Assistant Commissioner of Income-tax, V. Shreem Capacitors Pvt. Ltd., Sangli

ITA 2078/PUN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2865 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Question of law; Unabsorbed depreciation; Capital expenditure
• Section: 143(3); 80G

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NOS.1893 & 1894/PN/2013 ASSESSMENT YEARS : 2008-09 & 2009-10 SHREEM CAPACITORS PVT. LTD., [PRESENTLY KNOWN AS SHREEM ELECTRIC LIMITED], PLOT NO.22, MADHUBAN SOCIETY, VISHRAM BAG, SANGLI 416 416. PAN : AACCS4893C . APPELLANT VS. THE JT./DY. COMMISSIONER OF INCOME TAX, RANGE/CIRCLE 1, SANGLI. . RESPONDENT ITA NOS.2078 & 2079/PN/2013 ASSESSMENT YEARS : 2008-09 & 2009-10 THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1, SANGLI. . APPELLANT VS. SHREEM CAPACITORS PVT. LTD., [PRESENTLY KNOWN AS SHREEM ELECTRIC LIMITED], PLOT NO.22, MADHUBAN SOCIETY, VISHRAM BAG, SANGLI 416 416. PAN : AACCS4893C . RESPONDENT ITA NO.213/PN/2014 ASSESSMENT YEAR : 2010-11 THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1, SANGLI. . APPELLANT VS. SHREEM CAPACITORS PVT. LTD., [PRESENTLY KNOWN AS SHREEM ELECTRIC LIMITED], PLOT NO.22, MADHUBAN SOCIETY, VISHRAM BAG, SANGLI 416 416. PAN : AACCS4893C . RESPONDENT ASSESSEE BY : SMT. DEEPA KHARE DEPARTMENT BY : SHRI SANTOSH KUMAR 2 ITA NOS.1893 & 1894/PN/2013 ITA NOS.2078 & 2079/PN/2013 ITA NO.213/PN/2014 / DATE OF HEARING : 17.12.2015 / DATE OF PRONOUNCEMENT: 20.01.2016 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE. SINCE THE COMMON QUESTION OF LAW AND FACTS ARE INVO LVED IN ALL THE THREE ASSESSMENT YEARS FOR THE SAME ASSESSEE, ALL THE APP EALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. FIRST, WE SHALL TAKE-UP THE APPEAL OF THE REVENU E RELEVANT TO ASSESSMENT YEAR 2008-09 AS A LEAD YEAR FOR ADJUDICATION. ITA NO.2078/PN/2013, A.Y. 2008-09 (REVENUES APPEAL ): 3. THIS IS AN APPEAL FILED BY THE REVENUE IS AGAINS T THE ORDER OF CIT(A), KOLHAPUR, DATED 03.09.2013 RELATING TO ASSESSMENT Y EAR 2008-09 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHOR T THE ACT). 4. IN THIS APPEAL, THE REVENUE HAS IMPUGNED THE ORD ER OF THE CIT(A) BY RAISING THE FOLLOWING GROUNDS OF APPEAL :- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX[APPEALS], KOLHAPUR ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE CLAIMING DEDUCTION U/S 80IA(5) OF THE LT. ACT, ON THE PROFITS EARNED FROM GENERATION & SALE OF ELECTRICITY FROM SATARA U NIT, IN THE PROCESS IGNORING THE FACT THAT THE ASSESSEE COMPANY HAD INCURRED LOSSES FROM GENERATION AND SALE OF ELECTRICITY FROM TAMIL NADU, RAJASTHAN AND KARNATAK A UNIT WHICH WERE REQUIRED TO BE FIRST SET OFF AGAINST THE PROFITS EARNED AT SATA RA UNIT IN TERMS OF PROVISIONS OF SECTION 70 OF THE I.T. ACT AND RESULTANT PROFITS WA S TO BE ALLOWED AS DEDUCTION IN TERMS OF THE PROVISIONS OF SECTION 80IA(1) OF THE I .T. ACT, 1961. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX[APPEALS], KOLHAPUR ERRED IN HOLDING AT PARA NO. 6 OF HIS ORDER THAT, 'EVERY UNIT CONSTITUTES A SEPARATE UNDERTAKING ENGAGED IN THE ELIGIBLE BUSINESS AND LOSSES FROM ONE UNIT CANNOT BE SET OFF AGAINST PROFITS OF ANOTHER UNIT ENGAGED IN THE SAME BUSINESS FOR THE PURPOSE OF CLA IMING DEDUCTION UNDER SECTION 80IA', AS THE PROVISIONS OF SECTION 80IA OF THE I.T . ACT REFERS TO PROFITS AND GAINS DERIVED BY AND UNDERTAKING OR AN ENTERPRISE FROM AN Y BUSINESS REFERRED TO IN SUB- 3 ITA NOS.1893 & 1894/PN/2013 ITA NOS.2078 & 2079/PN/2013 ITA NO.213/PN/2014 SECTION (4) OF SECTION 80IA WHICH IN THE CONTEXT OF THE ASSESSEE-COMPANY WOULD IMPLY THAT PROFIT AND GAINS EARNED BY THE ASSESSEE- COMPANY FROM THE ELIGIBLE BUSINESS OF GENERATION OF ELECTRICITY WOULD BE CONS IDERED FOR ALLOWING THE DEDUCTION AND NOT THE PROFITS EARNED BY INDIVIDUAL UNITS ENGA GED IN THE BUSINESS OF GENERATING ELECTRICITY. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX [APPEALS], KOLHAPUR ERRE D IN NOT FOLLOWING THE DECISION OF HON'BLE HIGH COURT OF GUJARAT IN THE CA SE IF SINTEX INDUSTRIES LTD. VS. A.C.I.T. 37 TAXMAN 217(GUJ.) WHEREIN THE HON'BLE GU JARAT HIGH COURT HELD THAT DEDUCTION IS NOT ALLOWABLE, INVOLVING IDENTICAL FAC TS. [4] THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX [APPEALS], KOLHAPUR BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTOR ED. [5] THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR MODIFY OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 5. IN ESSENCE, THE ONLY ISSUE RAISED BY THESE GROUN DS ARE PERTAINING TO ELIGIBILITY OF DEDUCTION UNDER SECTION 80IA(5) OF T HE ACT ON PROFITS EARNED FROM GENERATION AND SALE OF ELECTRICITY WITHOUT SETTING- OFF THE LOSSES OF OTHER UNITS ENGAGED IN THE SAME BUSINESS. 6. THE RELEVANT FACTS CONCERNING THE ISSUE ARE THAT THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 UNDER SECTION 139(1) DECLARING TOTAL INCOME OF RS.7,23,87,710/-. FROM T HE COMPUTATION OF TOTAL INCOME FILED, IT IS NOTICED THAT THE GROSS TOTAL I NCOME OF THE ASSESSEE BEFORE DEDUCTION UNDER CHAPTER VI-A OF THE ACT STANDS AT P OSITIVE AMOUNT OF RS.7,58,06,910/- WHEREFROM DEDUCTION UNDER SECTION 80IA OF RS.33,14,205/- WAS CLAIMED BY THE ASSESSEE ALONG WITH ANOTHER MEAG ER DEDUCTION UNDER SECTION 80G TO THE TUNE OF RS.1,05,000/-. THUS, TH E TOTAL INCOME OF THE ASSESSEE CHARGEABLE TO TAX WAS DECLARED AT RS.7,23, 87,710/-. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE COMPANY HAD ACQUIRED A NUMBER OF WINDMILLS AND INSTALLED THE SAME IN VARIOUS PARTS O F THE COUNTRY IN GENERAL AND PARTICULARLY IN THE STATE OF MAHARASHTRA (SATARA), TAMIL NADU, RAJASTHAN (SODA & HARSH) AND KARNATAKA. IT WAS OBSERVED BY THE ASS ESSING OFFICER THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IA I N RESPECT OF PROFITS OF RS.33,14,205/- DERIVED FROM ONE OF ITS WINDMILL UNI T SITUATED AT SATARA. IT WAS FURTHER OBSERVED BY THE ASSESSING OFFICER THAT IN R ESPECT OF OTHER WINDMILLS SITUATED AT OTHER PART OF THE COUNTRY THERE IS A TO TAL LOSS OF RS.3,64,05,153/- AND 4 ITA NOS.1893 & 1894/PN/2013 ITA NOS.2078 & 2079/PN/2013 ITA NO.213/PN/2014 THUS THERE IS A RESULTANT NET LOSS FROM THE WINDMIL L BUSINESS ON CONSOLIDATED BASIS. THEREFORE, THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER SECTION 80IA OF THE ACT IN RESPECT OF PROFITS ARISING FROM ELIGIBLE UNIT AT SATARA. THE ASSESSING OFFICER TOO K A VIEW THAT PROFIT/LOSS IN RESPECT OF PARTICULAR INDUSTRY IS REQUIRED TO BE CO NSIDERED AS A WHOLE SEPARATELY AND IF THE PARTICULAR INDUSTRY HAS A NUMBER OF UNDE RTAKINGS, THE LOSS INCURRED BY ONE UNDERTAKING IS REQUIRED TO BE SET-OFF AGAINS T THE INCOME OF THE ANOTHER UNDERTAKING OF THE SAME INDUSTRY AND THEREAFTER IF ANY BALANCE PROFIT IS LEFT, THE SAME IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA O F THE ACT TO THE EXTENT OF REMAINING BALANCE. IN VIEW OF THE ABOVE, THE ASSES SING OFFICER HELD THAT SINCE THE WINDMILL BUSINESS IN TOTALITY HAS NOT YIELDED A NY PROFITS WHEN THE PROFITS/LOSSES OF ALL THE UNITS ARE COMBINED, THE A SSESSEE IS NOT ENTITLED TO DEDUCTION UNDER SECTION 80IA OF THE ACT. 7. IN FIRST APPEAL, THE CIT(A) DISAGREED WITH THE L OGIC CANVASSED BY THE ASSESSING OFFICER THAT SINCE THE PROFIT/LOSS FROM A LL THE WINDMILL UNITS ARE TAKEN TOGETHER IS NET LOSS, THE BENEFIT OF SECTION 80IA CANNOT BE BESTOWED. HE OBSERVED THAT SECTION 80IA REFERS TO PROFITS OF UN DERTAKING OR ENTERPRISE AND NOT THE WHOLE BUSINESS OF THE APPELLANT FOR THE PURPOSES OF SECTION 80IA(5) OF THE ACT. HE, ACCORDINGLY, REVERSED THE ORDER OF THE ASSESSING OFFICER AND HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UND ER SECTION 80IA OF THE ACT AS CLAIMED. 8. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT(A). 9. THE ONLY ISSUE FOR OUR CONSIDERATION IS WHETHER THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80IA(5) IN RESPECT OF PROFITS OF ELIGIBLE UNDERTAKING (SATARA UNIT) WITHOUT SET-OFF THE LOSSE S OF OTHER UNDERTAKINGS OF THE ASSESSEE ENGAGED IN SAME LINE OF BUSINESS OR NOT. WE FIND THAT THE ISSUE IS NO LONGER RES INTEGRA . IT IS EVIDENT FROM THE FACTS OF THE RECORD THAT THE ASSESSEE HAS POSITIVE GROSS TOTAL INCOME TO THE TUNE OF RS .7.58 CRORE. THERE IS NO DISPUTE THAT THE ASSESSEE HAS EARNED INCOME FROM RS .33,14,205/- WINDMILL 5 ITA NOS.1893 & 1894/PN/2013 ITA NOS.2078 & 2079/PN/2013 ITA NO.213/PN/2014 SITUATED AT SATARA UNIT WHICH IS AN ELIGIBLE UNDERT AKING WITH REFERENCE TO SECTION 80IA(5) OF THE ACT.. THEREFORE, PROFIT FRO M SATARA UNIT IS AVAILABLE TO THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA(5) OF THE ACT. WE OBSERVE THAT THE ASSESSEE IS ALSO HAVING POSITIVE GROSS TOTAL I NCOME AFTER SETTING-OFF OF BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION OF THE PREVIOUS YEARS. IN THE FACTS OF THE CASE, SINCE THE GROSS TOTAL INCOM E OF