ACIT, UDAIPUR V. M/s. K.K. Enterprises, UDAIPUR

ITA 315/JODH/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7904 (ITAT-JODHPUR)
• Duration Of Justice: 3 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 08-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Depreciation
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 315/JU/2009 ASSESSMENT YEAR : 2006-07 THE ACIT, VS M/S K.K. ENTERPRISES, CIRCLE-2, UDAIPUR UDAIPUR & ITA NO. 438/JU/2010 ASSESSMENT YEAR : 2007-08 THE DCIT, VS M/S K.K. ENTERPRISES, CIRCLE-2, UDAIPUR UDAIPUR (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.R. KOKANI RESPONDENT BY : SHRI AMIT KOTHARI DATE OF HEARING : 13.9.2012 DATE OF PRONOUNCEMENT : 20.09.2012 ORDER PER N.K.SAINI, A.M. THESE TWO APPEALS BY THE DEPARTMENT ARE DIRECTED AG AINST THE SEPARATE ORDERS DATED 24.3.2009 AND 19.4.2010 OF CIT(A), UDA IPUR FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 RESPECTIVELY. 2 2. SINCE ALL THE ISSUES INVOLVED IN THESE APPEALS A RE COMMON AND THE APPEALS WERE HEARD TOGETHER, SO THESE ARE BEING DIS POSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST WE WILL DEAL WITH ITA NO. 315/JU/2009 RELA TING TO ASSESSMENT YEAR 2006-07. 4. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L:- ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF TH E CASE, THE LD CIT(A) HAS ERRED IN :- 1. DELETING THE DISALLOWANCE OF DEPRECIATION OF RS. 23,59,569/- ON DUMPERS BY ALLOWING 15% DEPRECIATION AS AGAINST CLAIMED AT 30%. 2. DELETING THE DISALLOWANCE OF DEPRECIATION ON TAN KERS AMOUNTING TO RS. 1,24,614/- 5. THE FIRST ISSUE RAISED IN THIS APPEAL RELATES TO THE DELETION OF DISALLOWANCE OF DEPRECIATION ON DUMPERS. THE FACTS RELATING TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN ON 29. 7.2006 DECLARING AN INCOME OF RS. 22,55,136/- WHICH WAS PROCESSED ON 22.2.2007 U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS T HE ACT IN SHORT]. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY. TH E ASSESSEE CLAIMED THE DEPRECIATION @ 30% ON THE DUMPERS. THE ASSESSING OF FICER WAS OF THE VIEW THAT THE DEPRECIATION WAS ALLOWABLE @ 15%. WHEN AS KED TO JUSTIFY THE SAME, THE ASSESSEE SUBMITTED THAT THE DUMPERS WERE GIVEN ON HIRE TO M/S SHREE LOGISTICS P. LTD AND WERE REGISTERED UNDER THE MOTO R VEHICLE ACT SO WERE ENTITLED FOR DEPRECIATION @ 30%. THE ASSESSING OFF ICER DID NOT FIND MERIT IN 3 THE SUBMISSIONS OF THE ASSESSEE AND HELD THAT THE D UMPERS ON WHICH THE ASSESSEE HAD CLAIMED DEPRECIATION WERE NOT TRANSPOR T VEHICLES, RATHER THOSE WERE CONSTRUCTION EQUIPMENTS FALLING IN THE GENERAL CATEGORY OF PLANT AND MACHINERY AND HENCE WERE ENTITLED FOR DEPRECIATION @ 15%. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- A) CIT VS SIBSON CONSTRUCTION COMPANY 221 ITR 468 (GA UHATI) B) CIT VS SARDAR STONES, 215 ITR 350(RAJ) C) DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN TH E CASE OF CIT VS AR ENTERPRISES P. LTD IN DBIT NO. 77/2002 DA TED 6.9.2007 6. THE ASSESSEE CARRIED THE MATTER TO LD CIT(A) WHO DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATION @ 30% BY FO LLOWING HIS EARLIER ORDER DATED 20.2.2009 IN APPEALS NO. 409/IT/UDR/2007-08 F OR ASSESSMENT YEAR 2005-06. NOW THE DEPARTMENT IS IN APPEAL. 7. THE LD. DR AT THE VERY OUTSET STATED THAT THE IS SUE IS COVERED IN FAVOUR OF THE DEPARTMENT BY THE EARLIER ORDER DATED 20.11. 2009 OF THIS BENCH OF THE TRIBUNAL IN ITA NO. 270/JU/2009 FOR THE ASSESSMENT YEAR 2005-06. THE LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF LD CIT(A) BUT COULD NOT CONTROVERT THE CONTENTION OF THE LD DR. 8. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES AND MATERIALS AVAILABLE ON RECORD, IT IS NOTICED THAT A SIMILAR I SSUE HAVING IDENTICAL FACTS HAS ALREADY BEEN DECIDED IN FAVOUR OF THE REVENUE A ND AGAINST THE ASSESSEE VIDE ORDER DATED 20.11.2009 IN ASSESSEES OWN CASE IN ITA NO. 265 & 270/JU/2009 FOR THE ASSESSMENT YEARS 2004-05 AND 20 05-06. THE RELEVANT FINDINGS HAS BEEN GIVEN IN PARA 13 OF THE SAID ORDE R, WHICH READ AS UNDER:- 4 13. WE HAVE HEARD THE ID. DR EXPARTE QUA ASSESSEE AND HAVE PERUSED THE MATERIAL ON RECORD. THE DUMPERS ARE EARTH MOVING MACHINERY AND ARE NOT TRANSPORT VEHICLE. THIS VIEW IS WELL FOUNDED BY THE JUDGMENT RENDERED BY THE HONBLE GAUHATI HIG H COURT IN CIT VS. SIBSON & CO. RELIED UPON BY THE ID. ASSESSING O FFICER IN RESTRICTING THE DEPRECIATION TO 25%. MERELY BECAUSE THE DUMPERS CAME TO BE REGISTERED WITH THE TRANSPORT AUTHORITY DID NOT ALTER THE CHARACTER OF THE MACHINERY AND MAKE IT A TRANSPORT VEHICLE ENTITLING THE CLAIM OF HIGHER DEPRECIATION. THERE BEING NO CO GENT OR RELIABLE MATERIAL HAVING BEEN BROUGHT ON RECORD BY THE ID. C IT(A) TO SAY THAT THESE ARE ROAD TRANSPORT VEHICLES, HIGHER DEPRECIAT ION COULD NOT BE .ALLOWED AS SUCH. WE, THEREFORE, SET ASIDE THE ORDE R OF THE ID. CIT(A) AND RESTORE THE DECISION OF ID. ASSESSING OFFICER. THE REVENUES GROUND, THEREFORE, STAND ALLOWED. 9. SO, RESPECTFULLY FOLLOWING THE EARLIER ORDER OF THE TRI BUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-0 5 AND 2005-06 IN ITA NOS. 265 & 270/JU/2009, WE SET ASIDE THE ORDER OF L D CIT(A) AND THAT OF ASSESSING OFFICER IS RESTORED. 10. ANOTHER ISSUE AGITATED BY THE DEPARTMENT RELATES TO THE DIS ALLOWANCE OF DEPRECIATION ON TANKERS. THE FACTS RELATING TO THI S ISSUE IN BRIEF ARE THAT THE ASSESSING OFFICER HAD MADE DISALLOWANCE BY OBSERVIN G IN PARA 4 OF THE ASSESSMENT ORDER DATED 31.12.2008, WHICH READS AS U NDER:- DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2004-05, IT WAS FOUND THAT THE ASSESSEE RECEIV ED A DISCOUNT OF RS. 11,01,000/- ON PURCHASE OF TANKERS. THIS DISCOUNT WAS NOT ACCOUNTED FOR BY THE ASSESSEE IN