G SHOE EXPORT, MUMBAI V. ACIT 25(1), MUMBAI

ITA 5736/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0797 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 12-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V V VIDHYADHAR
• Assessee Lawyers: N R AGRAWAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 6 209 / MUM/20 14 ( ASSESSMENT YEAR : 2010 - 11 ) ACIT 25(1) 2 ND FLOOR, BANDRA KURLA COMPLEX, BANDRA MUMBAI 400 081 VS. M/S. G. SHOE EX PORT 1, HITEX INDUSTRIAL ESTATE S.V.ROAD, DAHISAR (E) MUMBAI 400 068 PAN/GIR NO. AACFG5376P APPELLANT ) .. RESPONDENT ) ITA NO. 5736/ MUM/20 14 ( ASSESSMENT YEAR : 2010 - 11 ) M/S. G. SHOE EXPORT 1, HITEX INDUSTRIAL ESTATE S.V.ROAD, DAHISAR (E) MUMBAI 400 068 VS. ACIT 25(1) 2 ND FLOOR, BANDRA KURLA COMPLEX, BANDRA MUMBAI 400 081 PAN/GIR NO. AACFG5376P APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI N.R.AGRAWAL REVENUE BY SHRI V.V.VIDHYADHAR DATE OF HEARING 0 4 / 01 /201 8 DATE OF PRONOUNCEME NT 24 / 01 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE CROSS APPEALS FILED BY REVENUE AND ASSESSEE AGAINST THE ORDER OF CIT(A) 35, MUMBAI DATED 16/07/2014 FOR THE A.Y.2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. ITA NO. 6209/MUM/2014 & 5736/MUM/2014 M/S. G. SHOE EXPORTS 2 2. THESE APPEAL S W ERE ORIGINALLY HEARD BY THE TRIBUNAL AND ORDER WAS PASSED ON 24/10/2016. ASSESSEE FILED THE MISCELLANEOUS APPLICATION, WHEREIN ORDER PASSED BY THE TRIBUNAL WAS RECALLED VIDE ORDER DATED 27/10/2017. THEREAFTER, REGISTRY FIXED THIS APPEAL FOR HEARING BY A REGULA R BENCH ON 04/01/2018. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM, ENGAGED IN THE BUSINESS OF MANUFACTURING, TRADING & EXPORT OF SHOES AND OTHER ALLIED ACTIVIT IES. THE ASSESSEE HAD A WINDMILL AND THE OPENING WDV WAS RS.9,48,000/ - . DURING THE YEAR, THE ASSESSEE HAD SOLD THE OLD WINDMILL WHICH WAS IN KARNATAKA TO ENERCON FOR RS.3,22,83,654/ - ON 10 - 11 - 2009. IT HAD ALSO BOUGHT A NEW WINDMILL FROM ENERCON FOR THE STA TE OF ANDHRA PRADESH FOR RS.4,31,00,000/ - . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FILED COMMISSIONING CERTIFICATE DT.31 - 03 - 2010, LETTER BEING ISSUE OF TEMPORARY AUTHORISATION DT.30 - 03 - 2010 OF CHIEF ELECTRICAL INSPECTOR, INVOICES FOR PRODUCTION OF ELECTRICITY BY OLD WINDMILL, ETC. 5. BASED ON THE SAID DETAILS, THE ASSESSING OFFICER WAS OF THE VIEW THAT THERE WAS NO PRODUCTION OF ELECTRICITY IN THE MONTH OF MARCH, 2010 AND IT WAS ONLY FOR TRIAL RUN AND NO COMMERCIAL PRODUCTION HAD BEEN STARTED. THE ASSESSEE