THE ASSESSEE INCLUDES PROFITS DERIVED BY ELIGIBLE UNDERTAKING (SATARA UNI T), THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IA(5) WHILE COMPUTING THE TOTAL INCOME. FOR THE PURPOSES OF DETERMINATION OF QUANTUM OF DEDUCTION U NDER SECTION 80IA(5), INCOME FROM ELIGIBLE BUSINESS IS REQUIRED TO BE CON SIDERED AS ONLY SOURCE QUA THE GROSS TOTAL INCOME. WE FIND THAT IN THE FACT S OF THE CASE, THE ASSESSING OFFICER HAS MISDIRECTED HIMSELF IN LAW IN SETTING-O FF OF THE LOSSES OF OTHER WINDMILLS WHICH ARE TREATED AS INDEPENDENT UNDERTAK INGS SITUATED AT DIFFERENT LOCATIONS OF THE COUNTRY FROM PROFITS OF SATARA UNI T. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE JUDGEMENT OF THE HONBLE SU PREME COURT IN THE CASE OF SYNCO INDUSTRIES LTD. VS. ACIT, (2008) 299 ITR 4 44 (SC) AND CIT VS. CANARA WORKSHOPS P. LTD., 161 ITR 320 (SC) AND THE DECISION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S J -SONS FOUNDRY PVT. LTD. VS. DCIT IN ITA NO.815/PN/2011, ORDER DATED 30.01.2013 RELIED UPON BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. 10. THE RELIANCE PLACED BY THE LD. DEPARTMENTAL REP RESENTATIVE FOR THE REVENUE ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SINTEX INDUSTRIES LTD. VS. ACIT, (2013) 37 TAXMANN. COM 217 (GUJ.) IS MISPLACED AND DISTINGUISHABLE ON FACTS. IN THE PRE SENT CASE BEFORE US, LOSSES OF OTHER UNITS HAVE NOT BEEN IGNORED FOR THE PURPOSE O F ARRIVING AT GROSS TOTAL INCOME. IT HAS BEEN IGNORED ONLY FOR THE DETERMIN ATION OF QUANTUM OF DEDUCTION FROM THE POSITIVE GROSS TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THUS, DECISION IN THE CASE OF SINTEX INDUSTRIES LTD. (SUPRA) HAS NO APPLICATION. IN THE LIGHT OF THE DE CISIONS CITED ABOVE, WHEREIN IT HAS BEEN HELD THAT EVERY UNIT CONSTITUTES A SEPARAT E UNDERTAKING ENGAGED IN THE ELIGIBLE BUSINESS, LOSSES OF ONE UNIT NEED NOT BE S ET-OFF AGAINST THE PROFITS OF 6 ITA NOS.1893 & 1894/PN/2013 ITA NOS.2078 & 2079/PN/2013 ITA NO.213/PN/2014 THE ANOTHER UNITS ALTHOUGH ENGAGED IN THE SAME BUSI NESS FOR THE PURPOSES OF DEDUCTION UNDER SECTION 80IA OF THE ACT. PRESENCE OF POSITIVE GROSS TOTAL INCOME AFTER SETTING OF BROUGHT FORWARD LOSSES ETC . AND PROFITS FROM AN ELIGIBLE UNDERTAKING IS SUFFICIENT TO ENTITLE THE DEDUCTION TO THE ASSESSEE. WE, ACCORDINGLY, FIND THAT THE CIT(A) HAS RIGHTLY REVER SED THE ACTION OF THE ASSESSING OFFICER IN ACCORDANCE WITH LAW. AS SUCH, WE DECLINE TO INTERFERE WITH THE ORDER OF THE CIT(A). 11. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.2078/PN/2013 RELATING TO ASSESSMENT YEAR 2008-09 IS DISMISSED. ITA NO.2079/PN/2013, A.Y. 2009-10 (REVENUES APPEAL ): ITA NO.213/PN/2014, A.Y. 2010-11 (REVENUES APPEAL) : 12. ABOVE CAPTIONED APPEALS FILED BY THE REVENUE AR E AGAINST THE RESPECTIVE ORDERS OF CIT(A), KOLHAPUR, DATED 24.09.2013 AND 20 .11.2013 RELATING TO ASSESSMENT YEARS 2009-10 AND 2010-11 PASSED UNDER S ECTION 143(3) OF THE ACT. 