DCIT 8(1), MUMBAI V. ENERCON WIND FARMS ( JAISALMER ) P. LTD, MUMBAI

ITA 6697/MUM/2010

• Counselvise Citation: 669719914 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 20-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: J P BAIRAGRA
• Keywords: Depreciation

Judgement Text

ITA NO.6697 OF 2010 ENERCON WIND FARMS JAISALMER P LTD MUMBAI PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO.6697/MUM/2010 (ASSESSMENT YEAR: 2005-06) DCIT 8(1) ROOM NO.210, 2 ND FLOOR AAYAKAR BHAVAN, MK ROAD VS ENERCON WIND FARMS (JAISALMER) PVT. LTD, KOLSITE HOUSE, PLOT NO.31, SHAH INDL. MUMBAI 400 020 ESTATE, VEERA DESAI ROAD ANDHERI(W) MUMBAI 400053 PAN NO: AABCE 3105 C (APPELLANT) (RESPONDENT) REVENUE BY: SHRI V.V. SHASTRI, DR ASSESSEE BY: SHRI J.P. BAIRAGRA DATE OF HEARING: 07/05/2012 DATE OF PRONOUNCEMENT: 11/05/2012 O R D E R PER VIVEK VARMA, J.M. THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ERS OF CIT (A)-16, MUMBAI DATED 09-07-2010. 2. THE ONLY GROUND TAKEN BY THE REVENUE IS AGAINST THE ALLOWANCE OF DEPRECIATION OF ` .1,68,83,775/- ON CIVIL WORK, ERECTION AND COMMISSIONING OF WIND MILL. 3. THE AR APPEARING ON BEHALF OF ASSESSEE POINTED OUT THAT SIMILAR ADDITION WAS DELETED BY THE COORDINATE BENC H IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05, IN ITA NO.266 6/MUM/2009 DATED 04.06.2010, HAVE HELD IN PARAS 7 & 8 AS UNDER : 7. IN VIEW OF OUR FINDING ABOVE AND AFTER CONSIDER ING THE CASE-LAWS CITED ABOVE, WE ARE OF THE OPINION THAT T HE BASEMENT CONSTRUCTED BY ASSESSEE TO INSTALL AND WITHHOLD THE HEAVY WINDMILL IS PART AND PARCEL OF T HE ITA NO.6697 OF 2010 ENERCON WIND FARMS JAISALMER P LTD MUMBAI PAGE 2 OF 3 WINDMILL AND WITHOUT THE SPECIALLY DESIGNED BASEMEN T, THE WINDMILL CANNOT STAND. THEREFORE, IT IS TO BE T REATED AS PLANT AND HIGHER DEPRECIATION CLAIMED BY ASSESSE E HAS TO BE ALLOWED. WHEN ASSESSEE HAS TAKEN A WINDMI LL ON LEASE AND CONSTRUCTED THE BASEMENT FOR INSTALLIN G THE WINDMILL FOR GENERATING POWER, DENIAL OF DEPRECIATI ON TO THE BASEMENT CONSTRUCTED BY ASSESSEE IS NOT JUSTIFI ED IN VIEW OF OUR FINDING THAT THE BASEMENT IS PART AND P ARCEL 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 CAS E, THOUGH ASSESSEE HAS TAKEN THE WINDMILL ON LEASE, ASSESSEE HAD INCURRED HUGE EXPENDITURE TO CONSTRUCT THE BASEMENT TO INSTALL THE WINDMILL AND ACTUALLY RUNNI NG THE WINDMILL. HENCE ASSESSEE IS ELIGIBLE FOR HIGHER DEPRECIATION. 8. IN VIEW OF THE FOREGOING REASONS WE HOLD THAT TH E LOWER AUTHORITIES HAVE NOT TAKEN A CORRECT VIEW IN DISALLOWING THE CLAIM OF ASSESSEE. THEREFORE, WE SE T ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DIREC T FOR ALLOWING THE CLAIM OF ASSESSEE FOR HIGHER RATE OF DEPRECIATION AT 80%. IN PARA 3.6 OF THE IMPUGNED ORDER, THE CIT (A) OBSE RVES, SINCE THE HON'BLE ITAT IS THE LAST FACT FINDING AU THORITY AN THE FINDING OF THE HON'BLE TRIBUNAL IS BINDING O N LOWER AUTHORITIES, THEREFORE, IT IS HELD THAT THE FOUNDAT ION AND ITS MATERIAL LIKE STEEL, REINFORCED CEMENT, GRAVE, EARTHLING ETC. ARE PART AND PARCEL OF WINDMILL WITHOUT WHICH THE WINDMILL CANNOT COME INTO EXISTENCE AND HENCE 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 TRE AT THE FOUNDATION, ERECTION AND COMMISSIONING AS PART AND PARCEL OF WINDMILL AND ALLOW DEPRECIATION ON 80%. T HUS THE GROUND OF APPEAL IS ALLOWED. 4. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05, RE LYING ON WHICH THE CIT (A) HAS GIVEN THE RELIEF TO ASSESSEE FOLLOW ING DEPRECIATION, WE DO NOT FIND ANY REASON TO DISTURB THE FINDINGS OF T HE CIT (A) AND ITA NO.6697 OF 2010 ENERCON WIND FARMS JAISALMER P LTD MUMBAI PAGE 3 OF 3 DEVIATE FROM THE ORDER OF THE COORDINATE BENCH, WE ALLOW THE DEPRECIATION AS CLAIMED. 5. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DI SMISSED, ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY, 2012. SD/- SD/- (R.S. SYAL) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 11 TH MAY, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI