Appeal Details
Counselvise Citation
[2018] 126 COUNSELVISE.COM (IT) 6236 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 2 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
12-01-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2012-2013
Appeal Filed On
09-11-2015
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ACIT, MEHSANA CIRCLE, MEHSANA (APPELLANT) VS M/S. GUJARAT MULTI GAS BASE CHEMICALS PVT. LTD. OPP. ONGC COLONY, VIJALPUR ROAD, MEHSANA PAN: AABCG1283D (RESPONDENT) REVENUE BY : S H RI OM PRAKAS PATHAK , SR. D . R. ASSESSEE BY: S H RI JIGAR PATEL , A.R. DATE OF HEARING : 18 - 12 - 2 017 DATE OF PRONOUNCEMENT : 12 - 01 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - TH IS REVENUE S APPEAL FOR A.Y. 2012 - 13 , AR IS ES FROM ORDER OF THE CIT(A) , GANDHINAGAR, AHM EDABAD DATED 07 - 08 - 2015 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - I ) THE LD. CIT(A) HAS ERRED IN LAW & ON FACTS IN DELETING THE DISALLOWANCE OF RS.43,14,339/' MADE BY THE ASSESSING OFFICER IN RESPECT OF EXCESS DEPRECIATION ON WINDMILL. I T A NO . 3212 / A HD/20 15 A SS ESSMENT YEAR 2012 - 13 I.T.A NO. 3212 /AHD/20 15 A.Y. 2012 - 13 PAGE NO ACIT VS. M/S. GUJARAT MULTI GAS BASE CHEMICALS PVT. LTD. 2 II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME - TAX(APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. III) IT IS, THEREFORE PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF IN COM E - TAX(APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 1 , 53 , 9 6,740 WAS FILED ON 29 TH SEPTEMBER, 2012. THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 6 TH AUGUST, 2013. THE ASSESSEE COMPANY IS ENGAGED I N THE BUSINESS OF MANUFACTURING OF SOD IUM SILICATE AND MINERAL BASED CHEMICALS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION OF THE DETAIL FILED BY THE ASSESSEE, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAS PURCHAS ED WINDMILL FROM M/S. SUZLAN EN ER G Y LTD. THE ASSESSING OFFICER HAS FURTHER NOTICED THAT THE ASSESSEE HAS GOT THE WINDMILL COMMISSIONED ON 7 TH JANUARY, 2012. THE OTHER WORK LIKE INSTALLATION, CIVIL CONSTRUCTION WORK , ELECTRICITY SUPPLY, INSTALLATION ETC. WERE CARRIED OUT BY THE ASSOCI ATE COMPANY OF SUZLAN ENER GY UNDER SEPARATE WORK ORDER S . THE ASSESSEE HAS CLAIMED 80% DEPRECIATION ON THE COST OF WINDMILL TAKEN AS RS. 67, 382 , 268/ - IN THE BLOCK ASSET AS WINDMILL. THE ASSESSING OFFICER HAS GIVEN T HE DETAIL OF ASSET AND INVESTMENT AS PER PAGE 3 OF THE ASSESSMEN T ORDER AS UNDER: - SL. NO. NAME OF THE COMPANY NATURE OF WORK AMOUNT (RS.) 1 M/S. SUZLON GUJARAT WIND PARK LTD WORK CONTRACT FOR ELECTRICAL WORK INCLUDING SUPPLY & INSTALLATION OF ELECTRICAL ITEMS. 4,066,927/ - 2 M/S. SUZLON ENERGY LTD. WINDMILL C OMPONENTS FOR GENERATION OF ELECTRICITY SUPPLY OF ROTOR BLADES OF SUZLON WTG 1.25MW, S66_1250_50_T_72M_STV_SCS_IND_M 6,500,000/ - I.T.A NO. 3212 /AHD/20 15 A.Y. 2012 - 13 PAGE NO ACIT VS. M/S. GUJARAT MULTI GAS BASE CHEMICALS PVT. LTD. 3 ARKII WIND TURBINE GENERATOR (SET OF 3 BLADES) QUANTITY - 1 SET 3 M/S. SUZLON TOWERS AND STRUCTURES LTD. SUPPLY OF COMPONENTS OF RENEWABLE ENERGY DEVICES - WINDMILL . TUBULAR TOWER SUITABLE FOR 74.5 METERS HUB HEIGHT OF SUZLON 1.25 MW RATING WIND TURBINE GENERATOR 8,500,000/ - 4 M/S. SUZLON ENERGY LTD. SUPPLY OF SUZLON S66_ 1250_50_T_72M _STV_SCS_IND_MARKI I WIND TURBINE GENERATOR COMPRISING MAINLY OF: NACELLE . HUB CONTROLLER( MICRO PROCESSOR) 32,262,000/ - 5 M/S. SUZLON INFRASTRUCTU RE SERVICES LTD. COMPONENTS AND ACCESSORIES OF RENEWABLE ENERGY DEVICE 1500KVA,33/0.690KV COPPER WOUND TRANSFORMER WITH ALL FITTINGS AND FIRST FILLING OF TRANSFORMER OIL TRANSFORMER.SR.NO.:SXA/0500/ 11 - 12 SILICA GEL BREATHER PAINT FOR TOUCH - UP 1,060,000/ - 6 M/S. SUZLON PROVIDING SUB LE ASE RIGHTS OF LAND AND RIGHTS OF SUITABLE ACCESS OF SURROUNDING (INCLUDING FREE ACCESS, RIGHT OF WAY ETC) FOR WINDMILL PURPOSE FOR YOUR 1.25MW WTG LAND AT LOCATION NO. BAR - 017 FOR YOUR WINDMILL PROJECT IN THE STATE OF GUJARAT 11,00,000/ - 7 M/S. SUZLON GUJARAT WIND PARK LTD WORKS CONTRACT FOR CIVIL WORK INCLUDING FOUNDATION AND ALLIED WORKS IN RESPECT OF WIND FARM PROJECT. 4,510,999/ - 8 M/S. SUZLON GUJARAT WIND PARK LTD LABOUR WORK FOR ERECTION AND INSTALLATION OF WTGFORL.25MW 1,822,156/ - 9 M/S. SUZLON LABOUR CHARGES FOR FINAL TESTING AND COMMISSIONING 110,300/ - I.T.A NO. 3212 /AHD/20 15 A.Y. 2012 - 13 PAGE NO ACIT VS. M/S. GUJARAT MULTI GAS BASE CHEMICALS PVT. LTD. 4 GUJARAT WIND PARK LTD 10 M/S. SUZLON POWER INFRASTRUCTU RE SERVICES LTD. PROCESSING CHARGES 87,500/ - 11 M/S. SUZLON POWER INFRASTRUCTU RE LTD. POWER EVACUATION INFRASTR UCTURE COST 5,515,000/ - 12 INCIDENTAL CHARGES 1,847,386/ - TOTAL 67,382,268/ - THE ASSESSING OFFICER OBSERVED THAT HIGHER RATE OF DEPRECIATION @ 80% IS NOT AVAILABLE ON ALL THE ITEMS AS STATED ABOVE. THEREFORE, HE HAS ISSUED SHOW CAUSE NOTICE T O THE ASSES SEE TO JUSTIFY THE CLAIM OF DEPR ECIATION AT HIGHER RATE OF 80%. IN THIS CONNECTION, THE ASSESSEE HAS EXPLAINED THAT AS PER PROVISION OF THE INCOME TAX ACT, 1961, DEPRECIATION @ 80% IS ALLOWED ON WINDMILL AND ANY SPECIALLY DESIGNED DEVIC E S WHICH RUN ON WIND MILL. HE FURTHER STATED THAT WINDMILL INCLUDE S WIND TURBINE GENERATOR, BLADES , CABLES, ELECTRICAL APPARATUS , TOWER S , PERMITS , RIGHTS , TRANSFORMERS, METER AND OTHER INFRASTRUCTURAL FACILITIES. IT IS USED TO GENERATE ELECTRICITY BY CONVERTING THE KINETIC ENERGY OF WIND INTO ELECTRI CAL ENERGY. HE CONTENDED THAT DEPRECIATION @ 80% IS ALLOWABLE ON THE ENTIRE DEVICES WHICH IS CAPABLE OF ELECTRICITY , USING THE WIND ENERGY, CIVIL WORK , ELECTRICAL I.T.A NO. 3212 /AHD/20 15 A.Y. 2012 - 13 PAGE NO ACIT VS. M/S. GUJARAT MULTI GAS BASE CHEMICALS PVT. LTD. 5 WORK, POWER EVACUATION AND INFRASTRUCTURE COST AND PROCESSING CHARGES FOR GENERATOR INSTALLATION. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND CONCLUDED THAT RATE OF DEPRECIATION @ 80% WAS NOT ALLOWABLE ON FOLLOWING ITEMS AND ALLOWA BLE DEPRECIATION I S AS UNDER : - SR. NATURE AMOUNT ALLOWABLE NO. (RS.) DEPRECIATION 1 WORKS CONTRACT FOR CIVIL INCLUDING 1,632, 500/ - 81,625 FOUNDATION & ALLIED WORK (INCLUDES OTHER (@ 5%) CIVIL WORK OF RS. 1,632,500/ - PROPORTIONATE COST OUT OF TOTAL COST OF RS. 27,00,000/ - ) 2 WORK CONTRACT FOR ELECTRICAL WORK 4,066,927/ - 3,05,019 INCLUDING SUPPLY & INSTALLATION OF (@ 7.5%) ELECTRICAL ITEMS. 3 POWER EVACUATION INFRASTRUCTURE COST 55,15,000 4,13,625 (@ 7.5%) 4 PROCESSING FESS 87,500 6,563 (@ 7.5.%) 5. INCIDENTAL CHARGES 1,847,386 1,38,554 (@ 7.5%) TOTAL 1,31,49,313 9,45,386/ - THEREFORE, THE EXCESS DEPRECIATION OF RS. 43,14,339/ - WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. I.T.A NO. 3212 /AHD/20 15 A.Y. 2012 - 13 PAGE NO ACIT VS. M/S. GUJARAT MULTI GAS BASE CHEMICALS PVT. LTD. 6 4. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE CLAIMED OF THE ASSESSEE BY OBSERVING AS UNDER: - 4.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSME NT ORDER, SUBMISSIONS OF THE APPELLANT AND THE CASE LAWS RELIED UPON. AO WHILE MAKING THE DISALLOWANCE OF DEPRECIATION ON WINDMILL OF RS.43,14,339/ - HAS CONTENDED VARIOUS WORK AND MACHINES ARE NOT PART OF WINDMILL AND TREATED THE SAME AS NORMAL PLANT & MAC HINERY AND ACCORDINGLY ALLOWED 7.5% DEPRECIATION INSTEAD OF 80% ON WINDMILL CLAIMED BY THE APPELLANT. SUCH WORK / MACHINES INCLUDES WORK CONTRACT FOR ELECTRIC WORK INCLUDING SUPPLY & INSTALLATION OF ELECTRICAL ITEMS OF RENEWABLE ENERGY DEVICES OF RS.40,66, 927/ - , POWER EVACUATION INFRASTRUCTURE COST OF RS.55,15,000/ - , PROCESSING CHARGES OF RS.87,500/ - AND INCIDENTAL CHARGES OF RS.18,47,386/ - APPELLANT HAS CONTENDED THAT WINDMILL IS A SINGLE COMPOSITE PLANT AND ALL THE WORK CONTRACT AND ELECTRICAL TRANSMISSION IS PART OF WINDMILL, THROUGH WHICH ELECTRICITY IS GENERATED. APPELLANT SUBMITTED THAT THERE ARE VARIOUS AGENCIES WHO WORK TOGETHER ON INSTALLATION OF WINDMILL. IN SUPPORT OF APPELLANT'S CLAIM THAT ALL THE ABOVE EXPENDITURE IS ENTITLED TO DEPRECIATION @ 80 % DEPRECIATION. BEFORE ADJUDICATING THE ISSUE, IT IS PERTINENT TO NOTE THAT IDENTICAL ISSUE FOR CLAIM OF ALLOWABILITY OF DEPRECIATION @ 80% ON VARIOUS ANCILLARY COST TO WINDMILL HAD COME UP BEFORE THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF M/S PARRY ENG G. & ELECTRONICS PVT LTD WHEREIN HON'BLE JURISDICTIONAL HIGH COURT IN TAX APPEAL NO. 604 OF 2012 VIDE ORDER DATED 29/1/2013 HAD HELD AS UNDER: '1. REVENUE IS IN APPEAL AGAINST A DECISION OF THE INCOME TAX TRIBUNAL, DATED : 02.03.2012, RAISING FOLLOWING QUE STIONS FOR OUR CONSIDERATION; '(A) WHETHER, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED ITAT HAS ERRED IN LAW CONFIRMING THE ORDER OF THE CIT(A) DELETING THE DISALLOWANCE OF EXCESS CLAIM OF DEPRECIATION OF RS.21,19,322/ - ON WINDMILL? (B) WHETHE R, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED ITAT HAS ERRED IN LAW IN CONFIRMING THE ORDER OF THE CIT (A) DELETING THE DISALLOWANCE OF ADDITIONAL DEPRECIATION OF RS.35,66,299/ - U/S. 32(L)(IIA) OF THE INCOME TAX ACT, 1961, ON WINDMILL?' 2. (1) THE FIRST QUESTION PERTAINS TO THE CLAIM OF THE ASSESSEE FOR DEPRECIATION, AT THE RATE OF 80 PER CENT ON INSTALLATION OF WINDMILL FOR GENERATION OF ELECTRICITY, SUCH CLAIM IS ARISING OUT OF ENTRY (XIII) OF APPENDIX - 1 TO THE INCOME TAX RULES, 1962. SUCH EN TRY PERTAINS TO RENEWABLE ENERGY DEVISES, WHICH INCLUDES INTER ALIA 'WINDMILLS AND ANY SPECIALLY DESIGNED DEVISE WHICH RUN ON WINDMILLS'. INSOFAR AS THE MAIN EQUIPMENT OF WINDMILL IS CONCERNED, THE DEPARTMENT HAD NO DISPUTE ABOUT SUCH CLAIM BEING GRANTED. THE DISPUTED ITEMS ARE AS FOLLOWS; 1. AMOUNT OF INTEREST ON TERM LOAN FOR WINDMILL, BEFORE INSTALLATION RS.2,52,752/ - 2. THE AMOUNT OF CIVIL WORKS, INSTALLATION, LABOUR AND FOUNDATION WORK OF WINDMILL RS.44,18,239/ - 3. THE AMOUNT PAID TO GEDA FOR LAND APPL ICATION FEE AND REIMBURSEMENT FEE AND REIMBURSEMENT OF POWER EVACUATION RS.18,50,000/ - TOTAL RS. RS.65,20,991/ - I.T.A NO. 3212 /AHD/20 15 A.Y. 2012 - 13 PAGE NO ACIT VS. M/S. GUJARAT MULTI GAS BASE CHEMICALS PVT. LTD. 7 3. INSOFAR AS THE SECOND ITEM IS CONCERNED, CIT APPEALS AND THE TRIBUNAL, BOTH HELD IN FAVOUR OF THE ASSESSEE, RELYING ON A DECISION OF THE APEX COURT IN THE CASE OF 'COMMISSIONER OF INCOME TAX VS. KARNATAKA POWER CORPORATION', REPORTED IN 247 ITR 268, WHEREIN, THE APEX COURT IN THE CONTEXT OF INVESTMENT ALLOWANCE ON PLANT AND BUILDING, OBSERVED THAT WHETHER BUILDING IS A PLANT, IS A QUESTION OF F ACT. IT WAS, FURTHER, OBSERVED THAT SINCE AUTHORITY HAD COME TO A FINDING OF THE FACT THAT THE ASSESSEE'S GENERATING STATION BUILDING WAS CONSTRUED TO BE AN INTEGRAL PART OF ITS GENERATING SYSTEM, THE BUILDING WAS A PLANT AND WAS ENTITLED TO INVESTMENT ALL OWANCE. IN PARTICULAR, THE CIT APPEALS IN ITS ELABORATE ORDER, DATED : 31.10.2011, OBSERVED THAT THE COMPANY HAD PURCHASED THE WINDMILL FROM SUZLON ENERGY LIMITED WITH A CONDITION THAT THE SAID COMPANY WILL INSTALL THE SAME AND ALL THE COST RELATED TO THE INSTALLATION