M/S. SANWARIA AGROILS LIMITED, Bhopal V. The ACIT 1(1), Bhopal

ITA 620/IND/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2282 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 23-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Depreciation; Additional depreciation; Earning of tax free income; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 234B; 14A; 32; 147; 148; 54

Judgement Text

M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 1 OF 34 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE , . . , # BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER M/S. SANWARIA AGROILS LTD. E-1/1 ARERA COLONY BHOPAL V. ACIT 1(1) BHOPAL $ / APPELLANT %&$ / RESPONDENT . . ./ PAN: AACSS 1449 N $ ' / APPELLANT BY SHRI ANIL KUMAR KHABYA, CA %&$ ' / RESPONDENT BY SHRI MOHD. JAVED, SR. D.R. ' / DATE OF HEARING 09-05-2017 , ' / DATE OF PRONOUNCEMENT 16-05-2017 / O R D E R PER O.P. MEENA, ACCOUNTANT MEMBER. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S)-I, BHOPAL [IN SHORT THE CIT(A)] DATED 19-09-2013 P ERTAINING TO ASSESSMENT YEAR 2007-08, WHICH IN TURN HAS ARISEN F ROM THE ORDER DATED PASSED BY THE ACIT 1(1) BHOPAL (IN SHO RT THE AO ) UNDER SECTION 147 READ WITH SECTION 143 (3) OF INCO ME TAX ACT,1961 ( IN SHORT THE ACT). THE ASSESSEE HAS TA KEN FOLLOWING GROUNDS OF APPEAL:- . . ./ I.T.A. NO. 620/IND/2013 / ASSESSMENT YEAR: 2007-08 M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 2 OF 34 1.THAT THE LEARNED CIT (A) ERRED IN HOLDING THAT TH E PROCEEDINGS INITIATED UNDER SECTION 148 AND THE ORD ER OF REASSESSMENT PASSED BY THE AO WERE NOT BAD IN LAW. 2.THAT THE ORDER OF ASSESSMENT HAS BEEN REOPENED ME RELY ON THE BASIS OF CHANGE OF OPINION WHICH WAS NOT PER MITTED UNDER SECTION 147. THE CIT (A) OUT TO HAVE DECLARED REASSESSMENT PROCEEDINGS WITHOUT JURISDICTION AND B AD IN LAW. 3. THAT THE LD. CIT (A) ERRED IN MAINTAINING DISALL OWANCE OF CLAIM OF ADDITIONAL DEPRECIATION UNDER SECTION 32 ( 1) (IIA) OF THE ACT OF RS.1, 20, 20, 000/-. 4.THAT THE LD. CIT (A) ERRED IN MAINTAINING LEVY OF INTEREST UNDER SECTION 234B WITHOUT VAT INVOICE SPECIAL PROV ISIONS OF SECTION 234B APPLICABLE IN THE FACTS OF THE CASE. 2. GROUND NO. 1 AND 2 OF APPEAL RELATES CHALLENGING TH E INITIATION OF REASSESSMENT PROCEEDINGS UNDER SECTIO N 147 OF THE ACT, WHICH WERE UPHELD BY THE LEARNED CIT (A). 3. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE IS A LIMITED COMP ANY AND ENGAGED IN THE BUSINESS OF PROCESSING, EXTRACTION, AND REFINING OF SOYA SEEDS AND SOYA REFINED OIL AND ALSO IN GENE RATION OF POWER. THE ASSESSEE HAS FILED ORIGINAL RETURN OF IN COME ON 04- 11-2007 DECLARING TOTAL INCOME AT RS. 8, 58, 82, 56 0/-. THIS WAS REVISED ON 16-03-2009 BY DECLARING TOTAL INCOME OF RS.8, 35, 82, M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 3 OF 34 306/-. THE ORIGINAL ASSESSMENT UNDER SECTION 143 (3 ) WAS COMPLETED VIDE ORDER DATED 30-10-2009 DETERMINING T OTAL INCOME AT RS. 8, 76, 15, 740/-. SUBSEQUENTLY THE CA SE WAS REOPENED UNDER SECTION 147 BY ISSUING NOTICE UNDER SECTION 148 ON 29-09-2011, AFTER RECORDING REASON BY THE AO. TH E ASSESSEE HAS REQUESTED FOR SUPPLY THE COPY OF REASONS RECORD ED, AND THE AO PROVIDED THE SAME ON 24-11-2011. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE HAD FILED AN APPEAL BEFORE THE CIT (A). IT WAS CLAIMED THAT THE REASONS FOR REOPENING WAS SUPPLIED ON 16-02-2012, THE PERUSAL O F THE SAME SHOWS THAT THE SAME WERE RECORDED ON 23-11-2011. TH EREFORE, IT WAS CONTENDED THAT THE REASONS WERE RECORDED AFTER ISSUE OF NOTICE UNDER SECTION 148 FOR THE ASSESSMENT, AND, T HEREFORE, THE REASSESSMENT PROCEEDINGS INITIATED WERE WITHOUT ANY JURISDICTION AND THE SAME IS LIABLE TO BE ANNULLED. HOWEVER, ONG OING THROUGH THE REASONS, THE LD. CIT (A) NOTED THAT IN THE COPY OF REASONS SUPPLIED TO THE APPELLANT, IN THE FOOTER OF EACH PA GE THE FOLLOWING WERE SO MENTIONED REPLY-HM NOTE -23.11.2011-ACIT-1 (1). ON THE PERUSAL OF THE COPY OF REASONS RECORDED, THE CI T (A) OBSERVED THAT NO DATE IS MENTION IN THE BEGINNING OF THE REA SONS RECORDED OR BELOW THE SIGNATURE OF THE AO. THE AO HAD SUPPLI ED THE M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 4 OF 34 REASON ON 24-11-2011 AND TO THE APPELLANT AND IT AP PEARS THAT WHILE SUPPLYING A COPY OF THE REASONS RECORDED, THE AO HAD TAKEN A PRINTOUT OF THE REASONS ALREADY RECORDED FR OM HIS COMPUTER ON 23.11. 2011. BUT, IT DOES NOT INDICATE OR CONFIRM THAT THE REASONS WERE ACTUALLY RECORDED ON 23-11-20 11. WHEREAS ON PERUSAL OF THE ORIGINAL ASSESSMENT RECORDS, IT I S FOUND FROM THE COPY THE ORIGINAL REASONS RECORDED FOR ISSUING NOTICE UNDER SECTION 148 THAT THERE IS NO SUCH REMARK IN THE FOO TER OF THE PAGES OF ORIGINAL REASONS RECORDED. THE NOTICE UNDE R SECTION 148 WAS ISSUED ON 29-09-2011 AND REASONS WERE ALSO RECO RDED BEFORE THE ISSUE OF THE SAID NOTICE, AS MENTIONED I N THE NOTE SHEET ENTRY DATED 29-09-2011. ACCORDINGLY, THE SUB MISSIONS OF THE APPELLANT WERE REJECTED ON THIS GROUND AND APPE AL WAS DISMISSED. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEF ORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE, REL YING ON THE DECISION IN THE CASE OF CIT V. FUJISTU OPTEL LTD. [ 2013] 359 ITR 67 (MP), SUBMITTED THAT ASSESSMENT HAS BEEN REOPENE D ON THE GROUND THAT ADDITIONAL DEPRECIATION AND EXPENSES IN RELATION TO EXEMPT INCOME WERE ALREADY ON RECORD, THEREFORE, TH E REOPENING ON SAME SET OF FACTS AMOUNTS TO CHANGE OF OPINION, AND THE M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 5 OF 34 REOPENING IS BAD IN LAW. FURTHER, THE REOPENING HAS BEEN MADE ON THE BASIS OF AUDIT REPORT, AND THERE IS NO APPLI CATION OF MIND OF THE AO, THEREFORE, THE REOPENING OF ASSESSMENT I S NOT IN ACCORDANCE WITH LAW AND DESERVE TO BE QUASHED. 6. ON THE OTHER HAND, THE LD. SR. D.R., RELYING ON THE ORDER OF THE CIT(A) SUBMITTED THAT THE ASSESSMENT HAS BEEN R EOPENED ON THE BASIS OF MATERIAL NOTICED DURING THE COURSE OF ASSESSMENT PROCEEDING FOR THE ASSESSMENT YEAR 2008-09, WHEREIN THE OPENING WDV ON WINDMILL AFTER CLAIM OF ADDITIONA L DEPRECIATION WAS FURNISHED BY THE ASSESSEE WAS NOTI CED, WHICH SHOWED THAT THE ASSESSEE HAS CLAIMED ADDITIONAL DEP RECIATION ON WINDMILL INSTALLED FOR CAPTIVE POWER GENERATION, WH ICH IS NOT PERMISSIBLE IN LAW AND THEREFORE, THE ASSESSMENT RE OPENED BY THE AO, AFTER RECORDING REASONS FOR DOING SO. THE C OPY OF THE SAME WAS ALSO MADE AVAILABLE TO THE ASSESSEE DURING ASP PROCEEDING WHEREIN THE ASSESSEE HAS NOT TAKEN ANY O BJECTION ON THIS GROUND. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSMENT YEAR INVOLVE UNDER CONSIDERATION IS A.Y. 2007- 08. THE FOUR ASSESSMENT YEARS FROM THE END OF ASSES SMENT YEAR M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 6 OF 34 EXPIRES ON 31-03-2012. THE NOTICE UNDER SECTION 14 8 WAS ISSUED IN THIS CASE ON 29-09-2011 I.E. BEFORE EXPIR Y OF 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. AS PER TH E MANDATE OF SECTION 147 IF THE AO HAS REASON TO BELIEVE THAT AN Y INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER I NCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF T HE REASSESSMENT PROCEEDINGS. ACCORDINGLY, WE FIND THAT THE AO HAS SATISFIED THE REQUIRED CONDITIONS LAID DOWN IN THE STATUTE FOR THE ISSUANCE OF NOTICE UNDER SECTION 148 AND THERE IS N O INFIRMITY IN HIS ORDER ON THIS COUNT. NOTICE UNDER SECTION 148 W ITHIN FOUR YEARS CAN BE ISSUED EVEN IF THERE IS NO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE ALL MATERIAL TRULY AND FULLY N ECESSARY FOR ASSESSMENT. THUS, THE ISSUE OF NOTICE UNDER SECTI ON 148 IS AS PER LAW. THIS VIEW IS ALSO SUPPORTED BY DECISION OF HON`BLE BOMBAY HIGH COURT IN THE CASE OF GRIND WELL NORTON LTD. V JAGDISH PRASAD JANGID ACIT AND OTHERS 267 ITR 673(B OM) WHEREIN IT WAS OBSERVED BY THE HONBLE HIGH COURT A S UNDER: M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 7 OF 34 IF ONE READS EXPLANATION 2 TO SECTION 147 OF THE IT ACT INCLUDING THE PROVISO THEREFORE THEN IT IS CLEAR TH AT WHERE THE DEPARTMENT RE-OPENS ASSESSMENT WITHIN A PERIOD OF 4 YEARS, IT CAN DO SO ON THE GROUND OF INCOME HAVING ESCAPED ASSESSMENT. EVEN IF THERE IS NO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS. HOWEVER IN THE CASES OF REOPENING AFTER 4 YEARS, TH E A.O. MUST HAVE REASON TO BELIEVE THAT THE INCOME HAD ESC APED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE IS DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS, EXP LANATION 2 CANNOT BE READ WITHOUT READING THE PROVISO TO SEC. 147. IN THIS CASE MERE INFORMATION REGARDING CLAIM U/S. 80I AND 80IA HAD BEEN PROVIDE TO A.O. WHILE COMPLETING THE ORIGINAL ASSESSMENT AND THERE WAS NO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS THE RE- OPENING BEYOND 4 YEARS WAS NOT VALID.. 8. THE POWER TO MAKE ASSESSMENT OR REASSESSMENT WITHIN FOUR YEARS OF THE END OF THE RELEVANT ASSESSMENT YE AR WOULD BE ATTRACTED EVEN IN CASES WHERE THERE HAS BEEN A COMP LETE DISCLOSURE OF ALL RELEVANT FACTS UPON WHICH A CORRE CT ASSESSMENT MIGHT HAVE BEEN BASED IN THE FIRST INSTANCE, AND WH ETHER IT IS AN ERROR OF FACT OR LAW THAT HAS BEEN DISCOVERED OR FO UND OUT JUSTIFYING THE BELIEF REQUIRED TO INITIATE THE PROC EEDINGS. THE WORDS ESCAPED ASSESSMENT, WHERE THE RETURN IS FIL ED, COVER THE M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 8 OF 34 CASE OF DISCOVERY OF A MISTAKE IN THE ASSESSMENT CA USED BY EITHER AN ERRONEOUS CONSTRUCTION OF THE TRANSACTION OR DUE TO ITS NON-CONSIDERATION, OR CAUSED BY A MISTAKE OF LAW AP PLICABLE TO SUCH TRANSFER OR TRANSACTION EVEN WHERE THERE HAS B EEN A COMPLETE DISCLOSURE OF ALL RELEVANT FACTS UPON WHIC H A CORRECT ASSESSMENT COULD HAVE BEEN BASED. IN CASES WHERE TH E ASSESSING OFFICER HAD OVER-LOOKED SOMETHING AT THE FIRST ASSESSMENT, THERE CAN BE NO QUESTION OF ANY CHANGE OF OPINION, WHEN THE INCOME WHICH WAS CHARGEABLE TO TAX IS ACTU ALLY TAXED AS IT OUGHT TO HAVE BEEN UNDER THE LAW, BUT WAS NOT , DUE TO AN ERROR COMMITTED AT THE FIRST ASSESSMENT. 9. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFIC ER HAS A CAUSE OR JUSTIFICATION TO THINK OR SUPPOSE THAT INCOME HA D ESCAPED ASSESSMENT, HE CAN BE SAID TO HAVE A REASON TO BELI EVE THAT SUCH INCOME HAD ESCAPED ASSESSMENT. THE WORDS REASON TO BELIEVE CANNOT MEAN THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED THE FACTS BY LEGAL EVIDENCE. UNLESS THE GROUND OR THE MATERIAL ON WHICH HIS BELIEF IS BASED, IS FOUND TO BE SO IRRATIONAL AS NOT TO BE WORTHY OF BEING CALLED A REASON BY ANY HONEST MAN, HIS CONCLUSION THAT IT CONSTITUTES A SUFFICIENT REA SON, CANNOT BE M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 9 OF 34 OVERRIDDEN. IF THE ASSESSING OFFICER HONESTLY COMES TO A CONCLUSION THAT A MISTAKE HAS BEEN MADE, IT MATTERS NOTHING SO FAR AS HIS JURISDICTION TO INITIATE THE PROCEEDINGS UNDER SECTION 147 IS CONCERNED, THAT HE MAY HAVE COME TO AN ERRON EOUS CONCLUSION WHETHER ON LAW OR ON FACTS. THE COURT WI LL NOT IN EXERCISE OF ITS EXTRAORDINARY JURISDICTION UNDER TH E CONSTITUTION, EXAMINE THE SUFFICIENCY OF THE REASON WHICH LED THE ASSESSING OFFICER TO BELIEVE THAT THE INCOME HAD ESCAPED ASSE SSMENT AS HELD IN THE CASE OF SHRI PRAFUL CHUNILAL PATEL V. M. J. MAKWANA [1999] 236 ITR 832(GUJ). 10. WE FURTHER FORTIFY OUR VIEW BY PLACING RELIANCE ON THE DECISION OF HON`BLE BOMBAY HIGH COURT IN THE CASE O F DR. AMIN`S PATHOLOGY LABORATORY V. P.N. PRASAD , JCIT [ 2001] 252 ITR 673 (BOM)/ [2001] 172 CGTR 696 (BOM) IT WAS OBS ERVED IN PARA THAT HON`BLE HIGH COURT OBSERVED AS FOLLOWS: HOWEVER, IN THE PRESENT CASE, THE PERIOD OF FOUR Y EARS HAS SINCE ELAPSED. THEREFORE, THE PROVISO TO SECTION 14 7 COMES INTO THE PICTURE. UNDER THE SAID PROVISO, NO ACTION CAN BE TAKEN AFTER FOUR YEARS UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR ASSESSMENT. THEREFORE, IT WAS CONTEND ED ON BEHALF OF THE ASSESSEE THAT, IN THE PRESENT CASE, T HERE IS NO ALLEGATION OF FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR AS SESSMENT. M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 10 OF 34 IN THE PRESENT MATTER, AS STATED ABOVE, THE ASSESSE E HAS BEEN FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING FOR ALL ITEMS OF EXPENDITURE AND INCOME EXCEPT FOR ALL COLL ECTIONS WHICH ARE UNDER CASH BASIS. A READING OF THE ASSESS MENT ORDER CLEARLY SHOWS THAT THE ASSESSING OFFICER FAIL ED TO NOTICE AN IMPORTANT ITEM, VIZ., AN AMOUNT OF RS. 6, 70,758 WHICH REPRESENTED UNPAID PURCHASES. THE ASSESSEE-FI RM HAD CLAIMED EXPENSES IN RESPECT OF ALL PURCHASES. H OWEVER, AN AMOUNT OF RS. 6,70,758 REPRESENTED UNPAID PURCHA SES. IT IS FOR THIS REASON THAT THE ASSESSING OFFICER HAS C OME TO THE CONCLUSION FOR ISSUANCE OF NOTICE UNDER SECTION 148 THAT THE ASSESSEE-FIRM HAD SUPPRESSED AN INCOME TO THE EXTEN T OF RS. 6,70,758. UNDER EXPLANATION 1 TO THE PROVISO, MERE PRODUCTION OF ACCOUNT BOOKS FROM WHICH MATERIAL EVI DENCE COULD HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE PROVISO. THEREFORE, MERE PRODUCTION OF THE BALANCE- SHEET, PROFIT AND LOSS ACCOUNT OR ACCOUNT BOOKS WILL NOT N ECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE PROV ISO. IN THE PRESENT CASE, THE FACTS SHOW THAT THE ASSESSING OFFICER OVERLOOKED THE AFORESTATED ITEM. THAT, HE NOTICED I T SUBSEQUENTLY. THAT, AT THE TIME OF PASSING THE ORIG INAL ORDER OF ASSESSMENT, HE COULD NOT BE SAID TO HAVE OPINED ON THE ABOVE ITEM. THEREFORE, THERE WAS NO CHANGE OF OPINI ON. THEREFORE, IN THE PRESENT CASE, THE IMPUGNED NOTICE IS SUSTAINED. 11. ADVERTING TO THE FACTS OF INSTANCE CASE, WE FIND THAT THE ASSESSEE, IN THE INSTANT CASE, THERE IS NO EVIDEN CE ON RECORD; TO SUGGEST THAT THE ASSESSEE HAS FURNISHED FULL PARTIC ULARS WITH REGARD TO NATURE OF THE CLAIM OF ADDITIONAL DEPRECI ATION ON WIND ELECTRIC GENERATOR AS COULD BE SEEN FROM THE REASON S RECORDED THAT THE ASSESSEE HAS NEITHER FURNISHED DEPRECIATIO N CHART AS M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 11 OF 34 PER INCOME TAX ACT NOR ALONG WITH COMPUTATION OF TO TAL INCOME NOR IT WAS AVAILABLE ON RECORD. IT WAS ONLY WHEN TH E ASSESSEE HAD SHOWN OPENING WDV OF WIND ELECTRIC GENERATOR F OR RS. 6,01,00,000 I.E. (12,20,20,000- 60,10,00,000) (AS C LAIMED IN A.Y. 2007-08) IN DEPRECIATION CHART FOR THE ASSESSMENT Y EAR 2008-09, WHICH IS AVAILABLE IN CASE RECORD OF ASSESSMENT YEA R 2008-09. THE AO, AFTER DUE DILIGENCE, CAME TO KNOW THAT THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATION OF RS. 8,95,89,175/ - WHICH INTER-ALIA INCLUDED ADDITIONAL DEPRECIATION OF RS. 1,20,20,000/- ON WIND ELECTRICITY GENERATOR AND SAME WAS ALLOWED. EVEN IN SCRUTINY PROCEEDINGS COMPLETED FOR THE ASSESSMENT Y EAR 2007- 08 IT IS NOT THE CASE OF THE ASSESSEE THAT THIS SPE CIFIC ISSUE WAS CONSIDERED AND ALL THE FACTS CONCERNING THE CLAIM O F ADDITIONAL DEPRECIATION ARE AVAILABLE ON RECORD. FURTHER THE A SSESSEE HAS EARNED DIVIDEND INCOME OF RS. 1.24 CRORE WHICH IS C LAIMED EXEMPT INCOME UNDER SECTION 10(34) BUT NO DISALLOWA NCE UNDER SECTION 14A OF THE ACT, WERE MADE EVEN THOUGH THE A SSESSEE HAS DEBITED INTEREST EXPENDITURE OF RS. 3.61 CRORES. TH US, THERE WAS PRIMA-FACIE REASON FOR REOPENING OF ASSESSMENT. THE REFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN REOPENING THE AS SESSMENT BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT. WE THE REFORE, REJECT M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 12 OF 34 GROUND OF THE ASSESSEE WITH REGARD TO VALIDITY OF R EOPENING OF ASSESSMENT. AS THERE WAS PRIMA-FACIE CASE OF REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T. 12. FURTHER RELIANCE IS PLACED IN THE CASE OF RAYMOND WOOLEN MILLS LTD. VS. ITO [1999] 236 ITR 34 (SC); WHEREIN IT WAS OBSERVED THAT: IN DETERMINING WHETHER COMMENCEMENT OF PROCEEDINGS U/S 147(A) WAS VALID, WHAT WAS TO BE SEEN WAS ONLY THE PRIMA FACIE MATERIAL; THE SUFFICIENCY OR CORRECTNESS OF T HE MATERIAL WAS NOT A THING TO BE CONSIDERED AT THAT STAGE. REO PENING OF THE ASSESSMENT OF THE PRECEDING YEAR ON THE BASIS O F INFORMATION OBTAINED IN THE SUBSEQUENT YEAR'S PROCE EDINGS REGARDING UNDERVALUATION OF INVENTORIES RESULTING I N UNDER- STATEMENT OF PROFITS WAS HELD VALID UNDER SECTION 1 47(A). 13. IN THE CASE OF KALAYNJI MABJI & COP. V. CIT 9(1097) 102 ITR 287 (SC) IT WAS HELD THAT REASSESSMENT CAN BE INITI ATED EVEN IF INFORMATION MAY BE OBTAINED FROM RECORD OF ORIGINAL ASSESSMENT. 14. THE LEARNED COUNSEL FOR THE ASSESSEE, SUBMITTED THA T ASSESSMENT WAS REOPENED ON THE BASIS OF AUDIT OBJEC TION, WHICH IS NOT PERMISSIBLE IN LAW. IN THIS REGARD WE RELY I N THE CASE OF P. V. S. BEEDIES PVT. LTD. [1999] 237 ITR 13, THE APEX COURT HELD THAT THE AUDIT PARTY CAN POINT OUT A FACT, WHICH H AS BEEN OVERLOOKED BY THE INCOME-TAX OFFICER IN THE ASSESSM ENT. M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 13 OF 34 THOUGH THERE CANNOT BE ANY INTERPRETATION OF LAW BY THE AUDIT PARTY, IT IS ENTITLED TO POINT OUT A FACTUAL ERROR OR OMISSION IN THE ASSESSMENT AND REOPENING OF A CASE ON THE BASIS OF FACTUAL ERROR OR OMISSION POINTED OUT BY T HE AUDIT PARTY IS PERMISSIBLE UNDER LAW. AS THE TRIBUNAL HAS RIGHTLY NOTICED, THIS WAS NOT A CASE OF THE ASSESSING OFFIC ER MERELY ACTING AT THE BEHEST OF THE AUDIT PARTY OR ON ITS R EPORT. IT HAS INDEPENDENTLY EXAMINED THE MATERIALS COLLECTED BY T HE AUDIT PARTY IN ITS REPORT AND HAS COME TO AN INDEPENDENT CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME. THE ANSWER TO THE QUESTION IS, THEREFORE, IN THE AFFIRM ATIVE, IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 15. ONGOING THROUGH THE ASSESSMENT ORDER, AND REASONS RECORDED BY THE AO, WE FIND TO THE AO HAD APPLIED H IS INDEPENDENT MIND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD FOR A.Y. 2008-08 AND ALSO FOR ASSESSMENT YEAR UNDER CONSIDERATION AND FIND THAT THE INFORMATION POINT ED OUT BY THE AUDIT WAS ON FACTUAL ERROR. THEREFORE, THE AO HAS F ORMED HIS OPINION ABOUT REASON TO BELIEVE THAT INCOME CHARGEA BLE TO TAX HAD ESCAPED ASSESSMENT. 16. IN THE LIGHT OF ABOVE FACTS, THE REOPENING OF ASSE SSMENT IS PERFECTLY IN ACCORDANCE WITH LAW HENCE SAME IS UPHE LD. THIS GROUND OF APPEAL OF THE ASSESSEE IS THEREFORE DISMI SSED. M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 14 OF 34 17. GROUND NO. 3 RELATES TO MAINTAINING THE DISALLOWANC E OF CLAIM OF ADDITIONAL DEPRECIATION OF RS. 1,20,20,000 /- UNDER SECTION 32 (1) (IIA) OF THE ACT ON WIND ELECTRIC GE NERATOR. 18. FACTS APROPOS OF THIS GROUND ARE THAT THE AO NOTED THAT THE ASSESSEE HAS SHOWN ADDITION TO ASSET OF WIND ELECTR IC GENERATOR FOR RS. 1, 20, 20, 000/-DURING THE YEAR UNDER CONSI DERATION, WHICH COMMISSIONED AND PUT TO USE DURING THE YEAR U NDER CONSIDERATION. SINCE THE ASSETS WERE USED FOR A PER IOD LESS THAN 180 DAYS DURING THE YEAR, THE ASSESSEE CLAIMED DEPR ECIATION ON THESE ASSETS OF RS. 6, 01, 00, 000/-IN A.Y. UNDER CONSIDERATION AS FOLLOWS : NORMAL DEPRECIATION RS. 1, 20, 20, 000 @40% -RS. 4,80,80,000 +ADDITIONAL DEPRECIATION RS. 1,20,20,00 0 @10% - 1,20,20,000 = TOTAL DEPRECIATION= RS. 6,01,00,000 19. THUS, THE ASSESSEE HAD ALSO CLAIMED ADDITIONAL DEPRECIATION OF RS. 1, 20, 20, 000/- UNDER SECTION 32 (1) (IIA) ON WIND ELECTRIC GENERATIONS. ACCORDING TO THE AO, THE WIND ELECTRIC GENERATORS WERE USED FOR GENERATION OF POW ER AND THESE WERE NOT NEW MACHINERY OR PLANT FOR MANUFACTURING OR PRODUCING OF ANY ARTICLE OR THING, AS POWER IS NOT AN ARTICLE OR THING AS ENVISAGED IN SECTION 32 (1) (IIA) OF THE A CT. THEREFORE, IT WAS HELD BY THE AO THAT THE ASSESSEE WAS NOT ENTIT LED FOR M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 15 OF 34 ADDITIONAL DEPRECIATION UNDER SECTION 32 (1) (IIA) ON THE ACQUISITION OF WIND ELECTRIC GENERATORS. THE AO ALS O REFERRED TO THE DECISION OF HONOURABLE ITAT CHENNAI IN THE CASE OF TAMIL NADU CHLORATES V. JCIT 98 TTJ 1 (CHENNAI), WHEREI N IT WAS HELD THAT POWER COULD NOT BE HELD TO BE ARTICLE OR THING AND THUS, THE TAXPAYER WAS NOT ELIGIBLE TO CLAIM AN ADD ITIONAL DEPRECIATION ON PURCHASE OF NEW MACHINERY USED FOR GENERATION OF POWER. 