The DCIT, Circle-1(1), Baroda V. Gujarat Alkalies & Chemicals Ltd., Baroda

ITA 2550/AHD/2012

• Counselvise Citation: 255020514 RSA 2012
• Duration Of Justice: 2 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 31-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Depreciation; Additional depreciation; Question of law
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHM E DABAD , BEFORE: SHRI PRAMOD KUMAR , ACCOUNTANT MEMBER SHRI KUL BHARAT, JUDICIAL MEMBER I T A NO. 25 50 /AHD/ 20 1 2 ASSESSMENT YEAR : 200 8 - 0 9 THE DCIT , CIRCLE - 1(1), BARODA V/S . GUJARAT ALKALIES & CHEMICALS LTD. P.O. PETROCHEMICALS, DIST. BARODA - 391346 PAN NO. A A AC G8896M (APPELLANT) .. (RESPONDENT) / BY REVENUE SHRI SANJAY AGRAWAL , CIT D.R. / BY ASSESSEE SHRI SUNIL H. TALATI , A.R. / DATE OF HEARING 31 . 0 8 .201 5 / DATE OF PRONOUNCEMENT 11 .0 9 .201 5 O R D E R PER : KUL BHARAT, JUDICIAL MEMBER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT( A) - I , BARODA , DATED 30 .0 8 .201 2 PERTAINING TO ASSESSMENT YEARS 200 8 - 0 9 . 2 . BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS REOPENED AND ASSESSMENT U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961, HEREINAFTER REFERRED TO AS THE ACT WAS FRAMED VIDE ORDER DATED 1 3 .12.20 11 . WHILE FRAMING I TA NO. 25 50 /AHD/ 1 2 A.Y. 0 8 - 0 9 ( D CIT VS. GUJARAT ALKALIES & CHEMICALS LTD. ) PAGE 2 ASSESSMENT ASSESSING OFFICER MADE DISALLOWANCE OF CLAIM OF ADDITIONAL DEPRECIATION OF RS.1,26,36,923/ - , DISALLOWANCE OF DEPRECIATION OF COMPUTERS OF RS.21,17,661/ - AND DISALLOWANCE OF DEPRECIATION ON WIND ELECTRIC GENERATOR OF RS.12,17,06,979/ - . 3. ASSESSEE AGGRIEVED BY THIS ORDER PREFERRED AN APPEAL BEFORE LD. CIT(A) . LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL. WHILE PARTLY ALLOWING THE APPEAL, LD. CIT(A) ALLOWED THE ADDITIONAL DEPRECIATION. AFTER CONSIDERING THE SUBMISSIONS DELETED THE DISALLOWANCE OF DEPRECIATION ON WIND ELECTRIC GENERATOR OF RS.12,17,06,979/ - , DEPRECIATION ON COMPUTERS OF RS.21,17,661/ - AND DEPRECIATION ON TONNERS WHICH WAS PLANT AND M ACHINERY OF CAUSTIC CHLORINE PLANT. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE ISSUES ARE COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF CO - ORDINATE BENCH AND CONFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT IN TAX APPEAL NO.942 OF 2013. ON THE CONTRARY, LD. CIT DR SUPPORTED THE ORDER OF ASSESSING OFFICER. 4 . WE HAVE HEARD THE RIVAL CONTENT IONS AND PERUSED THE MATERIAL ON RECORD . THE HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO.942 OF 2013 FORMUL ATED THE FOLLOWING QUESTIONS: A. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS CORRECT IN LAW IN CONSIDERING THE TONERS AS GAS CYLINDERS AND ACCORDINGLY DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION @ 6 0% IN CHLORINE TONERS INSTEAD OF 15% APPLICABLE TO PLANT AND MACHINERY OF CAUSTIC CHLORINE PLANT? B(I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE ITAT WAS CORRECT IN DELETING THE DISALLOWANCE OF ADDITIONAL DEPRECIAT ION OF RS.32,29,051/ - ON COMPUTERS INSTALLED IN THE FACTORY PREMISES, WITHOUT APPRECIATING THAT THE COMPUTERS ARE OFFICE APPLIANCES ONLY WHETHER INSTALLED IN FACTORY OR OFFICE? B(II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E HONBLE ITAT HAS ERRED IN NOT APPRECIATING THE FACTS THAT IF THE COMPUTERS WERE THE PART OF THE MACHINERY AND PLANT ELIGIBLE FOR ADDITIONAL DEPRECIATION U/S 32(1) (IIA) OF THE ACT, THEN ALLOWABLE DEPRECIATION ON COMPUTERS WOULD BE 15% INSTEAD OF 60% AS C LAIMED BY THE ASSESSEE? I TA NO. 25 50 /AHD/ 1 2 A.Y. 0 8 - 0 9 ( D CIT VS. GUJARAT ALKALIES & CHEMICALS LTD. ) PAGE 3 GROUNDS RAISED IN THIS APPEAL ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(APPEALS) ERRED IN DELETING THE DISALLOWANCE OF RS.12,17,06,979/ - ON ACCOUNT OF ADDITIONAL DEPRECIATION ON WIND ELECTRIC GENERATOR WITHOUT APPRECIATING THAT IT IS NOT COVERED UNDER CLAUSE (II) OF SECTION 32 OF THE INCOME - TAX ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(APPEALS) ERRED DELETING THE DISALLOWANCE OF RS. 21 ,17,661/ - ON COMPUTERS INSTALLED IN T[HE FACTORY PREMISES, WITHOUT APPRECIATING THAT THE COMPUTERS ARE OFFICE APPLIANCES ONLY WHETHER INSTALLED IN FACTORY OR OFFICE AND LIABLE FOR DEPRECIATION AS APPLICABLE TO PLANT AND MACHINERY. 3. ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(APPEALS) ERRED IN CONSIDERING THE 'TONNERS' AS 'GAS CYLINDERS' AND ACCORDINGLY DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION @ 60% ON CHLORINE TONNERS INSTEAD OF 1 5% APPLICABLE TO PLANT AND MACHINERY OF CAUSTIC CHLORINE PLANT AND THEREBY DELETING DISALLOWANCE OF RS.1,26,36,923/ - . 4(I). HONBLE GUJARAT HIGH COURT IN RESPECT OF QUESTION NO.A I.E. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS CORRECT IN LAW IN CONSIDERING THE TONERS AS GAS CYLINDERS AND ACCORDINGLY DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION @ 60% IN CHLORINE TONERS INSTEAD OF 15% APPLICABLE TO PLANT AND MACH INERY OF CAUSTIC CHLORINE PLANT, H AS DECIDED THIS QUESTION IN PARA 6 TO 9 HELD AS UNDER: 6. HAVING HEARD LEARNED COUNSEL FOR THE PARTIES AND HAVING PERUSED THE MATERIALS ON RECORD, WE SEE NO REASON TO INTERFERE. ADMITTEDLY, THE TONERS ARE BEING USED FOR STORAGE AND TRANSPORTATION OF CHLO RINE GAS GENERATED IN THE PLANT OF THE ASSESSEE. CERTIFICATE OF THE EXPERTS ALSO INDICATED THAT THE SAME WAS A GAS CYLINDER. REFERENCE IS ALSO MADE TO THE GAS CYLINDERS RULES WHERE THE TERM U GAS CYLINDER' HAS BEEN DEFINED AS CLOSED METAL CONTAINER HAVING VOLUME EXCEEDING 500 MILLILITRE BUT NOT LESS THAN 1000 LITRES INTENDED FOR STORAGE AND TRANSPORTATION OF COMPRESSED GAS INCLUDING LIQUEFIED PETROLEUM GAS (LPG). 7. WE NOTICE THAT SUCH AN ISSUE WAS CONSIDERED BY TWO HIGH COURTS OF THE COUNTRY AND HELD IN F AVOUR OF THE ASSESSEE. REFERENCE IN THIS REGARD MAY BE MADE TO THE DECISION OF THE ' DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX VS. GOYAL MG GASES LTD. REPORTED IN [2008] 296 ITR 72 (DELHI), WHERE IT WAS OBSERVED THAT 'IF WE INTERPRET THE E XPRESSION 'GAS CYLINDER' TO MEAN 'COOKING GAS CYLINDER', WE WILL BE REALLY ADDING WORDS TO THE STATUTE WHICH IS NOT PERMISSIBLE.'. RELYING ON THE SAID DECISION OF THE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX VS. GOYAL MG GASES LTD. (SUPRA ) , THE DIVISION BENCH OF MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX VS. CHEMPLAST SANMAR LTD. REPORTED IN [2008] 296 ITR 81 (MAD) , HELD THAT CHLORINE TONERS ARE GAS CYLINDERS, IT WAS HELD AS UNDER: - I TA NO. 25 50 /AHD/ 1 2 A.Y. 0 8 - 0 9 ( D CIT VS. GUJARAT ALKALIES & CHEMICALS LTD. ) PAGE 4 8. THE ABOVE VIEW OF OURS IS ALSO SUP PORTED BY THE DECISION OF THE DELHI HIGH COURT IN CIT V. GOYAL MG GASES LTD. [2008] 296 ITR 72, WHICH THE APPELLATE TRIBUNAL HAS RELIED UPON. IN THE CASE BEFORE THE DELHI HIGH COURT, THE CONTENTION OF THE ASSESSEE THEREIN WAS THAT THE CONTAINERS/TANKERS WE RE NOTHING BUT BIG CYLINDERS AS THEY HAD ALL THE ATTRIBUTES OF A CYLINDER, WHICH WAS REJECTED BY THE REVENUE ON THE GROUND THAT SINCE THE SO - CALLED CYLINDERS WERE MERELY CONTAINERS AND WERE MOUNTED ON TRUCKS, THE ASSESSEE THEREIN WAS ENTITLED TO DEPRECIATI ON AT THE RATE OF 25 PER CENT AS ELIGIBLE TO 'PLANT AND MACHINERY' , WHILE DECIDING THE ISSUE WHETHER THE ITEM CLAIMED BY THE ASSESSEE THEREIN IS GAS CYLINDERS OR MACHINERY, THE DIVISION BENCH HAS FOUND THAT THERE IS NO DISPUTE THAT THE ITEM IN QUESTION WA S GAS CYLINDER, THOUGH NO DOUBT A BIG ONE AND THAT THE EXPRESSION 'GAS CYLINDERS' USED IN APPENDIX I TO THE INCOME - TAX RULES DOES NOT MENTION THE SIZE OF THE GAS CYLINDERS NOR DOES IT SAY THAT GAS CYLINDERS SHOULD BE ONLY FOR COOKING PURPOSE OR FOR ANY OTH ER PARTICULAR PURPOSE AND ANY INTERPRETATION OF THE EXPRESSION 'GAS CYLINDERS' TO MEAN 'COOKING GAS CYLINDER', WOULD BE REALLY ADDING WORDS TO THE STATUTE WHICH IS NOT PERMISSIBLE. ACCORDINGLY, THE DIVISION BENCH OF THE DELHI HIGH COURT HELD THAT GAS CYLIN DERS ARE ENTITLED TO DEPRECIATION AT 100 PER CENT.' 8. LEARNED COUNSEL FOR THE ASSESSEE ALSO STATED THAT TILL THE STAGE OF ASSESSMENT YEAR 2004 - 05 SUCH CLAIM OF THE ASSESSEE FOR HIGHER DEPRECIATION WAS EVEN ACCEPTED BY THE REVENUE. 