WOULD BE BORNE BY THE ASSESSEE COMPANY. IT WAS, FURTHER, OBSERVED THAT SUCH WINDMILL CANNOT BE USED UNTIL IT IS INSTALLED AND FOR THE INSTALLATION OF THE SAME A SPECIFIC CIVIL STRUCTURE IS REQUIRED. NECESSARY PERMISSION IS REQUIRED FROM THE SP ECIFIC AUTHORITY. SPECIFIC KIND OF V ELECTRIFICATION IS REQUIRED FOR THE OPERATION AND MAINTENANCE OF THE WINDMILL. THE CIVIL STRUCTURE AND THE ELECTRIFICATION CREATED FOR THE PURPOSE OF WINDMILL ARE OF NO USE, IF THE WINDMILL IS DISPOSED OF. CIVIL STRUCTU RE AND THE ELECTRIC FITTINGS WOULD HAVE TO BE DISMANTLED. 4. THIS OPINION OF THE APPELLATE AUTHORITY WAS CONFIRMED BY THE TRIBUNAL IN THE IMPUGNED JUDGMENT, IN THE FOLLOWING TERMS; '4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO A ND THE CIT(A). THE DEPRECIATION IS ALLOWABLE ON RENEWABLE ENERGY DEVICE WHICH ALSO INCLUDES WINDMILL. THE DEPRECIATION AT THE RATE OF 80% IS ALLOWABLE ON THE ENTIRE DEVICE WHICH IS CAPABLE OF GENERATING ELECTRICITY USING WIND ENERGY. THERE IS NO PROVISION IN THE ACT TO BIFURCATE THE DEVICE INTO SEVERAL PARTS AND ALLOW DEPRECIATION THEREON AT DIFFERENT RATES OF DEPRECIATION. THE FOUNDATION, CIVIL AND ELECTRICAL WORKS ARE NECESSARY FOR THE INSTALLATION OF THE WINDMILL AND IS CLEARLY PART AND PARCEL OF THE WIN DMILL PROJECT ON WHICH DEPRECIATION AT THE RATE OF 80% IS ALLOWABLE.' 5. WE ARE OF THE OPINION THAT THE APPROACH OF BOTH THE AUTHORITIES IS PERFECTLY JUSTIFIED. WINDMILL WOULD REQUIRE A SCIENTIFICALLY DESIGNED MACHINERY IN ORDER TO HARNESS THE WIND ENERGY TO THE MAXIMUM POTENTIAL. SUCH DEVICE HAS TO BE FITTED AND MOUNTED ON A CIVIL CONSTRUCTION, EQUIPPED WITH ELECTRIC FITTINGS IN ORDER TO TRANSMIT THE ELECTRICITY SO GENERATED. SUCH CIVIL STRUCTURE AND ELECTRIC FITTINGS, THEREFORE, IT CAN BE WELL IMAGINED, W OULD BE HIGHLY SPECIALIZED. THUS, SUCH CIVIL CONSTRUCTION AND ELECTRIC FITTING WOULD HAVE NO USE OTHER THAN FOR THE PURPOSE OF FUNCTIONING OF THE WINDMILL. ON THE OTHER HAND, IT CAN BE EASILY IMAGINED THAT WINDMILL CANNOT FUNCTION WITHOUT APPROPRIATE INSTA LLATION AND ELECTRIFICATION. IN OTHER WORDS, THE INSTALLATION OF WINDMILL AND THE CIVIL, STRUCTURE AND THE ELECTRIC FITTINGS ARE SO CLOSELY INTERCONNECTED AND LINKED AS TO FORM THE COMMON PLANT. AS ALREADY NOTED, THE LEGISLATURE HAS PROVIDED FOR HIGHER RAT E OF DEPRECIATION OF 80 PER CENT ON RENEWABLE ENERGY DEVISES INCLUDING WINDMILL AND ANY SPECIALLY DESIGNED DEVISE, WHICH RUNS ON WINDMILL. THE CIVIL STRUCTURE AND THE ELECTRIC FITTING, EQUIPMENTS ARE PART AND PARCEL OF THE WINDMILL AND CANNOT BE SEPARATED I.T.A NO. 3212 /AHD/20 15 A.Y. 2012 - 13 PAGE NO ACIT VS. M/S. GUJARAT MULTI GAS BASE CHEMICALS PVT. LTD. 8 FROM THE SAME. THE ASSESSEE'S CLAIM FOR HIGHER DEPRECIATION ON SUCH INVESTMENT WAS, THEREFORE, RIGHTLY ALLOWED. 