T HE BOOKS OF ACCOUNT AND HENCE VIDE ORDER U/S 143(3) DA TED 12.12.2006 READ WITH ORDER U/S 154 DATED 15.2.2007 5 DEPRECIATION AMOUNTING TO RS. 4,09,200/- CLAIMED ON SUCH INFLATED COST WAS DISALLOWED. AS A COROLLARY TO THE ABOVE FACT, THE OPENING WDV O F TANKERS AS ON 1.4.2005 STANDS INFLATED BY AN AMOUNT OF RS. 4,15,380/- (6,91,800 2,76,720). THEREFORE, T HE DEPRECIATION @40% ON THIS INFLATED WDV OF RS. 6,91,800/- WHICH AMOUNT OF RS. 1,24,614/- IS DISALL OWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 11. WHEN THE ASSESSEE CARRIED THE MATTER TO THE LD CIT(A), T HE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY OBSERVING IN P ARA 6 OF THE IMPUGNED ORDER, WHICH READS AS UNDER:- 6. THIS POINT HAS ALSO DECIDED VIDE APPELLATE ORDE R DATED 20.2.2009 IN APPEAL NO. 512/2007 FOR ASSESSME NT YEAR 2004-05 AND 20-2-2009 IN APPEAL NO. 409/2007-0 8 FOR ASSESSMENT YEAR 2005-06. SINCE, FULL FACTS HAV E ALREADY BEEN DISCUSSED AND DECIDED BY THE ABOVE APPELLATE ORDERS AND THERE IS NO CHANGE IN THE FACT S OF THE CASE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICE R IS DELETED. THE APPEAL IS ALLOWED ON THIS GROUND. 12. BEING AGGRIEVED, THE DEPARTMENT HAS IS IN APPEA L. 13. DURING THE COURSE OF HEARING, LD COUNSEL FOR TH E ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE DEPARTMENT AND AGAINST THE ASSESSEE VIDE ORDER DATED 20.11.2009 IN ITA NO. 270/JU/2009 FOR THE ASSESSMENT YEAR 2005-06 IN ASSESSEES OWN CASE, A COPY OF THE SAID ORDER WAS ALSO FURNISHED. THE AFORESAID CONTENTION OF TH E LD. DR WAS NOT CONTROVERTED BY THE LD COUNSEL FOR THE ASSESSEE. 6 14. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES, IT IS NOTICED THAT A SIMILAR ISSUE HAVING IDENTICAL FACTS HAS ALREADY BEEN DECIDED IN FAVOUR OF THE DEPARTMENT AND AGAINST THE ASSESSEE IN ASSESSE ES OWN CASE IN ITA NO. 270/JU/2009 FOR THE ASSESSMENT YEAR 2005-06, ORDER DATED 20.11.2009, WHEREIN THE RELEVANT FINDINGS HAS BEEN GIVEN IN PAR A 7 WHICH READS AS UNDER:- 7. WE HAVE HEARD THE ID. DR EXPARTE QUA ASSESSEE AND HAVE ALSO PERUSED THE ENTIRE MATERIAL ON RECORD. THE ID. CIT(A) DELETED THE ADDITION OF RS. 11,01,000/- ON THE PRE MISE THAT THE CREDIT NOTE HAS BEEN RECEIVED BY THE ASSESSEE DURIN G THE F.Y. 2006-07 RELEVANT TO A.Y. 2007-08 WHICH LED THE ASSE SSEE TO SHOW THE SAID AMOUNT AS ITS INCOME FOR A.Y. 2007-08 . IN FACT, NEITHER THE ASSESSEE BROUGHT ON RECORD ANY SUCH CRE DIT NOTE NOR THE ID. LD. CIT(A) HAS MADE REFERENCE TO THE CREDIT NOTE BEFORE SAYING THAT THE CREDIT NOTE WAS RECEIVED IN F.Y. 20 06-07. SECONDLY, THE ASSESSEE HAD MAINTAINED ITS ACCOUNTS ON MERCANTILE BASIS. THE REBATE AND DISCOUNT HAVE ACCR UED TO THE ASSESSEE IN THE YEAR IN WHICH PURCHASE OF TANKERS W AS MADE. NECESSARILY, THEREFORE, THE COST OF ASSETS WAS TO B E REDUCED BY THE AMOUNT OF THE REBATE AND DISCOUNT THAT HAS