ACIT 8(1), MUMBAI V. ENERCON WIND FARMS ( JAIALMER) P. LTD, MUMBAI

ITA 6390/MUM/2010

• Counselvise Citation: 639019914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 15-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 30-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O A MAO
• Keywords: Depreciation

Judgement Text

1 ITA 6402-05 ENERCON WIND FARMS(KAR) P. LTD. ITA 6390-91 ENERCON WIND FARMS(JAISALMER) PVT. LTD. ITA ENERCON WIND FARMS(RAJASTHAN) PVT. LTD IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI N.V. VASUDEVAN, J.M. AND SHRI R.K. PAN DA, A.M. ITA NO. 6402 TO 6405/MUM/2010 (ASST YEARS 2004-05 TO 2007-08) INCOME TAX OFFICER -8(1)3, ROOM NO. 206, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI 400 020. VS ENERCON WIND FARMS (KARNATAKA) PVT. LTD., VEERA INDL. ESTATE, ANDHERI (EAST), MUMBAI. 400093 (APPELLANT) (RESPONDENT) PAN NO. AABCE3106B ITA NO. 6390/MUM/2008 (ASST YEARS 2006-07) ITA NO. 6391/MUM/2010 (ASST YEAR 2007-08) ACIT 8(1), ROOM NO. 210 2 ND FLOOR,, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI 400 020. VS ENERCON WIND FARMS (JAISALMER) PVT. LTD., VEERA INDL. ESTATE, VEERA DESAI ROAD, ANDHERI (EAST), MUMBAI. 400093 (APPELLANT) (RESPONDENT) PAN NO. AABCE3105C ITA NO. 6392/MUM/2010 (ASST YEAR 2007-08) ACIT 8(1), ROOM NO. 210 2 ND FLOOR,, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI 400 020. VS ENERCON WIND FARMS (RAJASTHAN) PVT. LTD., VEERA INDL. ESTATE, VEERA DESAI ROAD, ANDHERI (EAST), MUMBAI. 400093 (APPELLANT) (RESPONDENT) PAN AABCE8156G APPELLANT BY S HRI O.A. MAO RESPONDENT BY SHRI J.P. BAIRAGRA DATE OF HEARING 15.12.2011 DATE OF PRONOUNCEMENT 21.12.2011 ORDER PER BENCH. ITA NO. 6402 TO 6405/MUM/2010 FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDER DATED 30.06.2010 OF THE COMMISSIO NER OF INCOME TAX (A)- 16, MUMBAI RELATING TO ASSESSMENT YEARS 2004-05 TO 2007-08 RESPECTIVELY. 2 ITA 6402-05 ENERCON WIND FARMS(KAR) P. LTD. ITA 6390-91 ENERCON WIND FARMS(JAISALMER) PVT. LTD. ITA ENERCON WIND FARMS(RAJASTHAN) PVT. LTD ITA NO. 6390 & 6391/MUM/2010 FILED BY THE REVENUE A RE DIRECTED AGAINST THE ORDER DATED 30.06.2010 OF THE COMMISSIONER OF I NCOME TAX (A)- 16, MUMBAI RELATING TO ASSESSMENT YEARS 2006-07 & 2007- 08 RESPECTIVELY. ITA NO. 6392/MUM/2010 FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 30.06.2010 OF THE COMMISSIONER OF INCOME TAX (A)-16, MUMBAI RELATING TO A.Y. 2007-08. SINCE IDENTICAL ISSUES AR E INVOLVED IN ALL THESE APPEALS, THEREFORE, THESE APPEALS WERE HEARD TOGETH ER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. ITA NO. 6402/MUM/2010 (A.Y. 2004-05). 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCES MADE BY THE ASSESSING OFFICER REGARDING THE CLAIM OF DEPRECIATI ON TO THE EXTENT OF RS. 3,37,62,448/- ON CIVIL WORK, ERECTION AND CO MMISSIONING OF WIND MILL WITHOUT APPRECIATING THE FACTS AND CIRCUM STANCES OF THE CASE AND IN LAW. 2.