FILED A DETAILED REPLY ON 13/03/2013, AS UNDER: - 'FACTS: - THE PROCESS OF GENERATING ELECTRICITY THROUGH WIND TURBINE IS A COMPLEX PROCESS AND REQUIRES MANY DELICATE MACHINES LIKE SHAFT, ROTOR BLADES, GENERATORS, TURBINES TRANSFO RMERS & CONVERTERS. ALL THESE MACHINES ARE INTERCONNECTED VIA LARGE NETWORKED SUPPLY LINES AND DELICATE ELECTRICAL CIRCUITS. THERE ARE MANY ELECTRICAL ENGINEERS ALONG ITA NO. 6209/MUM/2014 & 5736/MUM/2014 M/S. G. SHOE EXPORTS 3 WITH ENERGY SPECIALISTS WORKING TOGETHER IN UNISON TO SETUP AND COMMISSION THE WINDMILL P ROJECT AT THE SITE. COMPUTER PROGRAMMING IS DONE AT SITE ON THE WINDMILL SYSTEM SO THAT HEAVY ELECTRICAL CIRCUITS RUN ON AUTOMATION AND FAIL - STOP INCASE OF OVERLOADS TO PROTECT THE SYSTEM. AFTER ERECTION AND SET UP SUCH SYSTEMS ARE TESTED TO AFFIRM WHETHER THE MACHINES ARE WORKING IN UNISON WITHOUT OVER LOADING, ELECTRICAL SURGES OR OTHER GLITCHES. THIS IS SIMPLY DONE TO AFFIRM THE OVERALL WORKING BEFORE COMMERCIAL PRODUCTION. TESTING & TRIAL IS AN INTEGRAL PART OF ANY ELECTRICITY GENERATION UNITS. TRIAL RU NS ARE CONDUCTED TO TEST THE ELECTRICAL CIRCUITS AND LOADING ON SUPPLY LINES. JUST BECAUSE TRIAL RUNS ARE CONDUCTED IT DOES NOT IMPLY THAT THE WINDMILL IS NOT READY FOR COMMERCIAL USE. EVEN IF THE TRIAL RUNS ARE RIOT SUCCESSFUL THAT DOESN'T IMPLY THAT ASSE TS WERE NOT READY FOR USE. TRIAL RUNS CAN BE CONDUCTED ONLY AFTER THE MACHINES ARE ALL ERECTED & COMMISSION AND READY FOR USE. A. WE WISH TO BRING TO YOUR NOTICE THE FOLLOWING DECISION OF MUMBAI - F BENCH TRIBUNAL DECISION IN THE CASE OF ARLABS LTD. V/S DE PUTY COMMISSIONER OF INCOME TAX 5 SOT 749 IN THE ABOVE DECISION DEPRECIATION WAS ALLOWED ON ASSETS FOR TRIAL PRODUCTION EVEN IF THERE WAS NO COMMERCIAL PRODUCTION. THE BENCH HAD CONSIDERED THAT TRIAL RUN IS A NORMAL FEATURE OF ANY IJIDUSTRIAL OR MANUFACTUR ING UNIT. FURTHER MERELY BECAUSE COMMERCIAL PRODUCTION COULD NOT BE STARTED AND TRADING OF SUCH GOODS COULD NOT BE COMMENCED DURING THIS YEAR, OUR VIEW, IT CANNOT BE SAID THAT THE PLANT AND MACHINERY WAS NOT USED FOR BUSINESS PURPOSES (THE ABOVE DECISION I S BINDING ON C. FURTHER COURTS & TRIBUNALS HAVE TIME & AGAIN HELD THAT DEPRECIATION SHOULD BE ALLOWED DURING THE TRIAL RUN PERIOD. THE FOLLOWING DECISIONS FURTHER CORROBORATE THE ASSESSEE'S CLAIM FOR DEPRECIATION DURING THE TRIAL RUN. I) ITO V/S HIN DUSTAN COLD STORAGE & REFRIGERATION COMPANY 79 777 476 - DELHI TRIBUNAL II) ACIT V/S PAHARPUR COOLING TOWERS 44 ITD 540 - CALCUTTA TRIBUNAL HI) MADRAS SPINNERS V/S