FALL EN DUE BEFORE THE CLOSE OF ASSESSMENT YEAR AS ON 31.03.2004 REL EVANT TO A.Y. 2004-05. IN THAT VIEW OF THE MATTER, INSTEAD MAKIN G THE ADDITION OF THE WHOLE AMOUNT OF RS.L1,01,000/-, THE SAME WAS REQUIRED TO BE REDUCED FROM THE COST OF THE ASSETS FORMING PART OF THE BLOCK OF ASSETS AND RIGHT COURSE WAS TO ALLO W CORRECT DEPRECIATION THEREON. THE ID. CIT(A), HOWEVER, FURT HER EXCEEDED HIS JURISDICTION IN HOLDING THAT THERE COU LD BE NO DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS.4,09,2 00/- ON THE AMOUNT OF RS. 11,01,000/- AS AFORESAID, AS A SEPARA TE ADDITION STANDS MADE BY THE ASSESSING AUTHORITY. HOWEVER, PE RUSAL OF THE ASSESSMENT ORDER REVEALS THAT SUCH DISALLOWANCE OF DEPRECIATION WAS MADE BY THE ASSESSING OFFICER IN T HE ORDER 7 IMPUGNED BEFORE HIM. THE DISALLOWANCE OF DEPRECIATI ON APPEARS TO HAVE BEEN MADE BY THE ASSESSING AUTHORITY IN A S EPARATE ORDER PASSED ON 15.01.2007 ON THE APPLICATION OL AS SESSEE REQUIRING HIM TO DO SO. THE ORDER PASSED U/S 154 OF THE ACT IS AN ORDER. WHEN THAT ORDER WAS NOT UNDER APPEAL BEFO RE HIM, HE COULD NOT HAVE ADJUDICATED ON THE ISSUE AND DELETED THE DISALLOWANCE OF DEPRECIATION, AS THE SAME DID NOT O CCASION IN THE ASSESSMENT ORDER DATED 12.12.2006 IMPUGNED BEFO RE HIM. THE ID. CIT(A) FOR THE REASONS BEST KNOWN TO HIM AP PEARS TO HAVE TRANSGRESSED HIS POWERS AND ADJUDICATED UPON T HE ISSUE, WHICH WAS NOT THE SUBJECT MATTER OF APPEAL. WE, THE REFORE, SET ASIDE THE ORDER ON THAT GROUND AND ALLOW THE GROUND RAISED IN APPEAL BY THE REVENUE. CONSEQUENTIAL EFFECT TO THIS DECISION SHALL BE GIVEN TO REVENUES GROUND NO. 2 IN APPEAL IN ITA NO. 270/JU/2009 FOR A.Y. 2005-06, AS THE ISSUE FLOWS FR OM THE SAME AMOUNT OF REBATE AND DISCOUNT OF RS.L1,01,000/- WHI CH HAS ACCRUED TO THE ASSESSEE IN ASSESSMENT YEAR 2004-05 AND WAS LIABLE TO BE REDUCED FROM THE COST OF ASSETS . 15. SO, RESPECTFULLY FOLLOWING THE EARLIER ORDER OF THE TRI BUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-0 5 AND 2005-06 IN ITA NOS. 265 & 270/JU/2009, WE SET ASIDE THE ORDER OF L D CIT(A) AND THAT OF ASSESSING OFFICER IS RESTORED 16. NOW WE WILL DEAL WITH ITA NO. 438/JU/2012. IN THIS APPEAL, FOLLOWING GROUNDS HAS BEEN RAISED:- ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF TH E CASE, THE LD CIT HAS ERRED IN :- 1. ALLOWING CLAIM OF DEPRECIATION @ 30% ON DUMPERS AND THEREBY DELETED THE ADDITION. 8 2. DELETING THE DISALLOWANCE OF DEPRECIATION OF RS. 99 ,691/- ON TANKERS. 3. DELETING THE EXCESS CLAIM OF DEPRECIATION OF RS. 34,82,238/- ON WINDMILL. 