9. UNDER THE CIRCUMSTANCES, WE DO NOT FIND THAT THE CIT(A) AND THE TRIBUNAL COMMITTED ANY ERROR IN THIS RESPECT. SUCH QUESTION, THEREFORE IS NOT REQUIRED TO BE CONSIDERED. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE GUJARAT HIGH COURT GR OUND NO.3 OF THE REVENUES APPEAL IS REJECTED BEING COVERED AGAINST THE REVENUE. 4(II). HONBLE GUJARAT HIGH COURT IN RESPECT OF QUESTION NO. B(I) I.E. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE ITAT WAS CORRECT IN DELETING THE DISALLOWANCE OF ADDITIONAL DEPRECIATION OF RS.32,29,051/ - ON COMPUTERS INSTALLED IN THE FACTORY PREMISES, WITHOUT APPRECIATING THAT THE COMPUTERS ARE OFFICE APPLIANCES ONLY WHETHER INSTALLED IN FACTORY OR OFFICE, HAS DECID ED THIS QUESTION IN PARA 10 TO 11 AS UNDER: 10. COMING TO THE SECOND QUESTION, FACTS ARE THAT DURING THE PREVIOUS YEAR RELEVANT' TO THE ASSESSMENT YEAR 2007 - 08 THE ASSESSEE INSTALLED CERTAIN COMPUTERS IN ITS FACTORY PREMISES AND CLAIMED DEPRECIATION AVA ILABLE TO COMPUTERS. THE ASSESSING OFFICER, HOWEVER, HELD THAT THE COMPUTERS SHOULD BE TREATED EITHER AS OFFICE APPLIANCES FAILING WHICH THEY WOULD FORM PART OF THE PLANT AND MACHINERY. IN EITHER CASE, RIGHT OF DEPRECIATION WOULD BE 20% AND AND NOT 60% AS CLAIMED BY THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER IN APPEAL. CIT(APPEALS) REVERSED THE DECISION OF THE I TA NO. 25 50 /AHD/ 1 2 A.Y. 0 8 - 0 9 ( D CIT VS. GUJARAT ALKALIES & CHEMICALS LTD. ) PAGE 5 ASSESSING OFFICER. IN FURTHER APPEAL BY THE REVENUE BEFORE THE TRIBUNAL, DECISION OF THE CIT(APPEALS) WAS CONFIRMED IN FOLLOWING TERMS: - '50 . WE HAVE HEARD BOTH THE PARTIES IN OUR OPINION, THE LD CIT(A) HAS CORRECTLY ANALYZED THE FACTS AND DECIDED THE ISSUE IN THE LIGHT OF APPLICABLE LAW. IT CANNOT BE SAID AS A UNIVERSAL PROPOSITION OF LAW THAT COMPUTERS ARE ALWAYS USED ONLY IN OFFICES AND NOT FOR MANUFACTURING ACTIVITIES. THE FINDING OF FACT RECORDED BY THE LD.CIT (A) HAS NOT BEEN REBUTTED BEFORE US. WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE LD.CIT(A) IN THIS REGARD. HIS ORDER IN THIS BEHALF THEREFORE CONFIRMED. GROUND NO. 2 TAKEN BY THE DEPA RTMENT IS DISMISSED. 11. WE CANNOT FIND ANY FAULT WITH THE OBSERVATIONS OF THE TRIBUNAL WHILE CONFIRMING THE VIEW OF CIT(APPEALS)THAT THERE CANNOT BE UNIVERSAL PREPOSITION OF LAW THAT COMPUTERS ARE USED ONLY IN OFFICES AND NOT FOR MANUFACTURING ACTIVITIES. THE INSISTENCE OF THE ASSESSING OFFICER THAT THE SAME SHOULD THEREFORE BE TREATED AS OFFICE APPLIANCE CANNOT BE COUNTENANCED. PERHAPS IF IT WAS SHOWN THAT THE COMPUTERS FORMED PART OF THE INTEGRATED