & 2107/12 :- 4 -: PROFIT ON CAPTIVE POWER PLANT UNIT WAS CLAIMED TO T HE EXTENT OF ` 5,29,19,443/-. THE ASSESSEE ENHANCED THE CLAIM AT THE MARKET RATE TO THE EXTENT OF ` 5,33,58,176/- BY WAY OF FILING A REVISED RETURN. IN THE ORIGINAL RETURN THE ASSESSEE CLAIMED THE COST OF ELECTRICITY PRODUCED THROUGH WINDMILL FOR CAPTIVE CONSUMPTION A T ` 3/- PER UNIT. HOWEVER, IN THE REVISED RETURN THE ASSESSEE REVISE D THE COST OF ELECTRICITY PRODUCED AT ` 7/- PER UNIT BY CONSIDERING THE MARKET RATE. ACCORDING TO THE LD. DR, THE CIT(A), IN FACT ALLOWE D THE CLAIM OF THE ASSESSEE U/S 80IA TO THE EXTENT F ` 2,21,91,464/-. THIS CLAIM WAS WITH REGARD TO THE ELECTRICITY PRODUCED THROUGH WIN DMILL. IN RESPECT OF THE CAPTIVE POWER PLANT, THE ASSESSEE ENHANCED THE CLAIM BY TAKING THE COST OF ELECTRICITY AT ` 7/- PER UNIT. THE CIT(A) REJECTED THE SAME. ACCORDING TO THE LD. DR, SINCE THE ASSESSEE CLAIME D THE COST OF ELECTRICITY AT ` 3/- PER UNIT, THE SAME CANNOT BE REVISED IN THE RE VISED RETURN. ACCORDING TO THE LD. DR, THERE WAS NO SUP PLY OF POWER BY THE ASSESSEE TO M/S AMMAN-TRY STEELS PVT. LTD AT ` 7/- PER UNIT. OFFER MADE BY A THIRD PARTY FOR DISTRESS SALES FOR A LIMI TED QUANTITY CANNOT BE ORDINARILY TAKEN AS A MARKET VALUE. REFERRING TO T HE ORDER OF THE CIT(A), THE LD. DR POINTED OUT THAT THE TNEB PURCHA SES ELECTRICITY PRODUCED BY THE PRIVATE COMPANIES. THE RATE OF ELE CTRICITY PURCHASED BY THE TNEB IS DIFFERENT DEPENDING UPON THE RAW MAT ERIALS USED FOR GENERATION OF ELECTRICITY. IN FACT, THE RATE WOULD BE HIGHER IF THE ITA NO. 2036 & 2107/12 :- 5 -: ELECTRICITY WAS GENERATED BY USING DIESEL, NAPTHA, FURNACE OIL AS RAW MATERIAL. IF THE NATURAL GAS IS USED THE RATE OF E LECTRICITY WILL BE LOWER. IN CASE LIGNITE OR COAL IS USED, THE RATE OF ELECTR ICITY WOULD BE LITTLE HIGHER THAN THE NATURAL GAS. TNEB PURCHASES ELECTR ICITY FROM STCMS WHICH USES COAL AS RAW MATERIAL, AT ` 3.38 PER UNIT. IN THOSE CIRCUMSTANCES, COMPUTING THE MARKET RATE OF ELECTRI CITY AT ` 7/- PER UNIT FOR CAPTIVE CONSUMPTION IS ON THE HIGHER SIDE. THEREFORE, THE CIT(A) HAS RIGHTLY RESTRICTED THE CLAIM TO ` 2,21,91,464/-. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. TH E ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IA IN RESPECT OF THE ELECTRICITY PRODUCED FOR CAPTIVE CONSUMPTION. THE ELECTRICITY IS BEING PRO DUCED BY THE ASSESSEE THROUGH WINDMILL AND CAPTIVE POWER PLANT. THE ASS ESSEE IS CLAIMING DEDUCTION U/S 80IA. N O DOUBT, IN THE ORIGINAL RETURN, THE ASSESSEE CLAI MED DEDUCTION AT ` 7,51,10,949/-. HOWEVER, THE SAME WAS ENHANCED BY WAY OF FILING REVISED RETURN. IN THE REVISED RETUR N, THE ASSESSEE HAS TAKEN THE COST OF ELECTRICITY AT ` 7/- PER UNIT. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WHAT WOULD BE THE MARKET RATE OF E LECTRICITY GENERATED BY THE ASSESSEE WHICH WAS USED FOR CAPTIVE CONSUMP TION. THE ASSESSEE IN THE ORIGINAL RETURN CLAIMED THE ELECTRI CITY AT ` 3.50 PER UNIT. HOWEVER, IN THE REVISED RETURN, THE ASSESSEE CLAIM S THE RATE OF ` 7/- PER UNIT. IT IS NOT IN DISPUTE THAT THE TNEB SUPPL IES ELECTRICITY TO THE ITA NO. 2036 & 2107/12 :- 6 -: ASSESSEE AT ` 7/- PER UNIT. THE ASSESSEE HAS ALSO FILED COPY O F AN OFFER LETTER FROM M/S AMMAN-TRY STEELS PVT. LTD FOR PURCHASE OF ELECTRICITY FROM THE ASSESSEE AT ` 7/- PER UNIT. THE CONTENTION OF THE LD. DR IS THAT THERE WAS NO SUPPLY OF ELECTRICITY B Y THE ASSESSEE TO M/S AMMAN-TRY STEELS PVT. LTD. THEREFORE, THE OFFER OF M/S AMMAN-TRY STEELS PVT. LTD. CANNOT BE TAKEN AS A BASIS FOR COM PUTING THE COST OF ELECTRICITY. HAD THE ASSESSEE SOLD ELECTRICITY TO M/S AMMAN-TRY STEELS PVT. LTD. THEN THE ASSESSEE WOULD HAVE SOLD THE SA ME AT ` 7/- PER UNIT. THE MARKET RATE OF ELECTRICITY, AS RIGHTLY S UBMITTED BY THE LD. DR, WOULD DEPEND UPON VARIOUS FACTORS INCLUDING THE RAW MATERIAL USED FOR PRODUCTION. HOWEVER, WHAT IS REQUIRED TO BE DETERM INED IS MARKET RATE. THE ASSESSEE, IN FACT, PURCHASES ELECTRICIT Y FROM TNEB AT ` 7/-. THEREFORE, WE HAVE TO SEE THE COST OF ELECTRICITY TO THE ASSESSEE IF THE SAME WAS PURCHASED BY THE ASSESSEE FROM OUTSIDE MA RKET. THE PURCHASE RATE OF ELECTRICITY BY TNEB FROM STCMS CAN NOT BE A FACTOR FOR DETERMINING THE MARKET RATE OF ELECTRICITY GENE RATED BY THE ASSESSEE FOR CAPTIVE CONSUMPTION. AS RIGHTLY CLAR IFIED BY THE LD. DR, THE TNEB IS PURCHASING ELECTRICITY FROM VARIOUS COM PANIES AT DIFFERENT RATES. THEREFORE, THE MARKET RATE HAS TO BE DETERM INED ON THE BASIS OF THE MATERIAL ON RECORD AND THE COST THAT WOULD HAVE BEEN INCURRED BY THE ASSESSEE IN CASE THE ELECTRICITY WAS NOT GENER ATED BY ITSELF. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IF THE ASSESSEE HAD NOT ITA NO. 2036 & 2107/12 :- 7 -: GENERATED ELECTRICITY BY ITSELF FOR CAPTIVE CONSUMP TION, IT HAS TO PURCHASE ELECTRICITY AT ` 7/- PER UNIT. OTHERWISE, THE MANUFACTURING ACTIVITY CANNOT BE CARRIED OUT BY THE ASSESSEE. I N THIS FACTUAL SITUATION, IT WOULD BE APPROPRIATE TO TAKE THE MARK ET COST OF THE ELECTRICITY AT ` 7/- PER UNIT FOR THE PURPOSE OF DEDUCTION U/S 80I A. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THE CIT(A) IS NOT JUSTIFIED IN RESTRICTING THE CLAIM TO ` 2,21,91,468/-. SINCE THE MARKET RATE OF ELECTRICITY IS AT ` 7/- PER UNIT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEES CLAIM IN TH E REVISED RETURN AT ` 60,86,19,121/- IS JUSTIFIED. 7. IN VIEW OF THE ABOVE DISCUSSION, THIS TRIBUNAL IS U NABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORD INGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSI NG OFFICER IS DIRECTED TO ALLOW DEDUCTION U/S 80IA OF THE ACT AT ` 60,86,19,121/- BY TAKING THE MARKET RATE OF ELECTRICITY AT ` 7/- PER UNIT. 8. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLO WANCE OF FOREIGN EXCHANGE FLUCTUATION LOSS WHILE COMPUTING T HE TAXABLE INCOME. 9. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSEE CLAIMED A SUM OF ` 22,37,77,690/- AS REVENUE EXPENDITURE. THIS AMOUNT COMPRISED OF ` 14,11,66,428/- BEING PREOPERATIVE EXPENSES AND ` 8,26,11,262/- BEING FOREIGN EXCHANGE ITA NO. 2036 & 2107/12 :- 8 -: LOSS ON UN-COMMISSIONED PLANT AT ARIYALUR. ACCORDI NG TO THE LD. COUNSEL, THE PLANT WAS ACTUALLY COMMISSIONED DURING THE YEAR UNDER CONSIDERATION. REFERRING TO THE JUDGMENT OF THE M ADRAS HIGH COURT IN RANE (MADRAS) LTD, 293 ITR 459, THE LD. COUNSEL SUB MITTED THAT THE EXPENDITURE INCURRED IN SETTING UP OF NEW FACTORY S HOULD BE CONSIDERED ON REVENUE ACCOUNT. THEREFORE, THE LOSS RELATABLE TO FOREIGN EXCHANGE FLUCTUATION FOR SETTING UP OF A PLANT AT ARIYALUR H AS TO BE ALLOWED AS REVENUE LOSS. SINCE THE EXPENDITURE WAS RELATING T O EXPANSION OF THE EXISTING BUSINESS, ACCORDING TO THE LD. COUNSEL, TH E EXPENDITURE HAS TO BE ALLOWED. 10. ON THE CONTRARY, SHRI PATHLAVATH PEERYA, LD. DR SUB MITTED THAT ADMITTEDLY, THE LOSS WAS INCURRED BY THE ASSE SSEE DUE TO FOREIGN EXCHANGE FLUCTUATION IN RESPECT OF THE MACHINERY PU RCHASED BY THE ASSESSEE. THEREFORE, THE EXPENDITURE WAS ON THE CA PITAL FIELD. THE ADDITIONAL PAYMENT OF PURCHASE COST DUE TO FOREIGN EXCHANGE FLUCTUATION WAS FOR PURCHASING OF A CAPITAL ASSET, THEREFORE, IT IS A CAPITAL EXPENDITURE INCURRED BY THE ASSESSEE. THE REFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OF FICER. IN FACT, THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATION. THEREFORE, THE ASSESSEE CANNOT HAVE ANY GRIEVANCE. ITA NO. 2036 & 2107/12 :- 9 -: 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. TH E ASSESSEE CLAIMS THAT THE EXPENDITURE WAS INCURRED FOR SETTING UP OF A PLANT AT ARIYALUR. SINCE THE EXPENDITURE WAS INCURRED FOR EXPANSION OF THE EXISTING BUSINESS OF PRODUCTION OF CEMENT, THE ASSESSEE CLA IMS THAT THE EXPENDITURE OR LOSS IS ON THE REVENUE FIELD. HOWEV ER, THE REVENUE CONTENDS THAT THE ASSESSEE PURCHASED THE MACHINERY FOR SETTING UP OF A PLANT AT ARIYALUR. THE MACHINERY PURCHASED IS CA PITAL ASSET. THE ASSESSEE WAS REQUIRED TO PAY ADDITIONAL AMOUNT DUE TO EXCHANGE RATE FLUCTUATION, THEREFORE, THE LOSS INCURRED DUE TO EX CHANGE RATE FLUCTUATION, IS FOR PURCHASING OF A CAPITAL ASSET HENCE, IT IS ON THE CAPITAL FIELD. BEFORE DECIDING THIS ISSUE, WE HAVE TO SEE WHETHER THE EXPENDITURE WAS INCURRED FOR THE PURPOSE OF EXPANSI ON OF THE EXISTING UNIT OR THE EXPENDITURE WAS EXCLUSIVELY FOR PURCHAS ING OF A CAPITAL ASSET. IF THE EXPENDITURE WAS EXCLUSIVELY FOR PURC HASING OF A CAPITAL ASSET, THEN THE CORRESPONDING LOSS OR PROFIT MAY BE IN THE CAPITAL FIELD. IT IS NOT KNOWN WHETHER THE EXCHANGE LOSS IS DUE TO REPAYMENT OF LOAN OR NOT? IF THE ASSESSEE INCURRED THE EXPENDITURE F OR EXTENDING THE EXISTING BUSINESS THEN THE EXPENDITURE HAS TO BE AL LOWED IN THE LIGHT OF THE JUDGMENT OF THE MADRAS HIGH COURT IN RANE(MADRA S) LTD (SUPRA). IT HAS TO BE VERIFIED WHETHER THE EXCHANGE RATE FLU CTUATION IS DUE TO REPAYMENT OF LOAN OR NOT? SINCE THERE IS A DISPUT E WITH REGARD TO THE ITA NO. 2036 & 2107/12 :- 10 -: FACTUAL ASPECT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OF FICER AND FIND OUT WHAT IS THE ACTUAL NATURE OF THE EXPENDITURE INCURR ED BY THE ASSESSEE. IN THE ABSENCE OF ANY MATERIAL BEFORE THIS TRIBUNAL , THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE OF FO REIGN EXCHANGE FLUCTUATION LOSS IS REMITTED BACK TO THE FILE OF TH E ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AF RESH IN THE LIGHT OF THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW IN THE LIGHT OF THE JUDGMENT OF THE MADRAS HIGH COURT IN RANE(MADRAS) LTD.(SUPRA) AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 12. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DEPRECI ATION ON THE BUILDING USED FOR CAPTIVE POWER PLANT. 13. WE HEARD SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSES SEE AND SHRI PATHLAVATH PEERYA, LD. DR. 14. THIS ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 IN I.T.A.NO. 1 633/MDS/2008. THIS TRIBUNAL FOUND THAT THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE BUILDING USED FOR CAPTIVE POWER PLANT. IN VIEW OF THE ABOVE, WE ARE UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHOR ITIES. ACCORDINGLY, ITA NO. 2036 & 2107/12 :- 11 -: THE SAME IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIATION ON THE BUILDING USED FOR CAPTIVE POWER PLANT. 15. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALL OWED. 16. NOW COMING TO THE REVENUES APPEAL I.T.A.NO. 2107/MDS/2012, THE FIRST GROUND IS WITH REGARD TO D EDUCTION U/S 80IA ON THE POWER GENERATED FROM WINDMILL AND CAPTIVE PO WER PLANT. 17. WE HEARD SHRI PATHLAVATH PEERYA, LD. DR AND SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE. 18. THIS ISSUE WAS CONSIDERED BY THE MADRAS HIGH COURT IN THE ASSESSEES OWN CASE IN TAX CASE (APPEAL) NO.757 OF 2007, DATED 18.1.2012. THE MADRAS HIGH COURT HELD THAT THE ASS ESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IA ON THE POWER GENERATED FROM WINDMILL AND THE POWER GENERATED FROM CAPTIVE POWER PLANT. THEREFOR E, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ) AND ACCORDINGLY, THE SAME IS CONFIRMED. 19. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLO WANCE OF ADDITIONAL DEPRECIATION ON THE CAPTIVE POWER PLANT AT ARIYALUR. 20. WE HEARD SHRI PATHLAVATH PEERYA, LD. DR AND SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE. ITA NO. 2036 & 2107/12 :- 12 -: 21. THIS ISSUE WAS ALSO CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 IN I.T.A.NO. 1 633/MDS/2008. THIS TRIBUNAL FOUND THAT THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION ON THE CAPTIVE POWER PLANT. IN VIEW O F THE ORDER OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ). ACCORDINGLY, THE SAME IS CONFIRMED. 22. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDITIO NAL DEPRECIATION ON WINDMILLS. 23. SHRI PATHLAVATH PEERYA, LD. DR SUBMITTED THAT SEC. 32(1)(IIA) OF THE ACT WAS BROUGHT INTO THE STATUE BOOK BY FINA NCE ACT, 2012, THEREFORE, IT IS APPLICABLE FROM ASSESSMENT YEAR 20 13-14, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR ADDITIONAL DEPREC IATION FOR THE YEAR UNDER CONSIDERATION. 24. ON THE CONTRARY, SHRI S.SRIDHAR, LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE GENERATION OF ELECTRICITY IS ALS O AN ARTICLE OR THING. IN FACT, THE APEX COURT CONSIDERED THIS ISSUE IN TH E CASE OF STATE OF AP VS.NTPC, 127 STC 280 AND IN INDIAN ALUMINIUM CO. VS STATE OF KERALA (1966) 7SCC 637 AND FOUND THAT THE ADDITIONAL DEPRE CIATION CANNOT BE DENIED TO THE ASSESSEE MERELY ON THE GROUND THAT E LECTRICITY IS NOT AN ARTICLE OR THING. THE CIT(A), AFTER EXTRACTING THE JUDGMENT OF THE APEX ITA NO. 2036 & 2107/12 :- 13 -: COURT, ALLOWED THE CLAIM OF THE ASSESSEE. THEREF ORE, EVEN BEFORE THE INTRODUCTION OF GENERATION OF POWER IN SEC. 32(1)(I IA), GENERATION OF ELECTRICITY IS ELIGIBLE FOR ADDITIONAL DEPRECIATION IN VIEW OF THE JUDGMENT OF THE APEX COURT IN NTPC(SUPRA) AND INDIAN ALUMINI UM CO. (SUPRA). JUST TO MAKE THE LAW CLEAR, THE PARLIAMENT INTRODUC ED AMENDMENT BY INCORPORATING GENERATION OF POWER IN SEC. 32(1)(IIA ) BY FINANCE ACT, 2012. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. 25. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. NO DOUBT, THE BUSINESS OF GENERATION OR GENERATION AND DISTRIBUTION OF POW ER WAS INTRODUCED IN SEC. 32(1)(IIA) BY FINANCE ACT, 2012 WITH EFFECT FROM 1.4.2013. HOWEVER, BEFORE THE AMENDMENT BY FINANCE ACT, 2012, THE APEX COURT IN THE CASE OF NTPC(SUPRA) AND INDIAN ALUMINIUM CO. (SUPRA) FOUND THAT ADDITIONAL DEPRECIATION CANNOT BE DENIED TO TH E ASSESSEE MERELY ON THE GROUND THAT ELECTRICITY IS NOT AN ARTICLE OR THING. IN VIEW OF THE ABOVE JUDGMENTS OF THE APEX COURT, THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT EVEN BEFORE INTRODUCTION OF THE AMENDM ENT BY FINANCE ACT, 2012 IN SEC. 32(1)(IIA), GENERATION OF ELECTRI CITY IS ELIGIBLE FOR ADDITIONAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. ITA NO. 2036 & 2107/12 :- 14 -: 26. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. 27. TO SUMMARIZE, ASSESSEES APPEAL I.T.A.NO. 2036/MDS /2012 IS PARTLY ALLOWED AND THE REVENUES APPEAL I.T.A.NO . 2107/MDS/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2016, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER / CHENNAI ! / DATED: 4 TH MARCH, 2016 RD !' # $% &% / COPY TO: 1 . '( / APPELLANT 4. ) / CIT 2. #*'( / RESPONDENT 5. %+, # - / DR 3. ) () / CIT(A) 6. ,/ 0 / GF