6. THE REMAINING PORTION OF QUESTION NO.L REQUIRES CONSIDERATION.' IT IS ALSO PERTINENT TO NOTE FROM THE ABOVE THAT THE HON'BLE HIGH COURT HAS H ELD THAT APPELLANT IS ENTITLED TO HIGHER DEPRECIATION ON CIVIL WORKS, INSTALLATION, LABOUR AND FOUNDATION OF WINDMILL AND ELECTRIC FITTINGS AND HELD THAT WITHOUT SUCH EXPENDITURE, THERE IS USE OF OTHER THAN FOR THE PURPOSE OF FUNCTIONING OF WINDMILL. ON T HE BASIS OF THE ABOVE FINDING OF HON'BLE HIGH COURT AND DECISION AVAILABLE ON RECORD, THE ISSUES IN PRESENT APPEAL IS ADJUDICATED AS UNDER: (I) WORK CONTRACT FOR ELECTRICAL WORK INCLUDING SUPPLY AND INSTALLATION OF ELECTRICAL ITEMS OF RENEWABLE ENERGY DEVICES OF RS. 40,66,927/ - : APPELLANT SUBMITTED THAT ELECTRIC WORK WITH ELECTRICAL GOODS AND LABOUR CHARGES IS PART OF WINDMILL AND SUBMITTED VARIOUS ELECTRICAL DIAGRAMS OF WIND TURBINE FROM GOOGLE WEBSITE TO EXPLAIN THAT THE ELECTRIC ITEMS AND ELECTRICAL WORK ARE INTEGRAL PART OF WINDMILL. THE APPELLANT FURTHER CONTENDED THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF ITAT CHENNAI IN CASE OF ACIT VS. KUTTI SPINNERS (P.) LTD. [2014] 51 TAXMANN.COM 534, WHERE IT WAS HELD THAT: 'ELECTRICAL CABLES, FIT TINGS AND OTHER ELECTRICAL WORKS CONNECTED WITH WINDMILL ARE A SINGLE COMPOSITE UNIT AND, HENCE, ELIGIBLE FOR DEPRECIATION AT RATE OF 80 PER CENT.' FOLLOWING THE ABOVE DECISION OF THE HON'BLE CHENNAI TRIBUNAL ALONG WITH THE DECISION OF THE HON'BLE GUJARAT HIGH COURT REFERRED SUPRA, IT IS HELD THAT ELECTRICAL FITTINGS & ELECTRICAL WORK CONNECTED WITH WINDMILL IS INTEGRAL PART OF WINDMILL AND ELIGIBLE FOR DEPRECIATION @ 80%. (II) POWER EVACUATION INFRASTRUCTURE COST OF RS.55,15,000/ - : APPELLANT EXPLAINED THAT POWER EVACUATION INFRASTRUCTURE COST IS INCURRED FOR EVACUATING THE POWER FROM WINDMILL AND TRANSMISSION TO MAIN GRID. SUCH POWER EVACUATION FACILITY CONSISTS OF INFRASTRUCTURE FACILITIES VIZ. FEEDERS FOR EVACUATION OF POWER FROM THE WIND PROJECTS, E XTRA HIGH TENSION SUB - STATION FOR STORAGE OF POWER FOR STEPPING IT UP TO A HIGHER VOLTAGE LEVEL AND LINE FOR INTER - FACING THE ABOVE FACILITIES TO A TRANSMISSION/ DISTRIBUTION NETWORK AND ALSO SUBMITTED POWER EVACUATION INFRASTRUCTURE DIAGRAMS AND WRITE - UPS ARE TAKEN FROM WEBSITES TO EXPLAIN THAT THE POWER TRANSMISSION SYSTEM IS INTEGRAL PART OF WINDMILL. THE A.R. OF THE APPELLANT SUBMITTED THAT DEPRECIATION AT THE HIGHER RATE I.E. 80% IS ALLOWABLE ON ELECTRICAL EQUIPMENT USED FOR ENERGY MANAGEMENT AND DISTR IBUTION SYSTEM, SUCH RATES OF DEPRECIATION IS PROVIDED IN APPENDIX - I ' IN PARA 8(IX)(E)(K). THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF HON'BLE ITAT CHANDIGARH IN CASE OF ACIT VS. RAKESH GUPTA [2013] 36 TAXMANN.COM 546, WHERE IT WAS HELD THAT: 'WHERE ELECTRICITY COULD NOT BE GENERATED BY WIND MILL WITHOUT POWER EVACUATION FACILITIES AND TRANSMISSION AND DISTRIBUTION LINES, DEPRECIATION WAS TO BE ALLOWED ON SAME AT HIGHER RATE OF 80 PER CENT APPLICABLE TO WIND MILLS, AND NOT AT NORMAL RATE.' FOLLOWING THE ABOVE DECISION OF HON'BLE CHANDIGARH TRIBUNAL, IT IS HELD THAT POWER EVACUATION INFRASTRUCTURE COST IS INTEGRAL PART OF WINDMILL AND ELIGIBLE FOR DEPRECIATION @ 80%. (III) PROCESSING CHARGES - RS. 87,500/ - : I.T.A NO. 3212 /AHD/20 15 A.Y. 2012 - 13 PAGE NO ACIT VS. M/S. GUJARAT MULTI GAS BASE CHEMICALS PVT. LTD. 9 THIS ISSUE IS SQUARELY COVERED BY THE DEC ISION OF PUNE TRIBUNAL IN CASE OF ASST. CIT VS. M/S. WESTERN PRECICAST PVT. LTD IN ITA NO. 2524/PN/2012 DATED 22 - 01 - 2014, WHERE IT WAS HELD THAT: '7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN ORDER TO APPRECIATE THE DISPUTE, THE FOLLOWING BREA K - UP OF EXPENSES ON ACCOUNT OF ERECTION AND COMMISSION OF WINDMILL I.E. WINDMILL INSTALLED IN THE PRECEDING ASSESSMENT YEAR 2006 -- 07 WOULD BE NECESSARY AS CONTAINED IN PARA 2.5 OF ORDER OF THE CIT(A): S. NO. DATE NATURE OF WORK EXPENDITURE - R S. 1. 30 - 03 - 2006 TOWARDS SUPPLY AND INSTALLATION OF HT ELECTRICAL YARD WITH VCB, OUTDOOR TYPE CT & PT AND HT TRANSMISSION LINE FROM WINDMILL TO GRID INTERCONNECTION POINT INCLUDING HT METERING FOR 1.25 MW WINDMILL AT LOCATION NO. K437 AT ABOVE SITE ADDRESS . 30,93,500/ - 2. 30 - 03 - 2006 LABOUR CHARGES TOWARDS FINAL TESTING AND COMMISSIONING FOR 1.25 MW WINDMILL AT LOC NO. K437. 1,10,200/ - 3. 30 - 03 - 2006 TOWARDS LABOUR CHARGES FOR WORK EXECUTED, FOR ERECTION AND INSTALLATION OF WINDMILL CONSISTING OF: UNLOADING A ND SAFE KEEPING OF MATERIAL, ASSEMBLY, ERECTION AND INSTALLATION OF WINDMILL TOWER AND WIND TURBINE GENERATOR FOR 1.25 MW WINDMILL AT LOCATION NO K - 437 AT ABOVE SITE ADDRESS. 14,32,600/ - 4. 04 - 03 - 2006 PROCESSING FEES 2,58,970/ - 5. 31 - 12 - 2005 MEDA PROCESSING AND APPLICATION FEES 6,28,750 / - CONTRIBUTION TOWARDS COMMON POWER EVACUATION 37,50,000/ - 6. 31 - 03 - 2006 INFRASTRUCTURE FACILITY 8. IN RESPECT OF ABOVE SIX COMPONENTS OF COST OF WINDMILL CLAIMED BY THE ASSESSEE, THE ASSESSING O FFICER ALLOWED DEPRECIATION AT 15% AND NOT AT 80% AS CLAIMED BY THE ASSESSEE. THE CIT(A) HOWEVER, CONSIDERED THE ITEMS OF COSTS AT NO 1 TO 5 QUALIFYING FOR HIGHER RATE OF DEPRECIATION BEING INTEGRAL PART OF WINDMILL.' FOLLOWING THE ABOVE DECISION OF PUNE T RIBUNAL (ITEM NO. 2 ABOVE), PROCESSING CHARGES TOWARDS TESTING AND COMMISSIONING OF WINDMILL IS INTEGRAL PART OF WINDMILL AND ELIGIBLE FOR DEPRECIATION @ 80%. (IV) INCIDENTAL CHARGES - RS.18,47,386/ - : APPELLANT SUBMITTED THAT BANK LOAN PROCESSING CHARG ES/FEES