DOT47 ITD 213 COCHIN TRIBUNAL IV) WEIKFIELD PRODUCTS V/S DEL T$4 ITD 286 - PUNE TRIBUNAL V) CIT V/SVINDHIJACHALDISTILLERIESIG6 CTR644~MADHYA PRADESH HIGH COURT PAGE (IN THE ABOVE CASE DATE OF COMMISSION OF MACHINERY WAS CONSIDERED AS RELEVANT DATE FOR DEPRECIATION &NOT COMMERCIAL PRODUCTION DATE. COMMISSION DATE IN ASSESEE'S CASE 1531/03/2010) VI ) CIT V/S GATES (INDIA) LTD. 218 CTR IO3.~DELHI HIGH COURT VII) CIT V/S MENTHA & ALLIED PRODUCTS - 236 CTR 329 - ALLAHABAD HIGH COURT VW) CIT V/S PICCADILLY AGRO INDUSTRIES 212 CTR505 - P&HHIGH COURT D. IN ACIT V/S ASHIMA SYNTEX LTD 169 CTR 102 - GUJARAT H IGH COURT HAD HELD AS FOLLOWS: I) TRIAL RUN OF THE MACHINERY IS OBVIOUSLY FOR BUSINESS PURPOSE ITA NO. 6209/MUM/2014 & 5736/MUM/2014 M/S. G. SHOE EXPORTS 4 II) TRIAL PRODUCTION WOULD ALWAYS FALL WITHIN THE AMBIT OF 'USED FOR THE PURPOSE OF BUSINESS' III) THE TRIAL RUN THOUGH WAS HELD OF ONLY 4 DA YS FROM 26 TH MARCH TO 31 MARCH, THIS WOULD NOT DISENTITLE THE ASSESEE FROM CLAIMING THE DEPREDATION. IV) STATUTE DOES NOT PRESCRIBE A MINIMUM TIME - LIMIT FOR 'USE' OF MACHINERY. 6. HOWEVER, AO DID NOT ACCEPT ASSESSEES CONTENTION AND DECLINED ASSE SSEES CLAIM OF DEPRECIATION ON THE WIND MILL. 7. BY THE IMPUGNED ORDER, CIT(A) ALLOWED ASSESSEES CLAIM OF DEPRECIATION ON THE WIND MILL. HOWEVER, HE REDUCED THE RATE OF DEPRECIATION IN RESPECT OF SOME PART / COST OF WIND MILL TO 15% INSTEAD OF 80% CLAIM ED BY THE ASSESSEE. 8 . IN THE APPEAL FILED BY REVEN U E , REVENUE IS AGGRIEVED FOR DELETING DISALLOWANCE OF THE DEPRECIATION ON THE WIND MILL AND ASSESSEE IS AGGRIEVED FOR RESTRICTING THE CLAIM OF DEPRECIATION AT 15% INSTEAD OF 80% ON WIND MILL PARTS. ASSESSE E IS ALSO AGGRIEVED FOR DISALLOWANCE OF FOREIGN TRAVELLING EXPENSES. 9 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE HAS CLAIMED DEPRECIATION AT RS.47,05,738/ - ON WINDMILL. DURING THE YEAR, THE APPELLANT SOLD AN OLD WINDMILL TO ENERCON FOR RS.3,22,83,654/ - ON 10.11.2009. THE ASSESSEE ALSO BOUGHT A NEW WINDMILL FROM ENERCON FOR INSTALLING IN THE STATE OF ANDHRA PRADESH FOR RS.43,10,00,000/ - ON 31.3.2010. THE AO RAISED THE ISSUE OF ALLOWABILITY OF DEPRECIATI ON ON THE GROUND THAT THE WINDMILL WAS NOT ACTUALLY PUT TO USE FOR COMMERCIAL PRODUCTION IN THE RELEVANT FINANCIAL YEAR. C ONTENTION OF THE AO WAS THAT THE SAID WINDMILL WAS ONLY READY FOR TRIAL PURPOSES SINCE THE ITA NO. 6209/MUM/2014 & 5736/MUM/2014 M/S. G. SHOE EXPORTS 5 LETTER ISSUED BY THE CHIEF ELECTRICAL INS PECTOR AND COMMISSIONING CERTIFICATE MENTIONED