13. IN THESE APPEALS FOR SUBSEQUENT YEARS ALSO, THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE IDENTICAL TO THE APPEAL OF THE R EVENUE IN ITA NO.2078/PN/2013 RELATING TO ASSESSMENT YEAR 2008-09 EXCEPT FOR THE AMOUNT OF CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT . FOR THE PARITY OF REASONING, THESE APPEALS OF THE REVENUE IN ITA NO.2 079/PN/2013 AND ITA NO.213/PN/2014 RELATING TO ASSESSMENT YEARS 2009-10 AND 2010-11 RESPECTIVELY ARE ALSO DISMISSED. ITA NO.1893/PN/2013, A.Y. 2008-09 (ASSESSEES APPEA L): 14. THE ABOVE CAPTIONED APPEAL FILED BY THE ASSESSE E IS AGAINST THE ORDER OF CIT(A), KOLHAPUR, DATED 03.09.2013 RELATING TO ASSE SSMENT YEAR 2008-09 PASSED UNDER SECTION 143(3) OF THE ACT. 7 ITA NOS.1893 & 1894/PN/2013 ITA NOS.2078 & 2079/PN/2013 ITA NO.213/PN/2014 15. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOL LOWING GROUNDS OF APPEAL :- 1.1 THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLO WANCE OF DEPRECIATION ON WIND MILL OF RS.25,64,925/-. 1.2 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E ISSUE IS COVERED BY JURISDICTIONAL ITAT DECISION IN THE CASE OF JSONS P VT. LTD., AND HENCE NEEDS TO BE ALLOWED. 1.3 THE DISALLOWANCE OF DEPRECIATION MAY PLEASE BE DELETED. 1.4 THE A.O. MAY BE DIRECTED TO ALLOW THE DEPRECIAT ION ON WIND MILL AS CLAIMED BY THE APPELLANT. 2.1 THE LEARNED CIT(A) ERRED IN CONFIRMING LUMP SUM DISALLOWANCE OF RS.3,00,000/- OUT OF FREIGHT TOUR AND TRAVELLING EX PENSES. 2.2 THE DISALLOWANCE OF RS.3,00,000/- MAY PLEASE BE DELETED. 2.3 THE LEARNED A.O. MAY BE DIRECTED TO ALLOW THE E XPENDITURE AS CLAIMED. 3.1 THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS.24,660/- U/S 41(1) AS CESSATION OF LIABILITY. 3.2 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E ADDITION U/S 41(1) IS LEGAL ISSUE AND CANNOT BE DECIDED ON THE CONSENT OF THE A PPELLANT. 3.3 THE ADDITION OF RS.24,660/- UNDER SEC. 41(1) BE DELETED. 4.0 THE APPELLANT CRAVES RIGHT TO ADD, LATER, DELET E, MODIFY ALL OR ANY OF THE GROUNDS OF APPEAL. 16. THE FIRST GROUND RELATES TO DISALLOWANCE OF DEP RECIATION ON WINDMILL OF RS.25,64,925/-. 17. THE RELEVANT FACTS CONCERNING THE ISSUE ARE THA T THE ASSESSEE COMPANY HAS CLAIMED ESCALATED DEPRECIATION @ 80% ON THE ENT IRE COST OF WINDMILL INCLUDING CIVIL WORK, EXPENSES OF ERECTION AND COMM ISSIONING WORK, ETC.. THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS NOT ENT ITLED TO THE HIGHER RATE OF DEPRECIATION IN RESPECT OF FOUNDATION AND CIVIL WOR K AND ERECTION AND COMMISSIONING WORK, WHICH IS APPLICABLE TO THE WIND MILL ITSELF. HE ACCORDINGLY RESTRICTED THE DEPRECIATION @ 10% ON FO UNDATION AND CIVIL WORK FOR WINDMILL AND 15% FOR ERECTION AND COMMISSIONING WORK OF WINDMILL AS AGAINST THE CLAIM OF 80% DEPRECIATION BY THE ASSESS EE. 18. WE FIND THAT THE ISSUE IS SQUARELY COVERED IN F AVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE RELEVANT TO ASSESSMENT YEAR 201 0-11 IN ITA 8 ITA NOS.1893 & 1894/PN/2013 ITA NOS.2078 & 2079/PN/2013 ITA NO.213/PN/2014 NO.2107/PN/2013, ORDER DATED 30.11.2015. THE RELEV ANT OPERATIVE PARA OF THE AFORESAID ORDER IS REPRODUCED BELOW FOR READY REFER ENCE :- 8. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMISSIONS MADE ON BEHALF OF THE REVENUE. THE ONL Y ISSUE FOR ADJUDICATION BEFORE US IS ALLOWABILITY OF SIMILAR DEPRECIATION RATE AS APPLICABLE TO WINDMILLS, ALSO TO THE FOUNDATION & CIVIL WORK AND ERECTION & COMMISSIO NING WORK EXECUTED FOR THESE WINDMILLS. IT IS THE CASE OF THE ASSESSEE BEFORE T HE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A) THAT ENTIRE EXPENDITURE TOGETHER WITH COST OF WINDMILL IS ENTITLED TO SAME RATE OF DEPRECIATION AT 80% AS THE OTHER EXPEN DITURE INCURRED TOWARDS FOUNDATION & CIVIL WORK AND ERECTION & COMMISSIO NING WORK, ETC. ARE INTEGRAL PART OF WINDMILLS AND ARE DIRECTLY ATTRIBUTABLE TO INSTALLATION AND OPERATIONAL FUNCTIONING OF WIND TURBINE. SINCE THE CIVIL WORK AND ERECTION & COMMISSIONING EXPENSES INCURRED ARE IN RELATION TO INSTALLATION O F WINDMILL, DEPRECIATION ON THE SAME SHOULD BE PROVIDED AT THE RATE APPLICABLE TO W INDMILL. WE FIND THAT THE AFORESAID ASSERTIONS MADE ON BEHALF OF THE ASSESSEE BEFORE THE REVENUE REMAINS UNCONTROVERTED. ACCORDINGLY, WE ARE OF THE FIRM VI EW THAT THE EXPENSES INCURRED ON ERECTION & COMMISSIONING, CIVIL WORK, ETC. BEING NE CESSARY ADJUNCT TO THE WINDMILL AND IS NOT MEANT FOR ANY OTHER PURPOSES OTHER THAN FOR OPERATIONAL FUNCTIONING OF WIND TURBINE AND THEREFORE CANNOT BE TREATED DIFFER ENTLY. THEREFORE, IMPUGNED CAPITAL EXPENDITURE TOWARDS CIVIL WORK & COMMISSION ING ETC. ALSO WILL QUALIFY FOR THE SAME RATE OF DEPRECIATION AS APPLICABLE TO WIND TUR BINE ITSELF. THE ISSUE IS NO LONGER RES-INTEGRA AND IS COVERED BY THE DECISION OF CO-OR DINATE BENCH OF THE TRIBUNAL IN THE CASE OF POONAWALA FINVEST & AGRO (P.) LTD. VS. ACIT, (2008) 118 TTJ 68 (PUNE) WHEREIN IT HAS BEEN CLEARLY HELD THAT THE CAPITAL E XPENDITURE INCIDENTAL TO THE WINDMILL HAS TO BE TESTED ON THE TOUCHSTONE OF THE FUNCTIONAL TEST AND THE ASSESSEE WILL BE ENTITLED TO HIGHER RATE OF DEPRECIATION ON SUCH INCIDENTAL EXPENDITURE, IF IT HAS NO OTHER USE EXCEPT FOR POWER GENERATION DONE B Y THE WINDMILL. OUR VIEW IS ALSO SUPPORTED BY ANOTHER DECISION OF THE CO-ORDINATE BE NCH OF PUNE TRIBUNAL IN THE CASE OF M/S D.J. MALPANI VS. ACIT IN ITA NOS.1148 T O 1154/PN/2013, ORDER DATED 30.10.2015. ACCORDINGLY, WE HOLD THAT THE REVENUE IS MISDIRECTED ITSELF IN LAW IN MAKING THE IMPUGNED DISALLOWANCE OF DEPRECIATION. IN THE RESULT, GROUND NO.1 OF THE ASSESSEES APPEAL IS ALLOWED. 19. GROUND NO.2 OF THE ASSESSEES APPEAL RELATES TO DISALLOWANCE OF RS.3,00,000/- OUT OF FOREIGN TOUR AND TRAVELLING EX PENSES. 20. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE INTER-ALIA CLAIMED AT RS.8,69,350/- ON FOREIGN TOUR AND TRAVELLING EXPENS ES OF THE DIRECTORS AND RS.82,500/- ON EMPLOYEES TOTALING TO RS.9,51,850/-. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE DIRECTORS, SHRI SHAHJI R . JAGDALE VISITED ITALY, GERMANY AND LONDON WHILE SHRI VIKAS S. JAGDALE VISI TED CHINA, ALGERIA, SOUTH KOREA, USA AND MALAYSIA. IT WAS OBSERVED THA T THE ASSESSEE COMPANY 9 ITA NOS.1893 & 1894/PN/2013 ITA NOS.2078 & 2079/PN/2013 ITA NO.213/PN/2014 COULD NOT FURNISH ANY EVIDENCE OF BUSINESS PURPOSE INVOLVED IN RESPECT OF VISITS TO ALGERIA, MALAYSIA AND GERMANY. AFTER CON SIDERING THE TOUR PROGRAMMES, PURPOSE OF VISIT AND ACHIEVEMENTS MADE IN RESPECT OF THESE VISITS, THE ASSESSING OFFICER FOUND THAT ALL THE VISITS HAV E NOT BEEN JUSTIFIED BY THE ACHIEVEMENTS AND THEREFORE 30% OF THE FOREIGN TRAVE LLING EXPENSES ESTIMATED AT RS.3,00,000/- WERE DISALLOWED TOWARDS NON-BUSINESS PURPOSE. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 21. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE PLACED RELIANCE ON THE SUBMISSIONS PLACED BEFORE THE LOWER AUTHORITIES . 22. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 23. WE FIND THAT THE CIT(A) HAS CONFIRMED THE ESTIM ATION OF DISALLOWANCE ON THE GROUND THAT THE REPLY IS GENERAL AND BUSINES S PURPOSE HAS NOT BEEN SUBSTANTIATED IN RESPECT OF CERTAIN VISITS NOTED AB OVE. IN THE ABSENCE OF SPECIFIC DETAILS, WE DECLINE TO INTERFERE WITH THE ORDERS OF THE CIT(A). 24. IN THE RESULT, THE GROUND NO.2 IS DISMISSED. 25. GROUND NO.3 IS DISMISSED AS NOT PRESSED. 26. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.1893/PN/2013 RELATING TO ASSESSMENT YEAR 2008-09 IS PARTLY ALLOW ED. ITA NO.1894/PN/2013, A.Y. 2009-10 (ASSESSEES APPEA L): 27. THE ABOVE CAPTIONED APPEAL FILED BY THE ASSESSE E IS AGAINST THE ORDER OF CIT(A), KOLHAPUR, DATED 24.09.2013 RELATING TO ASSE SSMENT YEAR 2009-10 PASSED UNDER SECTION 143(3) OF THE ACT. 10 ITA NOS.1893 & 1894/PN/2013 ITA NOS.2078 & 2079/PN/2013 ITA NO.213/PN/2014 28. IN THIS APPEAL, THE GROUNDS NO.1 AND 2 ARE IDEN TICAL TO THE APPEAL OF THE ASSESSEE IN ITA NO.1893/PN/2013 RELATING TO ASSESSM ENT YEAR 2008-09. FOR THE PARITY OF REASONING, OUR DECISION IN ITA NO.189 3/PN/2013 RELATING TO ASSESSMENT YEAR 2008-09 SHALL APPLY MUTATIS-MUTANDIS TO THIS APPEAL OF THE ASSESSEE IN ITA NO.1894/PN/2013 RELATING TO ASSESSM ENT YEAR 2009-10. THE GROUND NO.1 IS THEREFORE ALLOWED WHILE GROUND NO.2 IS DISMISSED. 29. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.1894/PN/2013 RELATING TO ASSESSMENT YEAR 2009-10 IS PARTLY ALLOW ED. 30. RESULTANTLY, THE APPEALS OF THE ASSESSEE ARE PA RTLY ALLOWED AND THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 20 TH DAY OF JANUARY, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 20 TH JANUARY, 2016. & ' ()* +*( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), KOLHAPUR; 4) THE CIT, KOLHAPUR; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , //TRUE COPY// ! '# / SR. PRIVATE SECRETARY $ %& %'' , / ITAT, PUNE