PERTAINING TO BORROWINGS FOR WINDMILL IS REQUIRED TO BE CAPITALIZED WITH WINDMILL. THE A.R. OF THE APPELLANT SUBMITTED THAT THE EXPENSES IN THE NATURE OF REVENUE, THEREFORE, IF DEPRECIATION IS NOT ALLOWED, THE SAME IS ELIGIBLE TO BE ALLOWED AS 100% EXPENSE OF WINDMILL BUSINESS. THE ABOVE ISSUE ALSO CAME UP FOR CONSIDERATION BEFORE THE HON'BLE ITAT IN THE CASE OF ACIT VS MAHARSHI UDYOG IN ITA NO.50/AHD/2011 AND IT WAS HELD BY THE HON'BLE TRIBUNAL THAT BANK LOAN PROCESSING CHARGES REQUIRES TO BE CONSI DERED AS PART OF WINDMILL AND APPELLANT IS ENTITLED TO DEPRECIATION @80%. FOLLOWING THE ABOVE DECISION OF JURISDICTION TRIBUNAL, IT IS HELD THAT APPELLANT IS ENTITLED TO CLAIM HIGHER DEPRECIATION ON SUCH LOAN PROCESSING FEE @ 80% APPLICABLE TO WINDMILL. IN VIEW OF THE ABOVE, THE GROUND OF APPEAL RAISED BY THE APPELLANT IS ALLOWED AND ADDITION MADE BY THE AO OF RS.43,14,339/ - IS HELD NOT JUSTIFIED AND IS HEREBY DIRECTED TO BE DELETED. I.T.A NO. 3212 /AHD/20 15 A.Y. 2012 - 13 PAGE NO ACIT VS. M/S. GUJARAT MULTI GAS BASE CHEMICALS PVT. LTD. 10 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSING OFFICER HAS NOT ALLOWED DEPRECIATION ON THE WINDMILL BY AN AMOUNT OF RS. 43,14,339/ - ON THE GROUND THAT DEPRECIATION AT HIGHER RATE ARE NOT AVAILABLE IN RESPECT OF CIVIL AND ELECTRICAL WORKS, INFRASTRUCTURE CO STS AND INCIDENTAL CHARGES IN CONNECTION WITH THE INSTALLATION OF WINDMILL. THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE AFTER PLACING RELIANCE ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PARRY ENGINEERING & ELECTRONICS PV T. LTD. 49 TAXMANN.COM 252 (GUJARAT) AND OTHER JURISDICTIONAL PRONOUNCEMENTS AS ELABORATED IN DETAIL IN HIS ORDER. WE OBSERVED THAT THE CIVIL AND ELECTRONIC WORK, INFRASTRUCTURE COSTS AND INCIDENTAL CHARGES ARE AN INTEGRAL PART OF THE WINDMILL PROJECT A ND THE WINDMILL CANNOT FUNCTION WITHOUT SUCH CIVIL STRUCTURE, ELECTRIC FITTINGS AND EQUIPMENTS ETC. THESE COMPONENTS CANNOT BE SEPARATED FOR THE PURPOSE OF APPLYING DEPRECIATION AT DIFFERENT RATES. AFTER CONSIDERING THE FACTS OF THE CASE AND THE LEGAL FINDINGS AS ELABORATED IN THE ORDER OF THE LD. CIT(A), WE JUSTIFY THE DECISION OF LD. CIT(A). CONSEQUENTLY, THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COUR T ON 12 - 01 - 2018 SD/ - SD/ - ( S.S . GODARA ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 12 /01 /201 8 I.T.A NO. 3212 /AHD/20 15 A.Y. 2012 - 13 PAGE NO ACIT VS. M/S. GUJARAT MULTI GAS BASE CHEMICALS PVT. LTD. 11 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3 . CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,
Other Referred Cases
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Laws Referred To
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