20. BEING, AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFO RE THE LD. CIT (A). IT WAS SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF EDIBLE OIL AND D.O .C. SECTION 32 (1)(IIA) ALLOWS A BENEFIT OF ADDITIONAL DEPRECIA TION OF 20% ON NEW PLANT AND MACHINERY INSTALLED BY THE ASSESSEE T O MANUFACTURE OR PRODUCE OF ANY ARTICLE OR THING. IT WAS SUBMITTED THAT THE ELECTRIC ENERGY IS GOOD AND, T HUS, AN ARTICLE OR THING. THE ELECTRICITY IS SOLD AND DUTIE S ARE COLLECTED ON PRODUCTION OF ELECTRICITY ENERGY . IN THE VAT AC T, THE ELECTRICAL ENERGY IS PLACED IN SCHEDULE-I AS EXEMP TED GOODS. THEREFORE, THERE IS NO DISPUTE THAT ELECTRICAL ENER GY IS GOOD AND CAPABLE OF BEING TRANSFERRED AND SOLD. THE LD. CIT (A) NOTED THAT THE ASSESSEE HAD TWO SEPARATE MAJOR BUSINESS S EGMENTS M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 16 OF 34 I.E. SOLVENT EXTRACTION AND REFINING AND POWER GENE RATION. THE ASSESSEE HAS ACQUIRED WIND ELECTRIC GENERATOR FOR I TS NEW BUSINESS OF POWER GENERATION. NOW THE ISSUE INVOLVE D IS WHETHER AN ASSESSEE ENGAGED IN THE BUSINESS OF GENE RATION OF POWER WAS ENTITLED FOR DEDUCTION OF ADDITIONAL DEPR ECIATION OF 20% OF THE ACTUAL COST OF ANY NEW MACHINERY OR PLAN T ACQUIRED AFTER 31 ST DAY OF MARCH 2005. THE CIT(A) REFERRED THE RELEVAN T PROVISION INSERTED IN THE FINANCE ACT 2012 OR IN THE BUSINESS OF GENERATION FOR GENERATION AND DISTRIBUTION OF POWER IN SECTION 32 (1)(IIA) WITH EFFECT FROM 01-04-2013. THEREFORE, THE LD. CIT (A) HELD THAT THE AMENDED PROVISION ARE APPLICABLE FOR A.Y. 2013-14 AND SUBSEQUENT ASSESSMENT YEARS. THUS, IT M AKES CLEAR THAT AN ASSESSEE WHO WAS ENGAGED IN THE BUSIN ESS OF GENERATION OR GENERATION AND DISTRIBUTION OF POWER WAS NOT ENTITLED FOR DEDUCTION OF ADDITIONAL DEPRECIATION O N THE ACQUISITION OF NEW PLANT OR MACHINERY AS PER SECTIO N 32 (1)(IIA) BEFORE A.Y. 2013-14. THE LD. CIT (A) ALSO REFERRED TO THE RELEVANT PORTION OF THE EXPLANATORY MEMORANDUM RELA TING TO ADDITIONAL DEPRECIATION UNDER SECTION 32 (1) (IIA) WHICH IS REPRODUCED AS UNDER : EXTENDING BENEFIT OF INITIAL DEPRECIATION TO THE PO WER SECTOR M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 17 OF 34 SECTION 32 (1)(IIA) PROVIDES FOR ALLOWANCE OF INITI AL DEPRECIATION (IN ADDITION TO NORMAL DEPRECIATION) A T THE RATE OF 20% OF THE ACTUAL COST ON NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT) TO THE ASSESSEE ENGAGED I N THE BUSINESS OF MANUFACTURED OR PRODUCTION OF ANY ARTIC LE OR THING IN THE YEAR OF ACQUISITION AND INSTALMENT. UN DER THE EXISTING PROVISIONS, THE BENEFIT OF THE INITIAL DEP RECIATION IS NOT AVAILABLE ON THE NEW MACHINERY OR PLANT INSTALL ED BY THE ASSESSEE ENGAGED IN THE BUSINESS OF GENERATION OR GENERATION AND DISTRIBUTION OF POWER. 21. IN ORDER TO INCREASE IN NEW INVESTMENT BY THE ASSES SEES ENGAGED IN THE BUSINESS OF GENERATION OR GENERATION AND DISTRIBUTION OF POWER, IT IS PROPOSED TO AMEND THIS SECTION TO PROVIDE THAT AN ASSESSEE ENGAGED IN THE BUSINESS OF GENERATION OR GENERATION AND DISTRIBUTION OF POWER SHALL ALSO BE ALLOWED INITIAL DEPRECIATION AT THE RATE OF 20% OF ACTUAL C OST OF NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT) ACQUIRED AND INSTALLED IN A PREVIOUS YEAR. THIS AMENDMENT WOULD TAKE EFFECT FROM 1 ST APRIL 2013 AND WILL, ACCORDINGLY, APPLY IN RELATIO N TO THE ASSESSMENT YEAR 2013-14 AND SUBSEQUENT ASSESSME NT YEARS. 22. FROM THE ABOVE IT IS EVIDENTLY CLEAR THAT THE INITI AL DEPRECIATION UNDER SECTION 32 (1) (IIA) IN RESPECT OF NEW MACHINERY AND PLANT FOR GENERATION OR GENERATION AN D M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 18 OF 34 DISTRIBUTION OF POWER IS ALLOWABLE AT THE RATE OF 2 0% OF ACTUAL COST FROM ASSESSMENT YEAR 2013-14 ONLY. NOW, IN THE INSTANT CASE, THE YEAR INVOLVED IS ASSESSMENT YEAR 2007-08 AND, THUS, THE APPELLANT WAS NOT ELIGIBLE FOR CLAIMING INITIAL DEPRECIATION UNDER SECTION 32 (1) (IIA) OF THE ACT ON THE WIND E LECTRIC GENERATOR IN THE YEAR UNDER CONSIDERATION. ACCORDIN GLY THE DISALLOWANCE OF INITIAL DEPRECIATION UNDER SECTION 32 (1) (IIA) OF RS.1, 20, 20, 000/-IS MADE BY THE AO WAS CONFIRMED. 23. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEF ORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBM ITTED THAT ELECTRICITY IS PRODUCED AND, COMMERCIALLY TRADEABLE AND THEREFORE IT WAS ARTICLE OR THING WITHIN THE MEANING OF SEC TION 32 (1) (IIA) OF THE ACT. THE LEARNED COUNSEL REFERRED THE VAT AC T AND SUBMITTED THAT IN THE SAID ACT, THE ELECTRICITY IS CONSIDERED AS GOOD FOR THE LEVY OF VAT. THE LEARNED COUNSEL FOR T HE ASSESSEE ALSO CITED A DECISION IN THE CASE OF COMMISSIONER O F SALES TAX, MADHYA PRADESH V. MADHYA PRADESH ELECTRICITY BOARD JABALPUR 1970 AIR 732, 1969 SCR (2) 939 WHEREIN SUPPLY ELE CTRIC ENERGY WAS TREATED AS GOOD AND ELECTRICITY BOARD WA S TREATED AS A DEALER FOR THE PURPOSE OF SALES TAX. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO PLACED RELIANCE IN THE CASE OF AC IT V. DELTA M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 19 OF 34 ENTERPRISE [ I.T.A. NO. 944/MUM/2012] (A.Y. 07-08) DATED 09- 10-2015] , WHEREIN RELYING ON THE DECISION OF SOUTH ERN PETROCHEMICAL AND INDUSTRIES CO. LTD. , THE SUPREME COURT HELD THAT THE ELECTRICITY HAS TO BE CONSIDERED AS (GOODS ) FOR THE PURPOSE OF APPLICATION OF SALES TAX LAWS. IN THE CA SE OF A.P. V. NATIONAL THERMAL POWER CORPORATION LTD. [2002] 5 SCC 203, M. P. CEMENT MANUFACTURES ASSOCIATION V. STATE OF MADH YA PRADESH [2004] 2 SCC 249 REFERRED TO IN TATA CONSULTANCY SE RVICES V. STATE OF A.P. [2004] 271 ITR 401 , IT WAS HELD THA T THE ELECTRICITY WAS CAPABLE OF ABSTRACTION, CONSUMPTION AND USE WHICH, IF DONE DISHONESTLY WAS PUNISHABLE U/S. 39 O F THE INDIAN ELECTRICITY ACT, 1910. IT WAS HELD THAT ELECTRICITY ENERGY WOULD BE TRANSMITTED, TRANSFERRED, DELIVERED, STORED AND POS SESSED ETC. IN THE SAME WAY AS ANY OTHER MOVABLE PROPERTY. IT WAS HELD THAT THAT THE ELECTRICITY IS GOODS WITHIN THE MEANIN G OF SALES TAX ACT. THEREFORE, IN VIEW OF THE DECISION RELIED UPON BY THE LD. COUNSEL, IT CAN BE SAID THAT THE ELECTRICITY GENERA TED BY THE ASSESSEE AMOUNTS TO PRODUCTION OF AN ARTICLE OR TH ING WITHIN THE MEANING OF SECTION 32 (1)(IIA) OF THE ACT AND T HEREFORE, THE ASSESSEE WOULD BE ENTITLED FOR ADDITIONAL DEPRECIAT ION @20%. WHILE DOING SO , IT WAS ALSO RELIED IN THE CASE OF ACIT V. MALLOW M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 20 OF 34 INTERNATIONAL IN I.T.A. NO. 152/MDS/2014 DTD. 19-12 -2014 FOR THE ASSESSMENT YEAR 2006-07. WHEREIN RELYING ON THE DECISION OF THE HON`BLE MADRAS HIGH COURT IN THE CASE OF CIT V. HI TECH ARAI (SUPRA) HAS HELD THAT WHERE THE ASSESSEE HAS SETUP A WIND MILL IN ADDITION TO SOME OTHER EXISTING BUSINESS , AND IS ENGAGED IN THE GENERATION OF ELECTRICITY , THE ASSE SSEE IS ENTITLED TO ADDITIONAL DEPRECIATION ON THE SAME. 6. WE FIND THAT THE ISSUE IN APPEAL IS SQUARELY COVERE D IN FAVOUR OF THE ASSESSEE BY THE AFORESAID DECISIONS O F THE HON`BLE MADRAS HIGH COURT AND THE COORDINATED BENCH OF THE TRIBUNAL. WE DO NOT FIND ANY INFIRMITY IN THE I MPUGNED ORDER. 24. THE LEARNED COUNSEL FOR THE ASSESSEE, RELIED IN THE CASE OF CIT V. TVM LTD. 319 ITR 336 (MAD) WHEREIN IT WAS H ELD THAT THE ADDITIONAL DEPRECIATION ALLOWED ON WIND MILL GENERA TOR TO AN ASSESSEE WHO IS ALREADY ENGAGED IN THE BUSINESS OF MANUFACTURE AND PRODUCTION OF AN ARTICLE OR THING. 25. ON THE OTHER HAND, THE LEARNED SR. D.R. RELYING ON THE DECISION OF CLOVER DEVELOPER P LTD. V. ACIT [I.T.A. NO. 6422/M/2011-A.Y. 0708 DTD. 01-05-2013] OF MUMBAI TR IBUNAL SUBMITTED THE PROVISION OF SECTION 32 (1)(IIA) OF T HE ACT HAVE BEEN INTERPRETED BY CHENNAI BENCH OF TRIBUNAL TO HOLD TH AT THE ASSESSEE WHO IS ALREADY ENGAGED IN THE BUSINESS OF PRODUCTION OR MANUFACTURE OF AN ARTICLE OR A THING OR GOOD IN THE PAST ALONE TO CLAIM OF ADDITIONAL DEPRECIATION , ADMITTEDLY, THERE IS NO OTHER CONTRARY DECISION IN EXISTENCE M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 21 OF 34 ON THE ISSUE. FURTHER, ADMITTEDLY THE ASSESSEE IS N OT ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTIO N OF AN ARTICLE OR THING PRIOR TO THE MANUFACTURE OF THE EL ECTRICITY USING THE IMPUGNED WINDMILL. CONSIDERING THE ABO VE SETTLED NATURE OF THE ISSUE, WE ARE OF THE OPINION, ASSESSEE IS NOT ENTITLED TO THE CLAIM ADDITIONAL DEPRECIATION. 26. THE LEARNED SR. D.R. FURTHER REFERRING TO NEWLY INS ERTED PROVISIONS OF SECTION 2 (29BA) OF THE ACT RELATING TO THE DEFINITION OF MANUFACTURE SUBMITTED THAT THE CLAIM OF THE ASSESSEE IS UNTENABLE, AS WORD MANUFACTURE REQUIRED A CHANGE IN NO LEAVING PHYSICAL OBJECT OR ARTICLE OR A THING. AND IN THE INSTANT CASE QUA THE ELECTRICITY GENERATED , NO NEW AND DIS TINCT OBJECT OR ARTICLE OR A THING HAS BEEN BROUGHT IN EXISTENCE B Y USING WINDMILL. THEREFORE, GENERATION OF ELECTRICITY BY USE OF WINDMILL DOES NOT AMOUNT TO MANUFACTURING ACTIVIT Y BY THE ASSESSEE. THE USE OF ELECTRICITY BY WINDMILL IS THEREFORE, ALLOWED ONLY AFTER AMENDMENT IN FINANCE ACT, 2012, WITH EFFECT FROM 01-04-2013. 27. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. ON PERUSAL OF THE ABOVE, IT SEEMS THAT THE AO WAS OF THE VIEW THA T THE ASSESSEE CASE IS COVERED U/S 32(1)(I) OF THE ACT WHICH PROVI DES FOR DEPRECIATION TO AN UNDERTAKING ENGAGED IN GENERATIO N OR GENERATION & DISTRIBUTION OF POWER AT SUCH PERCENTA GE OF THE ACTUAL COST AS PRESCRIBED AND HEREAFTER REFERRING TO THE AMENDMENT WHICH HAS BEEN BROUGHT IN BY THE FINANCE ACT,2012 M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 22 OF 34 WHEREIN THE PROVISIONS OF SECTION 32 (1)(IIA) HAS B EEN AMENDED TO PROVIDE FOR ADDITIONAL DEPRECIATION TO AN ASSESSEE ENGAGED IN BUSINESS OF GENERATION OR GENERATION & DISTRIBUTION OF POWERS, THE ASSESSEES CLAIM WAS DENIED HOLDING THE SAID AM ENDMENT PROSPECTIVE IN NATURE. HOWEVER, THE ASSESSEES CA SE IS THAT BY USING WINDMILL THE ASSESSEE IS PRODUCING AN ARTIC LE OR A THING AS DEFINE UNDER SECTION 32 (1) (IIA) OF THE ACT HEN CE, IT IS ENTITLED TO ADDITIONAL DEPRECIATION. 28. ON REVIEW OF PROVISIONS OF SECTION 32 READ WITH THE RULES, IT IS CLEAR THAT AN UNDERTAKING ENGAGED IN GENERATION OR GENERATION & DISTRIBUTION OF POWER HAS, AN OPTION TO CLAIM TH E DEPRECIATION EITHER UNDER SECTION 32 (1)(IIA) OF THE ACT. THE AO HAS NOT DISPUTED THE SAID CLAIM OF THE ASSESSEE IN RESPECT OF CLAIM OF DEPRECIATION U/S 32(1)(II) OF THE ACT .WE NOW REFER TO THE PROVISIONS OF SECTION 32(1)(II)(A) OF THE ACT WHICH READS AS UNDER: (IIA) IN THE CASE OF ANY NEW MACHINERY OR PLANT (O THER THAN SHIPS AND AIRCRAFT) WHICH HAS BEEN ACQUIRED AND I NSTALLED AFTER THE 31ST DAY OF MARCH, 2005 BY AN ASSESSEE EN GAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING OR IN THE BUSINESS OF GENERATION OR GENERATIO N AND DISTRIBUTION OF POWER, A FURTHER SUM EQUAL TO TWENT Y PER CENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (II). 29. A READING OF THE ABOVE PROVISIONS MAKES IT CLEAR TH AT THE ADDITIONAL DEPRECIATION @20% OF THE ACTUAL COST OF MACHINERY & M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 23 OF 34 PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (I I). IN OTHER WORDS, OVER AND ABOVE THE DEPRECIATION CLAIMED AND ALLOWED U/S 32(1)(II) OF THE ACT, THE ASSESSEE SHALL BE ELIGIBL E FOR AN ADDITIONAL DEPRECIATION OF 20% OF THE ACTUAL COST OF SUCH MACH INERY AND PLANT. IT FURTHER PROVIDES THAT A MACHINERY OF PLAN T SHOULD BE A NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRA FT) WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER THE 31ST DAY OF MARCH, 2005. IT FURTHER PROVIDES THAT THE ADDITIONAL DEPR ECIATION IN NEW MACHINERY OR PLANT SHALL BE ALLOWED IN THE HANDS OF THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF MANUFACTURE OR PR ODUCTION OF ANY ARTICLE OR THING OR IN THE BUSINESS OF GENERATI ON OR GENERATION & DISTRIBUTION OF POWER. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT NEW MACHINERY OR PLANT HAS BEEN ACQ UIRED AND INSTALLED AFTER THE 31ST MARCH 2005. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS CLAIMED DEPRECIATION U/S 32(1)(II) OF THE ACT. ONCE THE AO HAS ACCEPTED THE ASSESSEES CLAIM U/S 3 2(1)(II) OF THE ACT, WE DO NOT SEE A REASON WHY THE ASSESSEE SH OULD BE DENIED THE CLAIM OF ADDITIONAL DEPRECIATION ON THE SAME ASSETS U/S 32(1)(IIA) OF THE ACT. 30. IN THE CASE OF JCIT VS. MINERAL ENTERPRISES LTD. (2 013) 144 ITD 680 (BANG.)(TRIB.): THE ASSESSEE WAS ENGAGED IN MANUFACTURE OF ARTICLE OR THING. BY EXERCISING THE OPTION PROVIDED UNDER SECO ND PROVISO TO RULE 5(1A), IT CLAIMED ADDITIONAL DEPREC IATION ON WIND MILL. THE AO DISALLOWED THE CLAIM OF ADDITIONA L DEPRECIATION ON WIND MILL ON THE GROUND THAT PROVIS IONS OF THE ACT ALLOWED DEPRECIATION ONLY IN CASE OF ANY NE W MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT) AND NOT M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 24 OF 34 FOR WIND MILL, WHICH WAS ENGAGED IN POWER GENERATIO N. IT WAS HELD THAT IN VIEW OF THE DECISION OF MADRAS HIG H COURT RENDERED IN CASE OF CIT VS. VTM LTD. [2009] 319 ITR 336, ASSESSEE WAS ENTITLED TO ADDITIONAL DEPRECIATION ON THE WIND MILL. 31. THE LEARNED COUNSEL FOR THE ASSESSEE, HAS PLACED RE LIANCE IN THE CASE OF CIT VS. VTM LTD. (2009) 319 ITR 336 (MAD.)(HC): IN THIS CASE, ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF TEXTILE GOODS. IT SET UP A WINDMILL FOR GENERATION OF POWER AND CLAIMED ADDITIONAL DEPRECIATION U/S 32 (1)(IIA). AO HELD THAT SETTING UP OF A WINDMILL HAS ABSOLUTELY N O CONNECTION WITH THE MANUFACTURING OF TEXTILE GOODS AND THUS AS SESSEE IS NOT ENTITLED TO CLAIM ADDITIONAL DEPRECIATION U/S 32(1) (IIA). IT WAS HELD THAT TO CLAIM ADDITIONAL DEPRECIATION U/S 32(1 )(IIA), WHAT IS REQUIRED TO BE SATISFIED IS THAT SETTING UP OF A NE W 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 THIN G. THE SAID PROVISION DOES NOT STATE THAT THE SETTING UP OF A N EW MACHINERY OR PLANT, WHICH WAS ACQUIRED AND INSTALLED UPTO 31S T MARCH, 2002 SHOULD HAVE ANY OPERATIONAL CONNECTIVITY TO TH E ARTICLE OR THING THAT WAS ALREADY BEING MANUFACTURED BY THE AS SESSEE. THEREFORE, THE CONTENTION THAT SETTING UP OF A WIND MILL HAS NOTHING TO DO WITH THE POWER INDUSTRY, NAMELY, MANU FACTURE OF TEXTILE GOODS IS TOTALLY NOT GERMANE TO THE SPECIFI C PROVISION CONTAINED IN S.32(1)(IIA) OF THE ACT. ACCORDINGLY, ADDITIONAL DEPRECIATION ON WINDMILL AS ALLOWED BY CIT(A)/ITAT WAS UPHELD. THIS VIEW WAS ALSO FOLLOWED IN CASE OF CIT VS. HI T ECH ARAI LTD. M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 25 OF 34 321 ITR 477 (MAD.)(HC) AND CIT VS. TEXMO PRECISION CASTINGS 321 ITR 481 (MAD.)(HC). 32. WE FIND THAT THE EXPRESSION ARTICLE OR THING USED IN SECTION 32(1) (IIA) IS NOT DEFINED IN THE IT ACT, 1961. THE SUPREME COURT IN CASE OF STATE OF ANDHRA PRADESH VS. NTPC LTD. 5 SSC 203 HELD THAT ELECTRICITY IS GOODS AND THEREFORE PRODUCTIO N/GENERATION OF ELECTRICITY IS PRODUCTION OF ARTICLE OR THING. FURT HER, DELHI TRIBUNAL IN CASE OF NTPC LTD. VS. DCIT (2012) 54 SO T 177 WHEREIN ASSESSEES CLAIM OF ADDITIONAL DEPRECIATION WAS DISALLOWED ON THE GROUND THAT POWER/ELECTRICITY GEN ERATED BY ASSESSEE COULD NOT BE EQUATED WITH AN ARTICLE OR TH ING WHICH WAS BEING MANUFACTURED IN AN INDUSTRIAL UNDERTAKING, HE LD THAT IF THERE CAN BE SALE AND PURCHASE OF ELECTRIC ENERGY L IKE ANY MOVEABLE OBJECT, THEN ELECTRIC ENERGY IS COVERED BY THE DEFINITION OF GOODS AND THUS ADMISSIBILITY OF ADDITIONAL DEPRE CIATION COULD NOT BE DENIED TO ASSESSEE MERELY ON THE GROUND THAT ELECTRICITY IS NOT AN ARTICLE OR THING. IN VIEW OF THE SAID DECISI ONS, P&M ACQUIRED AND INSTALLED BY ASSESSEE FOR GENERATION O F ELECTRICITY IS AKIN TO MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING AND CONSEQUENTLY ASSESSEE IS ENTITLED FOR ADDITIONAL DE PRECIATION U/S 32(1)(IIA) ON SAME. 33. WE FIND TO THE AO, WHILE FRAMING ASSESSMENT U/S. 143(3)/147 HELD THAT ASSESSEES SUBMISSION IS NOT A CCEPTABLE IN VIEW OF AMENDED PROVISION OF SEC. 32(1)(IIA) WHEREB Y ASSESSEES ENGAGED IN THE BUSINESS OF GENERATION OR GENERATION AND DISTRIBUTION OF POWER IS ALLOWED ADDITIONAL DEPRECI ATION WITH EFFECT FROM A.Y. 13-14, MEANING THEREBY, THAT THEY WERE NOT M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 26 OF 34 ALLOWED ADDITIONAL DEPRECIATION DURING THE YEAR UND ER CONSIDERATION I.E. A.Y. 08-09. THE SAID AMENDMENT H AS BEEN INCORRECTLY INTERPRETED BY AO. THE COORDINATED BEN CH OF CHENNAI TRIBUNAL IN CASE OF ACIT VS. M. SATISH KUMA R (2012) 19 ITR (TRIB.) 646, CASE PERTAINING TO A.Y. 08-09, HAS GIVEN A FINDING ON SUCH AMENDMENT AND HAS HELD THAT GENERATION OF ELECTRICITY IS A MANUFACTURING A CTIVITY ENTITLING ASSESSEE TO CLAIM ADDITIONAL DEPRECIATION U/S 32(1)(IIA). IN THIS CASE, ASSESSEE WAS ENGAGED IN T HE BUSINESS OF SALE OF IMPORTED SECOND HAND MACHINERY AND GENERATION OF ELECTRICITY THROUGH WINDMILLS. HE INS TALLED TWO WINDMILLS. THE 1ST WINDMILL WAS INSTALLED IN YEAR 2 005 AND SECOND IN SEPT. 2007 I.E. A.Y. 08-09. ASSESSEE CLAI MED 100% DEPRECIATION IN RESPECT OF 2ND WINDMILL INSTALLED A S PER PROVISIONS OF SEC. 32(1) AND ITEM XIII OF NEW APPEN DIX 1 READ WITH RULE 5. THE AO REJECTED THE CLAIM OF ASSESSEE FOR GRANT OF ADDITIONAL DEPRECIATION ON WINDMILL INSTALLED DU RING A.Y. 08-09 BY OBSERVING THAT ASSESSEE IS NOT INVOLVED IN MANUFACTURING OF ANY GOODS. BEFORE TRIBUNAL, REVENU E SUBMITTED THAT ASSESSEE IS A COMMISSION AGENT AND N OT A MANUFACTURER. FOR AVAILING BENEFIT OF ADDITIONAL DE PRECIATION, IT IS ESSENTIAL THAT ASSESSEE SHOULD BE ENGAGED IN MANUFACTURING ACTIVITY. THEREFORE, ASSESSEE IS NOT ENTITLED TO ADDITIONAL DEPRECIATION U/S 32(1)(IIA). ASSESSEE SU BMITTED THAT IT HAD NO CLAIMED ADDITIONAL DEPRECIATION ON 1 ST WINDMILL SINCE HE WAS NOT INVOLVED IN ANY MANUFACTU RING OR PRODUCTION ACTIVITY AT THAT TIME. NOW, HE IS CLAIMI NG ADDITIONAL DEPRECIATION ON 2ND WINDMILL AS HE IS AL READY ENGAGED IN THE BUSINESS OF PRODUCTION/GENERATION OF ELECTRICITY. IT WAS HELD VIDE PARA 9 AND 10 OF THE ORDER AS UNDER:- A PERUSAL OF JUDGMENT CLEARLY SHOWS THAT GENERATION OF ELECTRICITY IS AKIN TO MANUFACTURING OF A NEW PRODUCT. IN THE INSTANT CASE, ELECTRICITY WHICH MAY NOT BE SEEN WITH THE EYES, HOWEVER, ITS EFFECT CAN BE SEEN AND FELT. M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 27 OF 34 THE ELECTRICITY CAN BE TRANSMITTED, TRANSFERRED, DE LIVERED, STORED, POSSESSED ETC. 34. THE HONBLE SUPREME COURT IN THE CASE OF CST VS. M ADHYA PRADESH ELECTRICITY BOARD (SUPRA) HAS HELD THAT ELE CTRICITY FALLS WITHIN THE DEFINITION OF GOODS UNDER THE PROVISIONS OF SALE OF GOODS ACT, 1930. THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF NTPC LTD. (SUPRA) AFTER A DETAILED EXAMINATION OF S EVERAL JUDGMENTS, ACTS, CONSTITUTION OF INDIA, HAS CONCLUD ED THAT THE PROCESS OF GENERATION OF ELECTRICITY IS AKIN TO MAN UFACTURE OF AN ARTICLE OR THING. IN VIEW OF THE ABOVE, WE ARE OF T HE SECTION 32(1)(IIA). ALTHOUGH THE SAID AMENDMENT IS WITH EFF ECT FROM 1.4.2013 CONSIDERED OPINION THAT GENERATION OF ELEC TRICITY IS A MANUFACTURING ACTIVITY. THE ASSESSEE IS INVOLVED IN THE MANUFACTURING ACTIVITY AND FULFILLS THE CONDITIONS AS LAID DOWN UNDER SECTION 32(1)(IIA). THE GOVERNMENT VIDE FINAN CE ACT, 2012 HAS AMENDED THE PROVISIONS OF SECTION 32(1)(IIA) TO INCLUDE THE BUSINESS OF GENERATION OR GENERATION AND DISTRIBUTI ON OF POWER, ELIGIBLE FOR BENEFIT UNDER BUT IT GIVES IMPETUS TO THE VIEW THAT GENERATION OF ELECTRICITY IS A MANUFACTURING PROCES S AND QUALIFIES FOR THE BENEFITS UNDER SECTION 32(1)(IIA). 35. FURTHER, THE COORDINATED BENCH OF KOLKATA TRIBUNAL IN CASE OF DAMODAR VALLEY CORPORATION (2016) 160 ITD 78, CA SE PERTAINING TO A.Y. 11-12 HELD THAT ON PERUSAL OF SECTION 32(1)(IIA) OF THE ACT AS IT S TOOD UPTO A.Y. 2012-13, IT IS EVIDENT THAT THE ADDITIONAL DEP RECIATION IS PERMISSIBLE TO ALL ASSESSEES WHO ARE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICL E OR THING. IN THE CIRCUMSTANCES, THE ASSESSEE WHO IS DE SIROUS OF CLAIMING THE ADDITIONAL DEPRECIATION NEED ONLY TO P ROVE THAT M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 28 OF 34 DURING THE RELEVANT YEAR HE WAS ENGAGED IN THE BUSI NESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. NOW THE QUESTION TO BE DECIDED IS AS TO WHETHER THE ASSESSE E ENGAGED IN GENERATION AND DISTRIBUTION OF ELECTRICI TY COULD BE SAID TO BE ENGAGED IN THE BUSINESS OF MANUFACTURE O R PRODUCTION OF ANY ARTICLE OR THING SO AS TO BE ELIG IBLE FOR CLAIMING ADDITIONAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT. IT IS WELL SETTLED THAT FOR THE PURPOSE OF MANUFACTURE, A N ELEMENT OF TRANSFORMATION IS A PREREQUISITE. A PARTICULAR ITEM SHOULD UNDERGO CHANGES IN ITS COL OUR AND CHARACTER AND BECOME A SEPARATE AND NEW MARKETABLE COMMODITY AFTER THE MANUFACTURING PROCESS. IN THE I NSTANT CASE, THE ASSESSEE HAD SET UP HYDEL POWER AND THERM AL POWER PLANT, WHEREIN THE WATER AND COAL GETS CONVER TED INTO ELECTRICITY THROUGH THE MANUFACTURING PROCESS. HENC E IT IS UNDISPUTED THAT TRANSFORMATION FROM MERE COAL TO EL ECTRICITY AND FROM MERE WATER TO ELECTRICITY HAPPENS PURSUANT TO THE MANUFACTURING PROCESS AND THE ELECTRICITY SO PRODUC ED OR GENERATED BECOMES A SEPARATE MARKETABLE COMMODITY. THE VARIOUS APEX COURT DECISIONS RELIED UPON BY THE ASS ESSEE IN THE CONTEXT OF LEVY OF SALES TAX ON THE SALE OF ELE CTRICITY HAD ALSO DECIDED THAT THE GENERATION OF ELECTRICITY AMO UNTS TO PRODUCTION OF ARTICLE OR THING. HENCE, IT COULD BE SAFELY CONCLUDED THAT THE ASSESSEE IS ENTITLED FOR CLAIMIN G ADDITIONAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT E VEN PRIOR TO THE AMENDMENT BROUGHT IN BY FINANCE ACT 2012. 15. 36. FURTHER RELIANCE IS PLACED IN THE CASE OF PRINCIPAL CIT VS. KANISHK STEEL INDUSTRIES (2016) 96 CCH 0292 (MAD.) (HC): IN THIS CASE, THE ASSESSEE WAS STATED TO HAVE SET U P TWO WIND MILLS IN ADDITION TO THE ALREADY EXISTING FOUR WIND MILLS AND THEREBY HAVING INCREASED ITS POWER GENERATION C APACITY BY ABOVE 50%. IT WAS HELD THAT IT IS TRUE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF OIL SEEDS, MOULDED RUBBER PARTS, REED VALUE ASSEMBLIES APART FROM GENERATION OF POWER. AFTER THE INSTALLATION OF THE M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 29 OF 34 ADDITIONAL WIND MILLS, BOTH PRIOR TO AS WELL AS AFT ER THE INSTALLATION OF THE ADDITIONAL WIND MILLS, THE ASSE SSEE WAS USING WIND ENERGY FOR GENERATING POWER FOR ITS CAPI TATIVE CONSUMPTION APART FROM SELLING THE SURPLUS POWER GE NERATED TO THE TAMIL NADU ELECTRICITY BOARD. AS FAR AS APPL ICATION OF SECTION 32(1)(IIA) OF THE ACT, IS CONCERNED, WHAT I S REQUIRED TO BE SATISFIED IN ORDER TO CLAIM THE ADDITIONAL DEPRE CIATION IS THAT THE SETTING UP OF A NEW MACHINERY OR PLANT SHO ULD HAVE BEEN ACQUIRED AND INSTALLED AFTER 31ST MARCH 2002 B Y AN ASSESSEE, WHO WAS ALREADY ENGAGED IN THE BUSINESS O F MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THE SAID PROVISION DOES NOT STATE THAT THE SETTING UP OF A N EW MACHINERY OR PLANT, WHICH WAS ACQUIRED AND INSTALLE D UP TO 31.03.2002 SHOULD HAVE ANY OPERATIONAL CONNECTIVITY TO THE ARTICLE OR THING THAT WAS ALREADY BEING MANUFACTURE D BY THE ASSESSEE. THEREFORE, THE CONTENTION THAT THE SETTIN G UP OF A WIND MILL HAS NOTHING TO DO WITH THE POWER INDUSTRY , NAMELY, MANUFACTURE OF OIL SEEDS ETC. IS TOTALLY NO T GERMANE TO THE SPECIFIC PROVISION CONTAINED IN SECTION 32(1 )(IIA) OF THE ACT. 37. IN THE CASE OF CIT VS. DIAMINES & CHEMICALS LTD. (2 014) 109 DTR 62 (GUJ.) (HC): THE ASSESSEE ALREADY IN THE BUSINESS OF MANUFACTURE OF CHEMICALS, IS ELIGIBLE FOR ADDITIONA L DEPRECIATION U/S 32(1)(IIA) IN RESPECT OF WINDMILL ELECTRICITY G ENERATING MACHINERY ACQUIRED BY IT. 38. THE SUBMISSIONS OF THE LD. D.R. THAT MANUFACTURE O F ELECTRICITY DOES NOT TRANSFORM IN PHYSICAL FORM IN VIEW OF DEFINITION CONTAINED IN SECTION 2 (29BA) OF THE ACT NOR IT AMOUNT TO MANUFACTURE OF AN ARTICLE OR A THING. IN THE INS TANT CASE, THE ASSESSEE HAD SET UP WINDMILL THE BY USING WINDMI LL THE WIND GETS CONVERTED INTO ELECTRICITY THROUGH THE MANUFAC TURING PROCESS. HENCE, IT IS UNDISPUTED THAT TRANSFORMATIO N FROM WIND M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 30 OF 34 TO ELECTRICITY THROUGH A PROCESS IN TO ELECTRICITY HAPPENS PURSUANT TO THE MANUFACTURING PROCESS AND THE ELECT RICITY SO PRODUCED OR GENERATED BECOMES A SEPARATE MARKETABLE COMMODITY. A PARTICULAR ITEM SHOULD UNDERGO CHANGES IN ITS COLOUR AND CHARACTER AND BECOME A SEPARATE AND NEW MARKETABLE COMMODITY AFTER THE MANUFACTURING PROCES S. THE ELECTRICITY THOUGH COULD NOT BE SEEN BY EYES, HOWEV ER, ITS EFFECT CAN BE SEEN AND FELT. THE ELECTRICITY CAN BE TRANSM ITTED, TRANSFERRED, DELIVERED, STORED, POSSESSED ETC. THE APEX COURT IN THE CASE OF COMMISSIONER OF SALES TAX, MADHYA PRADE SH V. MADHYA PRADESH ELECTRICITY BOARD JABALPUR 1970 AIR 732, 1969 SCR (2) 939 HELD THE SUPPLY ELECTRIC ENERGY AS GOOD AND ELECTRICITY BOARD WAS TREATED AS A DEALER FOR THE P URPOSE OF SALES TAX. THEREFORE, THE ARGUMENT OF REVENUE DOES NOT HO LD GOOD. THE VARIOUS APEX COURT DECISIONS RELIED UPON BY THE ASSESSEE IN THE CONTEXT OF LEVY OF SALES TAX ON THE SALE OF ELE CTRICITY HAD ALSO DECIDED THAT THE GENERATION OF ELECTRICITY AMOUNTS TO PRODUCTION OF ARTICLE OR THING. HENCE, IT COULD BE SAFELY CONC LUDED THAT THE ASSESSEE IS ENTITLED FOR CLAIMING ADDITIONAL DEPREC IATION U/S. 32(1) (IIA) OF THE ACT EVEN PRIOR TO THE AMENDMENT BROUGHT IN BY FINANCE ACT 2012. 39. THE LEARNED SR. D.R. HAS RELIED IN THE CASE OF CLOV ER DEVELOPER P LTD. V. ACIT [I.T.A. NO. 6422/M/2011-A. Y. 0708 DTD. 01-05-2013],WHICH IS IN FAVOUR OF THE REVENUE. HOWEVER, THE ASSESSEE HAS RELIED ON VARIOUS DECISIONS AS REF ERRED TO ABOVE OF MUMBAI, DELHI AND CHENNAI TRIBUNALS AS WELL AS HON`BLE MADRAS HIGH COURT AND OTHER COORDINATED BENCHES, WH ICH ARE FAVOUR OF THE ASSESSEE. WHEN TWO VIEWS ARE POSSIBLE THEN VIEW, M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 31 OF 34 WHICH IS FAVOURABLE, BE ADOPTED. IN THIS REGARD, WE FIND THAT IT HAS BEEN HELD IN PLETHORA OF JUDGEMENTS THAT IN CAS E WHERE TWO POSSIBLE ON THE SAME ISSUE AND THERE BEING NO JUDGE MENT ON THE SAID ISSUE FROM THE JURISDICTIONAL HON`BLE HIGH COU RT OR THE HON`BLE APEX COURT, THE VIEW THAT IS FAVOURABLE TO THE ASSESSEE HAS TO BE ADOPTED. IN OTHER WORDS, THE HON`BLE NON- JURISDICTIONAL HIGH COURT`S JUDGEMENT IN FAVOUR OF THE ASSESSEE, IS TO BE PREFERRED OVER THE NON-JURISDICTIONAL HIGH COURT`S JUDGEMENT NOT FAVOURABLE TO THE ASSESSEE. IN THIS C ONNECTION, WE RELY ON THE FOLLOWING JUDGEMENTS: I) CIT V. KULU VALLEY TRANSPORT CO. PVT. LTD. [1970] 77 ITR 518 (SC) HELD THAT EVEN IF TWO VIEWS ARE POSSIB LE THE VIEW WHICH IS FAVOURABLE TO THE ASSESSEE MUST BE ACCEPTED WHILE CONSTRUING THE PROVISIONS OF A TAXIN G STATUTE. II) CIT V. VEGETABLES PRODUCTS LTD. [1973] 88 IT R 192 (SC) HELD ON THE OTHER HAND, IF TWO REASONABLE CONSTRUCTIONS OF TAXING PROVISION ARE POSSIBLE, THA T CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED. THIS IS WELL-ACCEPTED RULE OF CONSTRUCTION RECOGNIZED BY THIS COURT IN SEVERAL OF ITS DECISION S. III) CIT V. MADHO PD. JATIA [1976] 105 ITR 179 ( SC) HELD WHERE AMBIGUOUS INTERPRETATION OF STATUTE ADMITTI NG TWO VIEWS- VIEWS WHICH IS FAVOURABLE TO SUBJECT SHOULD BE ADOPTED. IV) PETRON ENGINEERING CONSTRUCTION PVT. LTD. V . CBDT [1989] 175 ITR 523 (SC) HELD THAT PRINCIPLE THAT WH EN TWO INTERPRETATIONS ARE POSSIBLE TO BE MADE, THE INTERP RETATION, WHICH IS FAVOURABLE TO THE ASSESSEE, SHOULD BE ADOP TED IS WELL SETTLED AND THERE IS NO DOUBT ABOUT THAT. V) CIT (TDS) V. RELIANCE ENGINEERING ASSOCIATES PVT. LTD. [2012] 80 CCH 113 (GUJ) HELD THAT IT IS WELL-S ETTLED LAW THAT WHERE TWO INTERPRETATIONS ARE POSSIBLE, TH E ONE M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 32 OF 34 WHICH IS FAVOURABLE TO THE ASSESSEE SHOULD BE ADOPT ED. APPEAL DISMISSED. 40. IN VIEW OF ABOVE, WE FIND THAT IT IS SETTLED LAW WH ERE TWO INTERPRETATIONS ARE POSSIBLE, THE ONE, WHICH IS FAV OURABLE TO THE ASSESSEE SHOULD BE ADOPTED. APPLYING THE RATIO OF A BOVE DECISIONS TO THE FACTS OF THE CASE, IT CAN SAFELY S AID THAT THAT WHEN TWO VIEWS ARE POSSIBLE ON THE SAME SUBJECT, TH E VIEW FAVOURING THE ASSESSEE SHOULD BE ADOPTED. WE FIND T HAT IT IS NOW A SETTLED PROPOSITION AS HELD BY THE HONBLE SUPREM E COURT AND THE VARIOUS CO-ORDINATE BENCHES OF THE TRIBUNAL THA T THE PROCESS OF GENERATION OF ELECTRICITY IS AKIN TO MAN UFACTURE OF AN ARTICLE OR THING, THE ASSESSEE IN THE INSTANT CASE SATISFY THE REQUIREMENT THAT IT IS ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING. NOW COMING TO THE AMENDMENT WHICH HAS BEEN BROUGHT-IN BY THE FINANCE ACT 2012 W. E. F. A.Y. 2013-14 WHEREBY THE ASSESSEE ENGAGED IN THE BUSINESS OF GENERATION OR GENERATION & DISTRIBUTION OF POWER HAVE SPECIFICALLY BEEN INCLUDED AND HELD ELIGIBLE F OR CLAIM OF ADDITIONAL DEPRECIATION. IN OUR VIEW, THE SAID AMEN DMENT CANNOT BE HELD TO DISENTITLE THE ASSESSEE TO CLAIM OF THE ADDITIONAL DEPRECIATION. VARIOUS COORDINATE BENCHES HAVE HELD THAT EVEN PRIOR TO THE AMENDMENT BROUGHT IN BY THE FINANCE AC T 2012, THAT THE ASSESSEE`S ENGAGED IN GENERATION OR GENERA TION AND DISTRIBUTION OF ELECTRICITY WERE HELD ELIGIBLE FOR ADDITIONAL DEPRECIATION. IN THIS REGARD, A REFERENCE CAN BE DR AWN TO THE DECISION OF NTPC LTD. [2012] 54 SOT 177 (DELHI) (S UPRA), ACIT V. M. SATISH KUMAR [2012] 19 ITR (TRIB) 646 (CHENNAI) (SUPRA) AND DAMODAR VALLEY CORPORATION [2016] 160 ITD 78 (KOL) (SUPRA). IN M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 33 OF 34 OUR VIEW, THE SAID AMENDMENT CANNOT BE READ TO NEGA TE THE SETTLED LEGAL POSITION THAT GENERATION OF ELECTRICI TY IS AKIN TO MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING. A S HELD BY COORDINATE BENCH IN M SATISH KUMAR (SUPRA), THE SAI D AMENDMENT BY THE FINANCE ACT 2012 GIVES AN IMPETUS TO THE VIEW THAT GENERATION OF ELECTRICITY IS A MANUFACTUR ING PROCESS. IN LIGHT OF ABOVE, THE ASSESSEE IS HELD ENTITLED TO TH E ADDITIONAL CLAIM OF DEPRECIATION ON THE POWER PLANT AND THE WI NDMILL INSTALLED DURING THE YEAR. HENCE, THE GROUND OF THE ASSESSEE IS ALLOWED. 41. GROUND NO. 4 RELATES TO CHARGE OF INTEREST U/S. 234 B (3) OF THE ACT . 42. THE LEARNED COUNSEL RELYING IN THE CASE OF WHEREIN IT WAS HELD THAT VIJAY KUMAR SABOO (HUF) ORS V. ACIT 340 ITR 382 (KARN) SUBMITTED THAT INTEREST U/S. 234B (3) IS AV AILABLE IN CASE OF REASSESSMENT ONLY FROM THE DATE OF ORIGINAL ASSE SSMENT AND NOT FROM THE FIRST DAY OF ASSESSMENT YEAR. 43. WE HAVE HEARD. WE FIND THAT THE CHARGING OF INTERE ST UNDER SECTION 234B(3) IS MANDATORY AS HELD IN THE CASE O F ANJUM M. H. GHASWALA 252 ITR 1 (SC), THEREFORE, IT IS UPHEL D. HOWEVER, THE INTEREST WOULD BE CHARGEABLE AS PER LAW LAID DO WN BY HON`BLE KARNATAKA HIGH COURT (SUPRA). HOWEVER, AS W E ALLOWED THE MAIN GROUND OF APPEAL ON FAVOUR OF THE ASSESSEE IT BECOMES ACADEMIC IN NATURE AND CONSEQUENTIAL IN NATURE AND NOT REQUIRED ADJUDICATION. HOWEVER, WE HELD THE ASSESSE E IS ENTITLED TO CONSEQUENTIAL RELIEF IF ANY AS ARISE OUT ON GIVI NG EFFECT TO THIS M/S. SANWARIA AGROIL LTD. / I.T.A. NO. 620/IND/201 3 /A.Y.:07-08 PAGE 34 OF 34 ORDER IN A CASE WITH LAW. THIS GROUND OF APPEAL IS DISPOSED-OF ACCORDINGLY. 44. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. 45. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.5.2017 SD/- SD/- ( C.M. GARG) JUDICIAL MEMBER ( O. P. MEENA) ACCOUNTANT MEMBER / DATED : 16 TH MAY, 2017 OPM