THAT THE SAID WINDMILLS ARE BEING RUN FOR CONDUCTING TRIAL RUN OF THE EQUIPMENT. THE DETAILS OF THE SHOW - CAUSE GIVEN BY THE AO ARE AVAILABLE IN PARA 4.2 OF THE ASSESSMENT ORDER. THE ASSESSEE HAS MADE A DETAILE D REPLY BEFORE THE AO MENTIONING THEREIN THAT THE PROCESS OF GENERATING ELECTRICITY THROUGH WIND TURBINES IS A COMPLEX PROCESS AND THAT THESE MACHINES ARE I NTERCONNECTED VIA LARGE NETWORK SUPPLY LINES. TESTING AND CONTROL IS AN INTEGRAL PART OF ANY ELECTRI CITY GENERATION UNITS. GIVING DETAILED REASONING ALONGWITH THESE LINES, THE AS SESSEE HAS ALSO REFERRED TO VARIOUS JUDGEMENTS OF TRIBUNALS AND HIGH COURTS TO AUGMENT ITS ARGUMENT. SPECIFIC REFERENCE IS MADE TO THE DECISION OF ARLABS LTD. V/S DEPUTY COMMISS IONER OF INCOME - TAX - 5 SOT 749. THE DETAILS OF THE ASSESSEE'S SUBMISSIONS BEFORE THE ASSESSING OFFICER ARE AVAILABLE ON PAGES 3,4 AND 5 OF THE ASSESSMENT ORDER. ON THE ISSUE OF HIGHER RATE OF DEPRECIATION, THE APPELLANT HAS GIVEN A DETAILED SUBMISSION BEFO RE THE AO WHICH IS AVAILABLE ON PAGES 6 & 7 OF THE ASSESSMENT ORDER. THE AO HAS, HOWEVER, NOT ACCEPTE D THE ARGUMENTS OF THE ASSESSEE AND DISALLOWED ASSESSEES CLAIM OF DEPRECIATION ON WIND MILLS. 10 . BY THE IMPUGNED ORDER, CIT(A) DELETED THE DISALLOWANCE O F DEPRECIATION ON WIND MILL , HOWEVER ON THE PARTS OF WINDMILL, CIT(A) REDUCED THE RATE OF DEPRECIATION FROM 80% TO 15% AFTER OBSERVING AS UNDER: - REGARDING THE ISSUE AROUND THE ALLOWANCE OF DEPRECIATION, I FIND MERIT IN THE ARGUMENTS ADVANCED BY THE APPEL LANT ESPECIALLY IN LIGHT THE ITA NO. 6209/MUM/2014 & 5736/MUM/2014 M/S. G. SHOE EXPORTS 6 DECISION OF ARLABS LTD. REFERRED SUPRA AND ALSO THE DECISION OF HON.BLE CALCUTTA HIGH COURT IN UNION CARBIDE INDIA LTD. ALSO REFERRED SUPRA WHERE IT HAS BEEN CATEGORICALLY HELD THAT FOR THE PURPOSES OF ALLOWING DEPRECIATION, TR IAL RUN/TRIAL PRODUCTION WOULD ALSO BE CONSTRUED AS HAVING PUT THE MACHINERY TO USE FOR THE PURPOSE OF BUSINESS. THEREFORE, IN LIGHT OF THE SAME, THE APPEAL, OF THE APPELLANT IS ALLOWED ON THE GROUND OF DEPRECIATION. HOWEVER, GOING TO THE ISSUE OF PERCENT AGE OF DEPRECIATION TO BE ALLOWED, IT IS FOUND THAT AS FAR AS THE COMPONENTS OF THE WINDMILL ARE CONCERNED VIZ. TUBE STEEL TOWER, WIND TURBINE CONVERTER, DISTRIBUTION TRANSFORMER AND THE DP STRUCTURE OF WINDMILL, THESE WOULD BE ELIGIBLE FOR DEPRECIATION @ 80% SINCE THE WINDMILL CANNOT FUNCTION WITHOUT DIFFERENT COMPONENTS WHICH CAN GO TO COMPLETE THE FUNCTIONALITY OF THE WINDMILL. ALL THE DEVICES ARE INTERCONNECTED AND CAN BE