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF GENERATION OF POWER BY WIND ENERGY THROUGH WIND FARMS AND SALE THEREOF. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS COMMENCED GENERATION AND SALE OF COMMERCIAL POWER. THE A.O. ASKED THE ASSESSEE TO FURNISH DETAILS OF ASSETS OWNED BY IT. AFTER GOING THROUGH THE DETAILS OF VARIOUS ASSETS, THE A.O. ASKED THE ASSES SEE TO JUSTIFY ITS CLAIM OF DEPRECIATION ON FOUNDATION, ERECTION AND COMMISSION ING @ 80%. ACCORDING TO THE A.O. THE ASSESSEE COMPANY IS NOT ENTITLED TO DEPRECIATION @ 80% ON CIVIL WORK AND IT IS ENTITLED TO DEPRECIATION @ 5% ONLY. 2.2 IN APPEAL, THE LD. CIT(A) RELYING ON THE DECISI ON OF THE TRIBUNAL IN THE CASE OF SISTER CONCERN OF THE ASSESSEE NAMELY ENERC ON WINDFARMS (JAISALMER) PVT. LTD. VIDE ITA NO. 2666/MUM/2009 OR DER DATED 4.6.2010 FOR 3 ITA 6402-05 ENERCON WIND FARMS(KAR) P. LTD. ITA 6390-91 ENERCON WIND FARMS(JAISALMER) PVT. LTD. ITA ENERCON WIND FARMS(RAJASTHAN) PVT. LTD A.Y. 2004-05 DECIDED THE ISSUE IN FAVOUR OF THE ASS ESSEE BY HOLDING AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE ORDER OF THE A.O. AND THE FACTS OF THE CASE THAT WIND MILLS ENERGY DEVICES IS ELIGIBLE FOR 80% DEPRECIATION AS PER THE PROVISION OF THE I.T. ACT AND IS CLAIMED BY M/S PFC WHO IS THE OWNER OF THE WIND MILLS IN THIS CASE. THE DISPUTE IS REGARDING THE BASE STRUCTURE I.E. THE FOUNDATION ON WHICH THESE WIND MILLS ARE INSTALLED. THE APPELLANT HAS ALSO CLAIMED DEPRECIATION ON THE EXPENDITURE IN CURRED FOR PRE- INSTALLATION CHARGES, LOAN PROCESSING CHARGES AND T HE FOUNDATION WORKS. IN THIS REGARD, SIMILAR ADDITION WAS MADE B Y THE ASSESSING OFFICE IN THE CASE OF APPELLANTS SISTER CONCERN VI Z. M/S ENERCON WIND FARMS (IAISALMER) PVT. LTD. FOR A.Y. 2004-05 A ND THE SAID ADDITION WAS CONFIRMED BY MY PREDECESSOR. ON FURTH ER APPEAL, THE HONBLE I.T.A.T. VIDE ITS ORDER ITA NO. 2666/MUMN/2 009 DATED 4 TH JUNE 2010 HAS INTER ALIA HELD AS UNDER:- IN VIEW OF OUR FINDING ABOVE AND AFTER CONSIDERING THE CASE LAWS CITED ABOVE, WE ARE OF THE OPINION THAT THE BA SEMENT CONSTRUCTED BY THE ASSESSEE TO INSTALL AND WITHHOLD THE HEAVY WINDMILL IS PART AND PARCEL OF THE WINDMILL A ND WITHOUT THE SPECIALLY DESIGNED BASEMENT, THE WINDMI LL CANNOT STAND. THEREFORE, IT IS TO BE TREATED AS PL ANT AND HIGHER DEPRECIATION CLAIMED BY THE ASSESEE HAS TO B E ALLOWED. WHEN THE ASSESSEE HAS TAKEN A WINDMILL ON LEASE AND CONSTRUCTED THE BASEMENT FOR INSTALLING THE WIN DMILL FOR GENERATING POWER, DENIAL OF DEPRECIATION TO THE BAS EMENT CONSTRUCTED BY THE ASSESSEE IS NOT JUSTIFIED IN VIE W OF OUR FINDING THAT THE BASEMENT IS PART AND PARCEL OF THE WINDMILL AND IS TO BE TREATED AS PLANT. THE INTENTION OF THE LEGISLATURE IS TO GRANT HIGHER DEPRECIATION TO ENCOURAGE