MANUFACTURING PROCESS, HIS STAND THAT THE SAM E WOULD FORM PART OF THE PLANT AND MACHINERY MAY HAVE SOME BASIS. IN THE PRESENT CASE, NO SUCH MATERIAL WAS AVAILABLE ON RECORD. IT IS NOT AS IF THAT IN FACTORY PREMISES, COMPUTERS CANNOT BE INSTALLED FOR DIRECT USE IN MANUFACTURING ACTIVITY; THEREBY FORMI NG PART OF MACHINERY USED IN SUCH ACTIVITY. THERE MAY BE NUMBER OF WAYS IN WHICH INSTALLATION OF A COMPUTER MAY ENHANCE AND IMPROVE THE EFFICIENCY. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE COMPUTERS WERE PART OF THE PLANT AND MACHINERY. THEREFORE, R ESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE GUJARAT HIGH COURT GROUND NO.2 OF THE REVENUES APPEAL IS REJECTED. 5 . APROPOS TO GROUND NO.3, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF THE CO - ORDI NATE BENCH. ON THE CONTRARY, LD. CIT(A).DR OPPOSED THE SUBMISSIONS OF ASSESSEE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. CIT(A) ALLOWED THE CLAIM OF DEPRECIATION BY RELYING ON THE DECISION OF HONBLE MADRAS HIG H COURT RENDERED IN CASE OF COMMISSIONER OF INCOME - TAX VS. VTM LTD. [2010] 187 TAXMAN 319 (MAD.), CIT VS. HI TECH ARAI LTD. [2010] 321 ITR 477 (MAD) AND CIT VS. TEXMO PRECISION CASTINGS [2010] 321 ITR 481 (MAD). WE FIND THAT THE LD. CIT(A) HAS DECIDED THE ISSUE BY OBSERVING AS UNDER: 3.2 I HAVE CONSIDERED THE MATTER. SECTION 32(1)(IIA) READS AS UNDER: - 32(1). IN RESPECT OF DEPRECIATION OF I TA NO. 25 50 /AHD/ 1 2 A.Y. 0 8 - 0 9 ( D CIT VS. GUJARAT ALKALIES & CHEMICALS LTD. ) PAGE 6 (I) BUILDINGS, MACHINERY, PLANT OR FURNITURE, BEING TANGIBLE ASSETS; (II) KNOWHOW, PATENTS......... OWNED , WHOLLY OR PARTLY BY THE ASSESSEE AND USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION, THE FOLLOWING DEDUCTIONS SHALL BE ALLOWED (I) .. (II) (IIA) ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER 31 ST DAY OF MARCH 2005 BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, A FURTHER SUM EQUAL TO TWENTY PERCENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTI ON UNDER CLAUSE (II)' ADDITIONAL DEPRECIATION @ 20% OF ACTUAL COST OF NEW MACHINERY INSTALLED AFTER 31.3.2005 BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING IS THEREFORE AVAILABLE UNDER CLAUSE (II) OF SECTION 3 2(1). APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF PRODUCING CHEMICALS SUCH AS CAUSTIC SODA/CAUSTIC POTASH AND HAD INSTALLED NEW MACHINERY, I.E. WIND ELECTRIC GENERATOR AFTER THE PRESCRIBED DATE DURING F.Y. 2007 - 08. ON BEING ASKED, APPELLANT INFORMED TH AT IT HAD CLAIMED DEPRECIATION ON WIND ELECTRIC GENERATOR UNDER CLAUSE (II) OF SECTION 32(1) AND NOT CLAUSE (I) OR SECTION 32(1). APPELLANT FILED COPY OF COMPUTATION OF INCOME AND DEPRECIATION CHART IN THIS REGARD . ADDITIONAL DEPRECIATION @ 20% OF THE ACT UAL COST OF SUCH WIND ELECTRIC GENERATOR WOULD BE ADMISSIBLE UNDER CLAUSE (II) OF SECTION 32(1), SINCE APPELLANT HAD CLAIMED NORMAL DEPRECIATION ON WIND ELECTRIC GENERATOR UNDER CLAUSE (II) OF SECTION 32(1) AND NOT CLAUSE (I) OF SECTION 32(1) BY EXERCISING OPTION IN THIS REGARD UNDER RULE 5(1A) OF IT. RULES. DENIAL OF ADDITIONAL DEPRECIATION BY THE A.O. FOR THIS REASON IS, THEREFORE NOT TENABLE. ASSESSING OFFICER'S OTHER REASON FOR DENYING ADDITIONAL DEPRECIATION .ON WIND ELECTRIC GENERATOR WAS THAT ADDITIO NAL DEPRECIATION WAS ADMISSIBLE TO ASSESSEE ENGAGED IN PRODUCTION OR MANUFACTURE OF ARTICLE OR THING, WHEREAS GENERATION AND DISTRIBUTION OF POWER DOES NOT RESULT INTO 'PRODUCTION OR MANUFACTURE OF ARTICLE OR THING'. AS HELD IN THE CASE OF CIT VS VTM LTD. (2010) 187 TAXMAN 319 ( MAD), SECTION 32(1 )(IIA) DOES NOT IMPOSE ANY CONDITION OF OPERATIONAL CONNECTIVITY OF THE NEW MACHINERY WITH THE 'ARTICLE OR THING' ALREADY BEING MANUFACTURED BY ASSESSEE. SIMILAR VIEW HAS BEEN TAKEN IN THE CASES OF CIT VS HI TECH AR AI LTD. (2010) 321 ITR 477 (MAD) AND CIT VS TEXMO PRECISION CASTINGS (2010) 321 ITR 481 (MAD). SINCE APPELLANT WAS MANUFACTURING / PRODUCING CHEMICALS AND HAD INSTALLED NEW MACHINERY, I.E. WIND ELECTRIC GENERATOR, DENIAL OF ADDITIONAL DEPRECIATION DUE TO P OWER GENERATED BY WIND ELECTRIC GENERATOR NOT RESULTING INTO 'PRODUCTION OR MANUFACTURE' IS NOT TENABLE. ADDITIONAL DEPRECIATION U/S.32(1 )(IIA) ON WIND ELECTRIC GENERATOR IS DIRECTED TO BE ALLOWED AND DISALLOWANCE OF RS. 12,17,06,967 IS CANCELLED. HONBL E MADRAS HIGH COURT IN CASE OF CIT VS. TEXMO PRECISION CASTINGS HAS CONFIRMED THE VIEW OF THE TRIBUNAL BY HOLDING THAT: THE TRIBUNAL HAS NOTED THAT THERE IS NO DISPUTE ABOUT THE FACT THAT THE ASSESSEE HAS INCREASED THE CAPACITY OF GENERATION OF ELECTRICITY BY MORE THAN 50 PER CENT, BUT THE ADDITIONAL CLAIM OF THE ASSESSEE HAS BEEN REJECTED BY THE LOWER AUTHORITIES ON THE GROUND THAT THE SAID INSTALLATION OF NEW WINDMILLS DOES NOT INCREASE THE CAPACITY OF I TA NO. 25 50 /AHD/ 1 2 A.Y. 0 8 - 0 9 ( D CIT VS. GUJARAT ALKALIES & CHEMICALS LTD. ) PAGE 7 THE ASSESSEE'S BUSINESS OF MANUFACTURING OF INVESTMENT CASTINGS, AS WELL AS THE NEW WINDMILLS HAS BEEN USED FOR CAPTIVE CONSUMPTION AND REDUCED THE ELECTRICITY CHARGES OF THE ASSESSEE. IT WAS FURTHER NOTED BY THE TRIBUNAL THAT WHEN THE ASSESSEE WAS ALRE ADY HAVING THE WINDMILLS FOR GENERATION OF POWER AND THE INSTALLATION OF TWO NEW WINDMILLS HAS INCREASED THE CAPACITY OR GENERATION OF POWER BY MORE THAN 50 PER CENT, THEN THE VIEW TAKEN BY THE AUTHORITIES IS THAT THE INCREASE OF THE CAPACITY SHOULD HAVE B EEN IN THE BUSINESS OF INVESTMENT CASTINGS IS NOT CORRECT ON THE PREMISE THAT WHEN THE ASSESSEE WAS ALREADY GENERATING POWER FOR SELLING TO ELECTRICITY BOARD THEN THE INSTALLATION OF NEW WINDMILLS HAS DEFINITELY INCREASED THE CAPACITY OF THE ASSESSEE IN GE NERATION OF POWER AND IS COVERED UNDER THE CONDITIO NS PRESCRIBED UNDER SECTION 32(1 )(IIA). IN ORDER TO GIVE THE RELIEF SOUGHT FOR BY THE ASSESSEE THE TRIBUNAL RELIED ON ITS OWN DECISION IN THE CASE OF HI TECH ARAL LIMITED IN WHICH THE TRIBUNAL HAS HELD AS FOLLOWS : '8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD, WE NOTE THAT THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE IS BASICALLY GENERATING THE ELECTRICITY BY WIND MILLS FOR ITS OWN CONS UMPTION AND IT IS NOT THE BUSINESS OF THE ASSESSEE. THEREFORE, THE ASSESSES IS NOT ENTITLED FOR ADDITIONAL DEPRECIATION ON WIND MILLS, UNDER SECTION 32(1)(IIA). ON APPEAL, THE COMMISSIONER OF INCOME - TAX (APPEALS) HAS ALLOWED THE CLAIM OF THE ASSESSEE ON TH E GROUND THAT IT IS NOT ESSENTIAL THAT THE ASSESSEE IS IN THE BUSINESS OF GENERATION OF ELECTRICITY. BUT, SINCE THE ASSESSEE IS GENERATING THE ELECTRICITY BY WINDMILLS, THE CONDITIONS OF THE LAW ARE FULFILLED FOR CLAIMING ADDITIONAL DEPRECIATION. IT IS AN UNDISPUTED FACT THAT AFTER THE ADDITION OF TWO UNITS DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR, THE CAPACITY OF GENERATION OF POWER THROUGH WIND MILLS WAS ENHANCED BY 50 PER CENT. IN OUR VIEW, WHEN THE CENTRAL BOARD OF DIRECT TAXES IN ITS CIRCULAR HAS EXPLAINED THE POSITION OF CAPTIVE POWER UNIT AS WELL AS THE GENERATION AND GENE RATION AND DISTRIBUTION OF POWER UNIT ON SAME FOOTINGS, THEN WE FIND NO MERIT IN THE APPEAL OF THE REVENUE ON THIS ISSUE. ACCORDINGLY, WE DECIDE THIS ISSUE AGAINST THE REVE NUE. THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) IS UPHELD ON THIS ISSUE.' IT IS ALSO BROUGHT TO OUR NOTICE THAT THE SAID DECISION OF HI TECH ARM LIMITED WAS TAKEN ON APPEAL BY THE REVENUE TO THIS COURT AND THIS COURT BY ORDER SEPTEMBER 1, 2009, IN T. C. APPEALS NOS. 670 AND 671 OF 2009 CIT V. HI TECH AMI LTD. [2010] 321 ITR 477, DISMISSED THE APPEAL FILED BY THE REVENUE, IN WHICH ALSO, A QUESTION OF LAW IDENTICAL TO THE ONE, WHICH IS FOR MULATED IN THIS CASE, HAS BEEN FORMULATED AND PUT IN ISSUE BEFORE THE COURT AND THE DIVISION BENCH HELD AS FOLLOWS (PAGE 479) : '5. IN THE CASE ON HAND, THE ASSESSEE IS SLATED TO HAVE SET UP TWO WIND MILLS IN ADDITION TO THE ALREADY EXISTING FOUR WIND MILLS AND THEREBY INCREASED ITS POWER GENERATION CAPACITY BY ABOVE 50 PER CENT. IT IS TRUE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF OIL S EEDS, MOULDED RUBBER PARTS, REED VALUE ASSEM BLIES APART FROM GENERATION OF POWER. AFTER THE INSTALLATION OF THE ADDITIONAL WIND MILLS, BOTH PRIOR TO AS WELL AS AFTER THE INSTALLATION OF THE ADDITIONAL WIND MILLS, THE ASSESSEE WAS USING WIND ENERGY FOR GEN ERATING POWER FOR ITS CAPTIVE CONSUMPTION APART FROM SELLING THE SURPLUS POWER GENERATED TO THE TAMIL NADU ELECTRICITY BOARD. AS FAR AS APPLICATION OF SECTION 32(1) (IIA) OF THE ACT IS CONCERNED, WHAT IS REQUIRED TO BE SATISFIED IN ORDER TO CLAIM THE ADDIT IONAL DEPRECIATION IS THAT THE SETTING UP I TA NO. 25 50 /AHD/ 1 2 A.Y. 0 8 - 0 9 ( D CIT VS. GUJARAT ALKALIES & CHEMICALS LTD. ) PAGE 8 OF A NEW MACHINERY OR PLANT SHOULD HAVE BEEN ACQUIRED AND INSTALLED AFTER 31ST MARCH, 2002, BY AN ASSESSEE, WHO WAS ALREADY ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THE SAID PRO VISION DOES NOT STATE THAT THE SETTING UP OF A NEW MACHINERY OR PLANT, WHICH WAS ACQUIRED AND INSTALLED UP TO MARCH 31, 2002, SHOULD HAVE ANY OPERATIONAL CONNECTIVITY TO THE ARTICLE OR THING THAT WAS ALREADY BEING MANUFACTURED BY THE ASSESSEE. THEREFORE, T HE CONTENTION THAT THE SETTING UP OF A WIND MILL HAS NOTH ING TO DO WITH THE POWER INDUSTRY, NAMELY, MANUFACTURE OF OIL SEEDS, ETC., IS TOTALLY NOT GERMANE TO THE SPECIFIC PROVISION CONTAINED IN SEC TION 32(1)(IIA) OF THE ACT.' AS THE ISSUE IS ALREADY DEC IDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE IN THE ABOVE JUDGMENT, WE ARE OF THE VIEW THAT THE ORDER OF THE TRIBUNAL REQUIRES NO INTERFERENCE AT OUR HANDS AND THE APPEAL HAS TO BE DISMISSED AND ACCORDINGLY THE SAME IS DISMISSED . IN THE PRESENT CASE, IT IS NOTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PRODUCING CHEMICALS, SUCH AS, CAUSTIC SODA, AND CAUSTIC POTASH AND INSTALLED A NEW MACHINERY I.E. WIND ELECTRIC GENERATOR. THEREFORE, IN THE LIGHT OF JUDGMENT OF THE HONBLE MADRAS HIGH CO URT, THE ASSESSING OFFICER WAS NOT JUSTIFIED TO DISALLOW THE CLAIM OF THE ASSESSEE. THE REVENUE HAS NOT PLACED ANY CONTRARY JUDGMENT BY HONBLE SUPREME COURT OR JURISDICTIONAL HIGH COURT. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE MADRAS H IGH COURT IN CASE OF CIT VS. TEXMO PRECISION CASTINGS (SUPRA), WE DO NOT SEE ANY REASON TO INTERFERE WITH SAME AND S AME IS HEREBY AFFIRMED. THE GROUND OF REVENUES APPEAL IS DISMISSED. 7 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . TH I S ORDER PRONOUNCED IN OPEN COURT ON 11/09/2015 SD/ - SD/ - ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO: - 1. / APPELLANT 2. / RESPONDENT I TA NO. 25 50 /AHD/ 1 2 A.Y. 0 8 - 0 9 ( D CIT VS. GUJARAT ALKALIES & CHEMICALS LTD. ) PAGE 9 3. / CONCERNED CIT 4. - / CIT (A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. BY ORDER/ , / ,