17. GROUND NO.1 RELATES TO DELETION OF ADDITION MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF DEPRECIATION ON DUMPERS. THIS ISSUE IS SIMIALR TO THE ISSUE INVOLVED IN GROUND NO.1 IN ITA NO. 315/JU/200 9 FOR THE ASSESSMENT YEAR 2006-07 (SUPRA). THEREFORE, OUR FINDINGS GIVE N IN FORMER PART OF THIS ORDER SHALL APPLY MUTATIS-MUTANDIS FOR THIS YEAR AL SO. 18. GROUND NO.2 OF THIS APPEAL RELATES TO THE DISAL LOWANCE OF DEPRECIATION ON TANKERS. THIS ISSUE WAS ALSO SUBJECT MATTER OF T HE DEPARTMENTAL APPEAL IN THE PRECEDING YEARS AND IT WAS AN OBSERVATION OF T HE ITAT IN PARA 7 OF THE ORDER DATED 20.11.2009 THAT THE LD CIT(A) DELETED T HE ADDITION OF RS. 11,01,000/- ON THE PREMISE THAT CREDIT NOTE HAD BEE N RECEIVED BY THE ASSESSEE DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSES SMENT YEAR 2007-08 WHICH LED THE ASSESSEE TO SHOW THE SAID AMOUNT AS I TS INCOME FOR ASSESSMENT YEAR 2007-08 BUT NEITHER THE ASSESSEE BROUGHT ON R ECORD ANY SUCH CREDIT NOTE NOR LD CIT(A) HAD MADE REFERENCE TO THE CREDIT NOTE BEFORE SAYING THAT CREDIT NOTE WAS RECEIVED IN FINANCIAL YEAR 2006-07. THERE FORE, WE DEEM, IT APPROPRIATE TO REMAND THIS ISSUE BACK TO THE FILE O F ASSESSING OFFICER TO BE DECIDED AFRESH BY KEEPING IN VIEW THE OBSERVATIONS AND FINDINGS OF THE ITAT IN ORDER DATED 20.11.2009 IN ITA NOS. 265 & 270/JU/ 2009 FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06. ACCORDINGLY, THIS ISSUE IS REMANDED BACK TO THE FILE OF ASSESSING OFFICER. 9 19. THE LAST ISSUE IN THIS APPEAL RELATES TO DELETI ON OF DISALLOWANCE FOR DEPRECIATION ON WINDMILL. THE FACTS RELATING TO TH IS ISSUE IN BRIEF ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS NOTED THAT THE ASSESSEE CLAIMED 80% DEPRECIATION ON CIVIL WORK AND FOUNDATION, ELECTRIC ITEMS, COMPONENTS AND INSTALLATION AND DEPRECIATION ON COMMON POWER EVACUATION CHARGES TREATING THE SAME AS PART OF THE WINDMILL. THE ASSESSING OFFICER WAS OF THE VIEW THAT CIVIL WORK AND FOUNDAT ION, ELECTRIC ITEMS, COMPONENTS & INSTALLATION AND DEPRECIATION ON COMMO N POWER EVACUATION CHARGES SHALL NOT QUALIFY FOR HIGHER DEPRECIATION. THE ASSESSING OFFICER ALLOWED DEPRECIATION @ 10% ON CIVIL WORK & FOUNDATI ON AND @ 15% ON ELECTRIC ITEMS, COMPONENTS & INSTALLATION AND DID NOT ALLOW ANY DEPRECIATION ON COMMON POWER EVACUATION CHARGES. ACCORDINGLY DIS ALLOWANCE OF RS. 34,82,233/- WAS MADE BY GIVING THE WORKING AS UNDER :- ITEM COST ELIGIBLE RATE OF DEPRECIA- TION DEPRECIATIO N CLAIMED @ 80% DEPRECIATIO N ALLOWABLE DIFFERENCE CIVIL WORK & FOUNDATION 3460760 10% 1384304 173038 1211266 ELECTRICAL ITEMS, COMPONENTS & INSTALLATION 3141435 15% 1256574 235607 1020967 COMMON POWER EVACUATION 3125000 NOW ALLOWABLE 1250000 0 1250000 TOTAL DISALLOW- ABLE DEPRECIA- TION 3482233 10 20. THE ASSESSEE CARRIED THE MATTER TO THE LD CIT(A ) AND SUBMITTED THAT THE PROVISIONS OF ALLOWING DEPRECIATION ON THE WINDMILL IS GOVERNED BY APPENDIX I, PARA (XIII), WHICH PROVIDES THAT THE DEPRECIATIO N @ 80% HAS TO BE CHARGED ON THE COMPLETE WINDMILL. IT WAS FURTHER STATED THA T CIVIL CONSTRUCTION FOR FOUNDATION OF WINDMILL, CRANE FOUNDATION ETC. COULD NOT BE TERMED AS BUILDING AND ARE PART OF THE WINDMILL ONLY AS THE SAME BECOM E INTEGRAL PART OF THE ITEMS WHICH IS MOUNTED ON IT OR FOR WHICH IT SERVES INSEPARABLE PLATFORM. IT WAS STATED THAT WIND TURBINE GENERATION MACHINES OF 1.25 MW ALONG WITH ROTOR BLADES WERE INSTALLED AT 50 FEET ABOVE THE GR OUND LEVEL AND WAS WEIGHING APPROX 200 TONS WHICH COULD NOT BE PUT TO USE WITHOUT SPECIFIC AND SPECIALIZED INSTALLATION AND FOUNDATION. AS SUCH, T HE FOUNDATION EXPENSES WERE ESSENTIALLY PART OF THE WINDMILL. RELIANCE WA S PLACED ON THE FOLLOWING CASE LAWS:- A) ADDL CIT VS. MADRAS CEMENTS LTD 110 ITR 281 (MAD) B) NOWRANGROY METALS (P) LTD VS. JCIT (2003) 262 ITR 2 31 (GAU) C) CIT VS. HERDILLIA CHEMICALS LTD (1995) 216 ITR 742( BOM) D) VIJAY INDUSTRIES VS. ACIT (ITA NO. 745/JAIPUR/2007 ) ORDER DATED 18.7.2008 OF ITAT, JAIPUR 21. IT WAS FURTHER STATED THAT AS PER THE PROVISION S OF SECTION 43(1) OF THE ACT AND ACCOUNTING STANDARDS, THE ACTUAL COST OF PL ANT AND MACHINERY REQUIRED TO INCLUDE ALL THE INCIDENTAL COSTS AND AS PER PARA 9.1 OF THE ACCOUNTING STANDARD THE COST OF AN ITEM OF FIXED A SSETS COMPRISES ITS PURCHASE PRICE, INCLUDING IMPORT DUTIES AND OTHER N ON-REFUNDABLE TAXES OR LEVIES AND ANY DIRECTLY ATTRIBUTABLE COSTS OF BRING ING THE ASSET TO ITS WORKING 11 CONDITION FOR ITS INTENDED USE AND ANY TRADE DISCOU NTS AND REBATES ARE DEDUCTED IN ARRIVING AT PURCHASE PRICE. IT WAS ACC ORDINGLY SUBMITTED THAT THE EXPENSES INCURRED FOR CIVIL FOUNDATION, ELECTRIC IT EMS &ELECTRIC INSTALLATIONS AND POWER EVACUATION WOULD FORM PART OF THE MACHINE RY ONLY AND WILL BE ENTITLED TO THE SAME RATE OF DEPRECIATION AS OF THE ASSETS FOR WHICH IT WAS INCURRED. RELIANCE WAS PLACED ON THE FOLLOWING CAS E LAWS:- A) INDUSTRIAL DEVELOPMENT CORPORATION OF ORISSA LTD VS . CIT 268 ITR 130 (ORI.) B) D&H SECHERON ELECTRODES VS. CIT [1981] 132 ITR 1 (M P) C) CIT VS. OSWAL WOOLLEN MILLS LTAD (2007) 289 ITR 261 (P&H) 22. THE LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD GOT INSTALLED WINDMI LL THROUGH M/S SUZLON ENERGY LIMITED AND HAD CLAIMED DEPRECIATION @ 80% W HICH WAS ALLOWABLE AS PER THE PROVISIONS OF THE ACT. THE LD CIT(A) WAS OF THE VIEW THAT CIVIL WORK & FOUNDATION, ELECTRIC ITEMS AND COMPONENTS INSTALL ED AND COMMON POWER EVACUATION WERE INTEGRAL PART OF THE WINDMILL BECAU SE WITHOUT STONE FOUNDATION, WINDMILL CANNOT BE INSTALLED. SIMILARLY THE ASSESSEE INCURRED EXPENDITURE FOR ELECTRIC ITEMS, COMPONENTS AND INST ALLATION IN ORDER TO GET WINDMILL INSTALLED ON THE BASIS OF SPECIFICATIONS / SUGGESTIONS GIVEN BY THE COMPANY WHO HAD INSTALLED THE WINDMILL, SO IT WAS A N INTEGRAL PART OF THE WINDMILL. THE CIT(A) ALSO OBSERVED THAT THE ASSESS ING OFFICER DISALLOWED THE DEPRECIATION CLAIMED ON THE PLEA THAT COMMON PO WER EVACUATION EXPENSES AMOUNTING TO RS. 31,25,000/- PAID TO M/S SUZLON ENE RGY LIMITED THROUGH WHICH THE WINDMILL WAS INSTALLED WERE NON-REFUNDABL E AND AS PER THE DETAIL, THE ASSESSEE DID NOT ACQUIRE ANY ASSET BY INCURRING THE ABOVE EXPENSES ON 12 WHICH IT COULD CLAIM THE DEPRECIATION. THE LD CIT( A) WAS OF THE VIEW THAT THOSE COMMON POWER EVACUATION EXPENSES WERE ALSO IN TEGRAL PART OF THE WINDMILL AND ENTITLED FOR DEPRECIATION ALLOWABLE AT THE RATE ON WINDMILL AS IT IS HELD TO BE PART AND PARCEL OF THE WINDMILL. THE LD CIT(A) DELETED THE DISALLOWANCE OF DEPRECIATION MADE BY THE ASSESSING OFFICER AMOUNTING TO RS. 34,82,233/-. NOW, THE DEPARTMENT IS IN APPEAL. 23. THE LD DR STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW AND ALSO SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS BENCH IN ITA NO. 6 0 & 61/JU/2010 FOR ASSESSMENT YEARS 2006-07 AND 2005-06 RESPECTIVELY IN THE CASE OF DCIT, BHILWARA VS M/S SARVODAYA SUITINGS PVT LTD, BHILWAR A ORDER DATED 30.3.2012. A COPY OF THE SAID ORDER WAS ALSO FURNI SHED. 24. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES AND MATERIAL AVAILABLE ON RECORD, WE ARE OF THE OPINION THAT THE LD CIT(A) HAS PASSED A JUST ORDER WHICH IS IN CONSONANCE WITH THE EARLIER ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF DCIT, BHILWARA VS M/S SARVO DAYA SUITINGS PVT LTD, BHILWARA (SUPRA). IN THE INSTANT CASE, IT IS NOT I N DISPUTE THAT THE ASSESSEE INSTALLED A WINDMILL. FOR INSTALLING A WINDMILL, C IVIL WORK & FOUNDATION WAS DONE BY INCURRING AN EXPENDITURE OF RS. 30,60,760/- , WITHOUT DOING THE CIVIL CONSTRUCTION WORK INCLUDING FOUNDATION WORK, IT WAS NOT POSSIBLE TO INSTALL THE WINDMILL. SIMILARLY, THE ELECTRIC ITEMS, COMPO NENT AND INSTALLATION WERE NECESSARY FOR THE WINDMILL, BECAUSE IN THE ABSENCE OF THESE COMPONENTS AND ELECTRIC ITEMS IT WAS NOT POSSIBLE FOR THE WINDMILL TO PRODUCE ELECTRICITY. 13 THEREFORE, IT WAS ALSO AND INTEGRAL PART OF THE WIN DMILL. IN THE INSTANT CASE, THE ASSESSEE PAID A SUM OF RS. 31,25,000/- TO M/S S UZLON ENERGY LTD THROUGH WHOM THE WINDMILL WAS INSTALLED. THE SAID PAYMENT WAS NON-REFUNDABLE. THE SAID EXPENDITURE WAS MADE FOR THE INSTALLATION OF THE WINDMILL AND IF THERE WAS NO SUCH WINDMILL INSTALLATION, THE ASSESS EE COULD NOT HAVE INCURRED SUCH EXPENSES, THEREFORE, EXPENDITURE INCURRED ON C OMMON POWER EVACUATION WAS DIRECTLY RELATED TO THE WINDMILL AND THE ASSESS EE WAS ENTITLED FOR HIGHER DEPRECIATION. WE, THEREFORE, CONSIDERING THE TOTAL ITY OF FACTS DO NOT SEE ANY INFIRMITY IN THE ORDER OF LD CIT(A) ON THIS ISSUE. 25. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IN ITA NO. 315/JU/2009 IS ALLOWED WHILE APPEAL IN ITA NO. 438/JU/2010 IS PART LY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20.09 .2012 ) SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 20 TH SEPTEMBER, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR ITAT, JODHPUR