USED FOR GENERATION OF POWER THROUGH THE WINDMILL ONLY. EACH OF THESE DEVICES ARE DEPENDENT ON THE OTHER AND CANNOT FUNCTION INDEPENDENTLY TO ACHIEVE THE DESIRED RESULT FOR GENERATION OF ELECTRICITY. THAT THE ABOVE DEVICES ARE ELIGIBLE FOR DEPRECIATION @ 80%, IS ALSO COVERED IN THE DECISION OF ITAT PUNE X A' BENCH IN THE CASE OF POONAWAL A FINWEST & AGRO (P) LTD. V/S ACIT 2008 118 TTJ PUNE 68). HOWEVER, ON THE COMPONENT OF THE TRANSFER AND DEVELOPMENT RIGHTS FOR INSTALLATION OF THE WIND 'TURBINE CONVERTER, EXPENSES ON ERECTION AND COMMISSIONING OF THE WIND TURBINE CONVERTER AND TRANSPORT E XPENSES OF THE WIND TURBINE CONVERTER, THE SITUATION IS DIFFERENT. THE FIRST ONE IS A STATUTORY PAYMENT MADE TO THE GOVERNMENT FOR THE INSTALLATION OF THE WINDMILL AND THE SECOND TWO ARE PROFESSIONAL CHARGES PAID TO THE ENGINEERS AND LABOUR FOR ERECTION AN D COMMISSIONING OF THE WINDMILL. SAME IS THE SITUATION WITH THE CIVIL AND INDUSTRIAL CONSTRUCTION OF THE WIND TURBINE CONVERTER. THESE EXPENSES ARE ANCILLARY FOR WINDMILL SYSTEM AND THOUGH FORM PART OF - THE SUPPORT FOR THE FUNCTIONING OF THE WINDMILL, CANN OT BE SAID TO BE INTEGRAL PART OF THE MAIN STRUCTURE OF THE WINDMILL. THEREFORE, THE COST INCURRED ON ALL OTHER EXPENSES RELATED TO SETTING UP OF THE WINDMILL ARE TO BE ALLOWED DEPRECIATION @ 15% AND ONLY THE EXPENSES OF WINDMILL DEVICES I.E. RS,50,00,000/ - FOR TUBULAR STEEL TOWER, RS.2,91,000/ - FOR WIND TURBINE CONVERTER, RS.23,00,000/ - FOR DISTRIBUTION TRANSFORMER AND THE DP STRUCTURE, ARE TO BE GIVEN DEPRECIATION @ 80%. IN THE RESULT, THIS GROUND IS PARTLY ALLOWED. 11 . WE HAVE CONSIDERED RIVAL CONTENTIO NS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT AO HAS DECLINED CLAIM OF DEPRECIATION ON THE PLEA THAT MACHINERY WAS UNDER TRIAL PRODUCTION. THE AO ALSO OBSERVED THAT AUTHORIZATION TO INSTALL WINDMILL IS DATED ITA NO. 6209/MUM/2014 & 5736/MUM/2014 M/S. G. SHOE EXPORTS 7 31/03/2010. W E FOUND THAT OBSERVATION OF AO ITSELF IS WRONG. THE CERTIFICATE CERTIFIES THAT AUTHORIZATION HAS ISSUED FOR CONDUCTING TRIAL RUN OF EQUIPMENT AND COMMISSIONING OF WIND MILLS. THERE IS NO DISPUTE TO THE FACT THAT MACHINERY WAS PUT FOR TRIAL PRODUCTION. 12 . IF MACHINES ARE ON TRIAL RUN, THEN IT IS USED FOR BUSINESS, AS DECIDED IN VARIOUS H IGH COURTS & TRIBUNAL JUDGEMENTS AS UNDER. HIGH COURTS I) PRIC. CIT V LARSEN & TOUBRO LTD. ITA NO. 421 OF 2015 DATED 6/11/2017 (BOMBAY) II) CIT V/S METAL POWDER CO. LTD. 75 DTR 0233 (MAD) (TRIAL PRODUCTION OF WIND MILL) III). CIT V/S UNION CARBIDE LTD. (CAL) 254 ITR 0488 (TRIAL PRODUCTION) IV). ACIT V/S ASHIMA SYNTAX (GUJARAT) 251 ITR 0133 (TRIAL PRODUCTION) V) CIT V/S VISWANATH BHASKAR SA THE (BOMBAY) 5 ITR 0621 (PASSIVE AS WELL AS ACTIVE USER) VI). CIT V/S VINDHYCHAL DISTILERIES (MP) 272 ITR 583 (TRIAL PRODUCTION & PASSIVE AS WELL AS ACTIVE USER) PAGE NO, 13 VII). CIT V/S CHENNAI PETROLEUM LTD. (MAD) 358 ITR 0314 (PASSIVE AS WELL AS ACTI VE USER) IX). CIT VS. OSWAL AGRO MILLS LTD.(DELHI) 50 DTR 0305 : (2012) 341 ITR 0467 X ). LAXMI GENERAL FINANCE LTD., V/S. DCIT VI(4) ITA NO.1186/MAD/10 XI ). LARSEN & TOUBRO LTD., V/S. ACIT RANGE 2(2) (MUM) XII ) TATA COMMUNICATION LTD., V/S. DCIT CIRCLE 1(3) 151 TTJ 0273 (MUM) 13 . WE ALSO FOUND THAT THE DEPARTMENT ITSELF HAS ACCEPTED AND ALLOWED DEPRECIATION ON TRIAL PRODUCTION OF EXACTLY THE SAME PLACE, SAME DATES, AND SAME SUPPLIERS IN THE CASE OF M/S. CHANDULAL SURAJMAL. 14 . IN VIEW OF THE ABOVE JUDI CIAL PRONOUNCEMENTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR ALLOWING ASSESSEES CLAIM OF DEPRECIATION ON WIND MILLS. ITA NO. 6209/MUM/2014 & 5736/MUM/2014 M/S. G. SHOE EXPORTS 8 15 . HOWEVER, CIT(A) HAD REDUCED THE RATE OF DEPRECIATION FROM 80% TO 15% ON THE PAYMENT MADE BY ASSESSEE TO ANDHRA GOVERN MENT OF RS.16,00,000/ - ON ACCOUNT OF TRANSFER OF DEVELOPMENT RIGHTS FOR INSTALLATION OF WIND MILL. 1 6 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT TRANSFER OF DEVELOPMENT RIGHTS RS. 16.00.000/ - PAID TO STATE GOVERNMENT, IS A STATUTORY PAYMENT MADE TO GOVERNMENT OF ANDHRA PRADESH FOR THE INSTALLATION OF WHOLE WINDMILL SYSTEM WITHOUT THIS PAYMENT THE ASSESSEE CANNOT INSTALL TOWER, THE ROTOR BLADES & THE TRANSFORMERS ALONGWITH SUPP L Y LINES. THUS, THIS PAYMENT CONSTITUTE PART OF COST OF PLANT AND MACHIN ERY ON WHICH ASSESSEE IS ENTITLED FOR FULL RATE OF DEPRECIATION. THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF ACIT V/S. VELATHAL SPINNING MILLS (P) LTD. DATED 30/6/2011 ITA NO. 2082 & 2083/MDS/2010. RESPECTFULLY FOLLOWING THE DECI SION OF THE CO - ORDINATE BENCH, WE DO NOT FIND ANY MERIT FOR REDUCING RATE OF DEPRECIATION ON THE STATUTORY PAYMENT MADE TO GOVERNMENT OF ANDHRA PRADESH. 1 7 . ON ERECTION AND COMMISSIONING EXPENSES OF WINDMILL TURBAIN, LABOUR C HARGES AMOUNTING TO RS.18 LAKHS , THE CIT(A) ALLOWED DEPRECIATION @15% INSTEAD OF 80%. 1 8 . FROM THE RECORD WE FOUND THAT CIVIL FOUNDATION ERECTION COMMISSIONING IS FOR THE WINDMILL & WITHOUT WHICH WIND TURBINE WOULD HAVE BEEN OF NO USE NOR IT WOULD PRODUCE ELECTRICITY. THE WINDMILL CANNO T HANG IN MID - AIR WITHOUT ANY SUPPORT. THIS COST ALSO WAS INCURRED TOWARDS LAYING OF SUPPLY LINES FROM WINDMILL TO CONTROL ROOM AND TILL THE MAIN GRID. THE SUPPLY LINES ITA NO. 6209/MUM/2014 & 5736/MUM/2014 M/S. G. SHOE EXPORTS 9 ARE BASICALLY HUGE MESH OF WIRES AND ELECTRICAL CIRCUITS WHICH CARRY THE ELECTRICAL CH ARGES FROM WINDMILL TO CONTROL ROOM AND FROM THEREON TO THE MAIN STATE GOVERNMENT GRID. THIS COST IS INTEGRAL PART OF THE WHOLE WINDMILL SYSTEM SINCE EVEN IF THE ELECTRICITY GENERATED THEN IT WOULD BE OF NO USE IF IT CANNOT BE TRANSFERRED TO THE STATE GRID . ASSESSEE IS PAID BY THE STATE GOVERNMENT OF ANDHRA PRADESH ONLY ON THE BASIS OF ELECTRICITY TRANSFERRED TO THE STATE GRID. WITHOUT THESE THE ELECTRICITY GENERATED CANNOT BE TRANSFERRED TO GRIDS. THUS, THESE EXPENSES ALSO FORM PART OF WINDMILL AND ELIGIBL E FOR FULL RATE OF DEPRECIATION @80% INSTEAD OF 15% AS ALLOWED BY CIT(A). 19 . IN SUPPORT OF ABOVE PROPOSITION, RELIANCE CAN BE PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS. A) CIT V/S COOPER FOUNDRY PVT. LTD. ITA NO. 1326 OF 2010 DATED 14/6/2011 (BOMBA Y) B) ACIT V/S VELATHAL SPINNING MILLS (P) LTD. DATED 30/6/2011 ITA NO. 2082 & 2083/MDS/2010 C) ENERCON WIND FARMS JAISLAMER V/S DEPT. OF INCOME TAX ITA 6402 - 05/MUM/2010 DATED 21.12.2011 D) SHAH LULLA ESTATE DEVELOPERS V/S DCIT ITA 653/PN/2010 DATED 19.03 .2012 . 20 . ASSESSEE HAS ALSO INC URRED TRANSPORTATION EXPENSES FOR WIND MILL TURBAIN CONVERT O R AMOUNTING TO RS.15 LAKHS. ON THIS AMOUNT ALSO CIT(A) RESTRICTED CLAIM OF DEPRECIATION @ 15%. WE DO NOT FIND ANY MERIT IN THE ACTION OF CIT(A) FOR RESTRICTING DEP RECIATION TO THE EXTENT OF 15%. THE ISSUE ITA NO. 6209/MUM/2014 & 5736/MUM/2014 M/S. G. SHOE EXPORTS 10 IS COVERED BY THE DECISION OF CO - ORDINATE BENCH IN CASE OF VELATHAL SPINNING MILLS (P) LTD., IN ITA NO.2082 & 2083/MDS/2010 ORDER DATED 30/06/2011. RESPECTFULLY FOLLOWING THE ORDER OF THE CO - ORDINATE BENCH, WE DIR ECT TO ALLOW DEPRECIATION AT 80% ON THE EXPENDITURE INCURRED ON CIVIL AND INDUSTRIAL CONSTRUCTI ON OF W IND TURBINE CONVERTOR, ERECTION AND C OMMISSIONING EXPENSES OF W IND T URBINE C ONVERTOR, T RANSPORTATION EXPENSES OF WIND MILL. WE DIRECT ACCORDINGLY. 2 1. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED WHEREAS APPEAL OF THE ASSESSEE IS ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 24 / 01 /201 8 S D/ - ( AMARJIT SINGH ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 24 / 01 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//