THE ENTREPRENEURS WHO GENERATE POWER THROUGH WINDMILL. IN THE PRESENT CASE, THOUGH THE ASSESSEE HAS TAKEN THE WIN DMILL ON LEASE, THE ASSESSEE HAD INCURRED HUGE EXPENDITUR E TO CONSTRUCT THE BASEMENT TO INSTALL THE WINDMILL AND ACTUALLY RUNNING THE WINDMILL. HENCE, THE ASSESSEE IS ELIGI BLE FOR HIGHER DEPRECIATION. SINCE, THE HONBLE I.T.A.T. IS THE LAST FACT FINDIN G AUTHORITY AND THE FINDING OF THE HONBLE TRIBUNAL I S BINDING ON THE LOWER AUTHORITIES, THEREFORE, IT IS HELD THA T THE FOUNDATION AND ITS MATERIAL LIKE STEEL, REINFORCED CEMENT, GRAVE, EARTHLING ETC. ARE PART AND PARCEL OF WINDMI LL WITHOUT WHICH THE WINDMILL CANNOT COME INTO EXISTENCE AND H ENCE THE DEPRECIATION IS ALLOWABLE ON IT @ 80% ON CIVIL WORK I.E. FOUNDATION, ERECTION AND COMMISSIONING OF A WINDMIL L. THE ASSESSING OFFICER IS THEREFORE DIRECTED TO TREAT TH E FOUNDATION, ERECTION AND COMMISSIONING AS PART AND PARCEL 4 ITA 6402-05 ENERCON WIND FARMS(KAR) P. LTD. ITA 6390-91 ENERCON WIND FARMS(JAISALMER) PVT. LTD. ITA ENERCON WIND FARMS(RAJASTHAN) PVT. LTD OF WINDMILL AND ALLOW DEPRECIATION ON @ 80%. THUS THE GROUND OF APPEAL IS ALLOWED. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE RE VENUE IS IN APPEAL BEFORE US. 2.2 AFTER HEARING BOTH THE SIDES, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO ALLOWED THE CLAIM OF THE ASSE SSEE BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF SISTER CONC ERN OF THE ASSESSEE. THE LD. D.R. COULD NOT PLACE ANY MATERIAL SO AS TO TAKE A C ONTRARY VIEW OTHER THAN THE VIEW TAKEN BY THE TRIBUNAL. WE, THEREFORE, DO N OT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY UPHOLD THE SAME. THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 3. IN THE RESULT, REVENUES APPEAL IN ITA NO. 6402/ MUM/2010 FOR A.Y. 2004-05 IS DISMISSED. ITA NO. 6203 TO 6205/MUM/2010 FOR A.Y. 2005-06 TO 2 007-08 & 6390/ MUM/2010 FOR A.Y. 2006-07 & 6391 TO 6392/MUM/2010 F OR A.Y. 2007- 08 (BY REVENUE). 4. THE GROUNDS TAKEN BY THE REVENUE IN THE ABOVE AP PEALS ARE IDENTICAL TO THE GROUND TAKEN BY THE REVENUE IN ITA NO. 6402/ MUM/2010. WE HAVE ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DISMISSED THE APPEAL FILED BY THE REVENUE. FOLLOWING THE SAME RATIO, TH E GROUNDS RAISED BY THE REVENUE IN THE ABOVE APPEALS ARE DISMISSED. 5 ITA 6402-05 ENERCON WIND FARMS(KAR) P. LTD. ITA 6390-91 ENERCON WIND FARMS(JAISALMER) PVT. LTD. ITA ENERCON WIND FARMS(RAJASTHAN) PVT. LTD 5. IN THE RESULT, ALL THE APPEALS FILED BY THE REVE NUE ARE DISMISSED. ORDER PRONOUNCED ON 21.12.2011. SD/- ( N.V. VASUDEVAN ) JUDICIAL MEMBER SD/- ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 21.12.2011. RK COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT, CONCERNED, MUMBAI 4 CIT(A) - CONCERNED, MUMBAI 5 DR BENCH E 6 MASTER FILE /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI