DCIT, Jaipur V. EXCEL ASSOCIATES PVT. LTD., Jaipur

ITA 204/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99345 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 28-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA
• Assessee Lawyers: G G MUNDRA C A DHK
• Keywords: Depreciation
• Section: 32

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 VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 204/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3, ROOM NO. 218, STATUE CIRCLE, JAIPUR. CUKE VS. M/S. EXCEL ASSOCIATES P. LTD., 501, BASEMENT NAVJEEVAN COMPLEX, 29, STATION ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAAFE 3521 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA (ADDL.CIT ) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.G. MUNDRA (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29.09.2015. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 9/10/2015. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THIS APPEAL IS BY THE REVENUE ARISING OUT OF THE OR DER PASSED BY LD. CIT (A)-I, JAIPUR ON 11.12.2012 IN RELATION TO THE ASSE SSMENT YEAR 2008-09. THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL IS AS UN DER :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE DISA LLOWANCE MADE BY THE A.O. ON ACCOUNT OF DEPRECIATION. 2 ITA NO. 204/JP/2013 A.Y. 2008-09 DCIT VS. M/S. EXCEL ASSOCIATES P. LTD. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF MANUFACTURING & TRADING OF HT/LT LINE EQUIPMENT, SWIT CHES, CLAMPS CONNECTORS, ISOLATORS, ELECTRICITY GENERATION THROUGH WIND POWER AND TRADING OF ELECTRICAL GOODS. DURING THE ASSESSMENT YEAR UNDER CONSIDERATI ON, THE ASSESSEE HAD INSTALLED A WIND MILL AT VILLAGE SADIYA, DISTRICT J AISALMER. TOTAL INVESTMENT MADE IN THE WIND MILL PROJECT IS RS. 3,52,71,729/- AND T HE ASSESSEE HAS CLAIMED DEPRECIATION @ 80% I.E. 2,82,17,383/-. THE AO VIDE O RDER SHEET ENTRY DATED 19.11.2010, THE COUNSEL OF THE ASSESSEE WAS ASKED TO FURNISH THE EVIDENCES IN RESPECT OF COMMISSIONING OF THE WIND MILL AND THE M ONTH IN WHICH THE WIND MILL WAS PUT TO USE I.E. STARTED GENERATION OF POWER. 3. THE LD. COUNSEL FOR THE ASSESSEE FILED WRITTEN SU BMISSION ON 25.11.2010. THE EXECUTIVE ENGINEER-II(C&M)/(TCC-IV) RRVPNL, BARME R HAS ISSUED THE COMMISSIONING CERTIFICATE VIDE HIS LETTER NO. RRVPN L/XEN-II (C&M) TCCIV/BMR/D.761 DATED 20.10.2007. THE SAID LETTER STA TES AS UNDER :- TO M/S. EXCEL ASSOCIATES PVT. LTD., REGD. OFFICE BASEMENT NO. 1, NAVJEEVAN COMPLEX, 29, STATION ROAD, JAIPUR 302 006 (INDIA). SUB : REVISED COMMISSIONING CERTIFICATE. THIS IS TO CERTIFY THAT M/S. EXCEL ASSOCIATES PVT. L TD. HAVE SUCCESSFULLY COMMISSIONED 1 NO. X 600 KW SUZLON MAK E WIND 3 ITA NO. 204/JP/2013 A.Y. 2008-09 DCIT VS. M/S. EXCEL ASSOCIATES P. LTD. ELECTRIC GENERATOR ON DATED 30 TH SEP, 2007 AT VILLAGE SADIYA, DIST. JAISALMER, RAJASTHAN. BRIEF DETAILS OF MACHINERIES COMMISSIONED : (1) RATING OF WIND ELECTRIC GENERATOR 600 KW (2) QUANTITY 01 NO. (3) LOCATION NO. J - 119 (4) DATE OF COMMISSIONING 30 TH SEP. 2007. WE FURTHER STATE THAT THIS WIND ELECTRIC GENERATOR IS INTERCONNECTED TO 33 KV END OF JAISALMER GSS WITH METERING ARRANGEM ENT NO. 31. ALSO THE LINE LENGTH FOR THE ABOVE MENTIONED WIND E LECTRIC GENERATOR TO RECEIVING END (SUB STATION) IS LESS THAN 50 KMS. SD/- EXECUTIVE ENGINEER II(C&M)/TCC-IV) RRVPNL, BARMER. FURTHER, THE ASSESSEE WROTE TO THE SUPERINTENDING EN GINEER (RPPC), JODHPUR DISCOM ON 13.11.2007. THE SAID READS AS UNDER :- SUB : INVOICE AGAINST THE ELECTRICITY DELIVERE D DURING THE MONTH OF OCTOBER 2007 FROM OUR 0.60 MW WIND FARM AT VILLAGE : SADIYA, DISTT. JAISALMER. DEAR SIR, PLEASE FIND ENCLOSED HEREWITH THE JOINT METER READIN G AT COMMON DELIVERY POINT FOR THE ELECTRICITY DELIVERED DURING THE MONTH OF OCTOBER 2007 BY 0.60 MW WIND POWER PROJECT TO RVPN GR ID TAKEN JOINTLY BY RVPN, JVVNL AND SUZLON ENERGY LIMITED ON 01.03.2008. AS PER THE POWER PURCHASE AGREEMENT, WE ARE ENCLOSING HEREWITH THE BREAK UP OF NET ELECTRICAL UNITS EXPORTED, AS S UBMITTED BY M/S. SUZLON ENERGY LIMITED AT COMMON DELIVERY POINT FOR THE PURPOSE OF ADJUSTMENT OF UNITS GENERATED AS PER THE FOLLOWING D ETAILS 4 ITA NO. 204/JP/2013 A.Y. 2008-09 DCIT VS. M/S. EXCEL ASSOCIATES P. LTD. 1. ENERGY EXPORT : 38507 KWH 2. ENERGY IMPORT : 3032 KWH NET ENERGY EXPORT : 35475 KWH RATE OF SALE OF ELECTRICITY : RS. 3.48 PER KWH TOTAL AMOUNT : RS. 123453.00 ROUNDED OFF : RS. 123453 ( RUPEES ONE LAKH TWENTY THREE THOUSANDE FOUR HUNDRED FIFTY THREE ONLY) THE ORIGINAL READINGS OF POWER PRODUCERS HAVE BEEN FU RNISHED TO THE SUPERINTENDING ENGINEER, RPPC (JDVVNL), HEERAPURA, JAIPUR. YOU ARE REQUESTED TO KINDLY ARRANGE TO ISSUE A CHEQ UE FOR THE ABOVE AMOUNT IN OUR FAVOR AT THE EARLIEST. 3.1. DESPITE SUBMISSION OF THE LETTER AND DOCUMENT, THE AO HAS HELD THAT WIND MILL WAS PUT TO USE FOR LESS THAN 6 MONTHS DURING TH E YEAR 2007 HENCE THE DEPRECIATION CLAIMED BY THE ASSESSEE WAS REDUCED TO 40% INSTEAD OF 80% AS CLAIMED BY THE ASSESSEE. 4. BEING AGGRIEVED, THE ASSESSEE HAS FILED APPEAL B EFORE LD. CIT (A). HOWEVER, THE LD. CIT (A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT PARA 4.3 OF THE ORDER OF LD. CIT (A) READS AS UNDER :- 4.3. I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE AR AND CONCUR WITH THE SUBMISSION S OF THE AR IN VIEW OF THE EVIDENCE PLACED ON RECORD BY WAY OF DETAI LS OF CERTIFICATE FOR ELECTRICITY DELIVERED DURING THE MONTH OF SEPTE MBER, SIGNED BY THE OFFICIALS OF JVVNL AND RRVVPNL. IN THIS CERTIFI CATE, DETAILS OF THE 5 ITA NO. 204/JP/2013 A.Y. 2008-09 DCIT VS. M/S. EXCEL ASSOCIATES P. LTD. INITIAL AND FINAL READING OF EXPORT OF ELECTRICITY HAVE BEEN MENTIONED WHICH SHOW THAT THE WIND MILLS WAS PUT TO USE IN THE M ONTH OF SEPTEMBER, 2007. IN VIEW OF THE ABOVE FACTS, THE DEP RECIATION CLAIMED AT 80% IS ALLOWABLE TO THE ASSESSEE AND THE DISALLOWANCE OF RS. 1,41,08,690/- ON ACCOUNT OF EXCESS CLAIM OF DEP RECIATION IS DELETED. 5.1 BEFORE DECIDING THE ISSUE IT IS APPROPRIATE TO DISCUSS THE RELEVANT PROVISIONS FOR DEPRECIATION PROVIDED UNDER S. 32 OF IT ACT AS WELL AS APPENDIX 1 AND APPENDIX 1A TO R. 5(1A) OF IT RULES. FOR BETTER UNDERSTANDING WE QUOTE SUB- CLS. (I) AND (II) OF S. 32(1) WHICH ARE AS UNDER : 32(1). IN RESPECT OF DEPRECIATION OF' (I) IN THE CASE OF ASSETS OF AN UNDERTAKING ENGAGED IN GENERATION OR GENERATION AND DISTRIBUTION OF POWER, SUCH PERCENTAG E ON THE ACTUAL COST THEREOF TO THE ASSESSEE AS MAY BE PRESCRIBED; (II) IN THE CASE OF ANY BLOCK OF ASSETS, SUCH PERCE NTAGE ON THE WDV THEREOF AS MAY BE PRESCRIBED.' PROVIDED FURTHER THAT WHERE AN ASSET REFERRED TO I N CLAUSE (I) OR CLAUSE (II)[ OR CLAUSE (IIA)], AS THE CASE MAY BE, IS ACQU IRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS OR PROFESSION FOR A PERIOD OF LESS THAN ONE HUNDRED AN D EIGHTY DAYS IN THAT PREVIOUS YEAR, THE DEDUCTION UNDER THIS SUB-SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTED TO FIFTY PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET UNDER CLAUSE (I) OR CLAUSE (II) [OR CLAUSE (IIA)], AS THE CASE MAY BE:]. AS PER CL. (I) OF SUB-S. (1) OF S. 32 THE DEPRECIAT ION ON THE ASSETS OF AN UNDERTAKING ENGAGED IN GENERATION OR GENERATION AND DISTRIBUTION OF POWER IS AT 6 ITA NO. 204/JP/2013 A.Y. 2008-09 DCIT VS. M/S. EXCEL ASSOCIATES P. LTD. A PERCENTAGE AS PRESCRIBED AS PER RATES ON THE ACTU AL COST THEREOF. THUS SUB-CL. (I) OF SUB-S. (1) OF S. 32 PROVIDES THE DEPRECIATIO N AT A PRESCRIBED RATE ON THE ASSETS OF SPECIFIED UNDERTAKING ON THE ACTUAL COST INSTEAD OF WDV. EXPLANATION 5 TO SUB-S. (1) OF S. 32 MAKES IT CLEAR THAT THE PROV ISIONS OF SUB-S. (1) TO S. 32 OF IT ACT SHALL APPLY WHETHER OR NOT THE ASSESSEE HAS CLAI MED THE DEDUCTION IN RESPECT OF DEPRECIATION IN COMPUTING HIS TOTAL INCOME. 5.2. THE EXPRESSION PUT TO USE FOR 180 DAYS HAS BEEN WRONGLY CHANGED BY THE AO FOR 6 MONTHS . IT IS AN ADMITTED CASE TH AT THE WIND MILL WAS COMMISSIONED ON 30 TH SEPTEMBER, 2007 AND FURTHER IT IS ALSO AN ADMITTED CASE THAT THE METERING ARRANGEMENT WAS ALSO MADE BY INTER -CONNECTING WITH THE GRID SUB STATION OF RRVPNL, BARMER. THUS ALL THE INSTAL LATION OF THE WIND MILL, LAYING DOWN OF THE TRANSMISSION LINES, AND INSTALLATION OF METER AND CONNECTION OF THE METER WITH THE SUPPLY LINE OF THE ASSESSEE WERE COMPL ETED ON 30.09.2007. THEREFORE, IN THE OPINION OF THE BENCH THE ASSET WAS PUT TO USE ON OR BEFORE 30.09.2007, THUS THE ASSET FOR WHICH DEPRECIATION CLAIMED WAS USED FOR A PERIOD OF MORE THAN 180 DAYS. OUR VIEW IS ALSO S UPPORTED BY JUDGMENT PASSED BY CHENNAI BENCH IN THE MATTER OF K.K.S.K. LEATHER PROCESSORS (P) LTD [2010] 130 TTJ 184 (ITAT[CHEN]) . IN THE LIGHT OF THE ABOVE, THE ORDER PASSED BY LD. CIT (A) IS UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. 7 ITA NO. 204/JP/2013 A.Y. 2008-09 DCIT VS. M/S. EXCEL ASSOCIATES P. LTD. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9/10/2015. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED: 9/10/2015 DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CIRCLE-3, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. EXCEL ASSOCIATES PVT. LTD., JA IPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 204/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR