DCIT CC 3(1) CEN RG 3A-9 ENERCON TOWER, VEERA DESAI RD, VEERA INDL ESTATE, ANDHERI, MUMBAI V. VAAYU INFRASTRUCTURE LLP, MUMBAI

ITA 6842/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9697 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 21-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Assessee Lawyers: A K GHOSH
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 6842 /MUM./2016 ( ASSESSMENT YEAR : 20 12 13 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 3(1), RANGE 3, MUMBAI . APPELLANT V/S VAAYU INFRASTRUCTURE LLP A 9, ENERCON TOWER VEERA DESAI ROAD VEERA INDUSTRIAL ESTATE ANDHERI (W), MUMBAI 400 053 PAN AAJFV3647B . RESPONDENT ITA NO. 6830/MUM./2016 ( ASSESSMENT YEAR : 20 13 14 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 3(1), RANGE 3, MUMBAI . APPELLANT V/S VAAYU INFRASTRUCTURE LLP A 9, ENERCON TOWER VEERA DESAI ROAD VEERA INDUSTRIAL ESTATE ANDHERI (W), MUMBAI 400 053 PAN AAJFV3647B . RESPONDENT ASSE SSEE BY : SHRI A.K. GHOSH REVENUE BY : MS. ARJU GARODIA DATE OF HEARING 26 . 0 3 .2018 DATE OF ORDER 28.03.2018 2 VAAYU INFRASTRUCTURE LLP O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEALS BY THE REVENUE ARE AGAINST THE COMMON ORDER DATED 12 TH AUGUST 2016, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 51, MUMBAI, FOR ASSESSMENT YEAR 2012 13 AND 2013 14. 2 . THE ONLY COMMON ISSUE ARISING FOR CONSIDERATION IN THE PRESENT APPEALS RELATE TO ALLOWANCE OF ASSESSEES CLAIM OF DEPRECIATION ON FOUNDATION / CIVIL WORKS OF WIND MILLS. 3 . BRIEF FACTS ARE, THE ASSESSEE AS STATED BY THE ASSESSING OFFICER IS ENGAGED IN GENERATION OF POWER BY WIND ENERGY THROUGH WIND F A RM. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON WIND MILLS INSTALLED AT GUJARAT. AFTER CALLING FOR NECESSARY DETAILS ON THE DEPRECIATION CLAIMED ON WIND MILLS, THE ASSESSING OFFICER FOUND T HAT HIGHER DEPRECIATION @ 100% AS ALLOWABLE TO WIND MILLS WAS CLAIMED BY THE ASSESSEE ON CIVIL CONSTRUCTION RELATING TO FOUNDATION WORK OF THE WIND MILL. HE, THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN WHY DEPRECIATION CLAIMED AT HIGHER RATE ON SUCH CIV IL CONSTRUCTION SHOULD NOT BE RESTRICTED TO 5% AS ALLOWABLE TO CIVIL WORKS LIKE ROADS AND BUILDINGS. OBJECTING TO THE PROPOSED DISALLOWANCE OF DEPRECIATION, THE ASSESSEE SUBMITTED THAT THE FOUNDATION WORK FOR INSTALLING WIND MILL BEING A PART 3 VAAYU INFRASTRUCTURE LLP OF THE WIND M ILL UNIT , DEPRECIATION IS ALLOWABLE AT THE HIGHER RATE. IN THIS CONTEXT, THE ASSESSEE ALSO BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THE DECISION OF THE TRIBUNAL IN CASE OF ANOTHER GROUP COMPANY. THE ASSESSING OFFICER, HOWEVER, STATING THAT THE DEPART MENT HAS NOT ACCEPTED THE DECISION OF THE TRIBUNAL RESTRICTED THE DEPRECIATION ON THE CIVIL WORK OF THE WIND MILL TO 5%. BEING AGGRIEVED OF PART DISALLOWANCE O F DEPRECIATION ASSESSEE PREFERRED APPEALS BEFORE THE FIRST APPELLATE AUTHORITY. 4 . THE LEARNED COMM ISSIONER (APPEALS) TAKING NOTE OF THE FACT THAT WHILE DECIDING IDENTICAL ISSUE IN CASE OF ASSESSEES SISTER CONCERN, ENERCON WIND FIRM (KARNATAKA) PVT. LTD., THE TRIBUNAL HAS HELD THAT DEPRECIATION IN RESPECT OF FOUNDATION / CIVIL WORK OF THE WIND MILL IS ALLOWABLE AT THE SAME RATE AS APPLICABLE TO WIND MILL ALLOWED ASSESSEES CLAIM OF DEPRECIATION. 5 . LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE GROUND RAISED. 6 . LEARNED AUTHORISED REPRESENTATIVE STRONGLY SU PPORTING THE ORDER OF THE FIRST APPELLATE AUTHORITY SUBMITTED THAT THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE FOLLOWING DECISIONS: I ) ENORCON WIND FIRM (JAISALMER) LTD. V/S ITO, ITA NO.2666/ MUM./2009, ORDER DATED 04.06.2010; 4 VAAYU INFRASTRUCTURE LLP II ) ITO V/S ENORCON WIND FIRM (KARNATAKA) LTD., ITA NO.6402/ MUM./2010 & ORS. DATED 21.12.2011; AND III ) CIT V/S MIRAJ PRODUCTS PVT. LTD., ITA NO.14 OF 2013, ITA NO.53 OF 2012 DATED 18.07.2014. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. THE LIMIT ED ISSUE ARISING FOR CONSIDERATION IN THE PRESENT APPEALS ARE, WHETHER THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION ON THE FOUNDATION WORK (CIVIL CONSTRUCTION) OF WIND MIL L GENERATORS AT THE SAME RATE AS IS APPLICABLE TO WIND MILLS. IN OUR VIEW, THE ISSU E STANDS SETTLED IN FAVOUR OF THE ASSESSEE BY THE CASE LAWS CITED BEFORE US BY THE LEARNED AUTHORISED REPRESENTATIVE. IN THE CASE OF CIT V/S MIRAJ PRODUCTS PVT. LTD. (SUPRA), THE HONBLE RAJASTHAN HIGH COURT WHILE DECIDING IDENTICAL ISSUE RELIED UPON THE D ECISION OF THE HONBLE GUJARAT HIGH COURT IN CIT V/S PERRY ENGINEERING AND ELECTRONICS PVT. LTD., A ND HELD THAT , SINCE , THE WIND MILL HAS TO BE FITTED AND MOUNTED ON A CIVIL CONSTRUCTION , SUCH CIVIL CONSTRUCTION IS INTEGRALLY CONNECTED WITH THE WIND MILL S YSTEM AND HAS TO BE CONSIDERED AS PART OF IT. T HEREFORE, THE RATE OF DEPRECIATION APPLICABLE TO WIND MILL WOULD ALSO APPLY TO CIVIL CONSTRUCTION WORK. THE SAME VIEW HAS BEEN EXPRESSED BY THE CO ORDINATE BENCH IN CASE OF ASSESSEES SISTER CONCERN AS REFERRE D TO ABOVE. FACTS ARE IDENTICAL IN THE PRESENT CASE ALSO. THERE IS NO DISPUTE THAT THE CIVIL CONSTRUCTION ON WHICH THE ASSESSEE HAS CLAIMED DEPRECIATION AT HIGHER RATE ARE THE FOUNDATION WORK FOR INSTALLING THE 5 VAAYU INFRASTRUCTURE LLP WIND MILL GENERATOR. IN FACT, THE ASSESSING O FFICER HAS ALSO ACCEPTED THE AFORESAID FACTUAL POSITION WHILE REFERRING TO THE DECISION OF THE TRIBUNAL IN CASE OF ASSESSEES SISTER CONCERN AND HAS RESTRICTED DISALLOWANCE TO 5% ONLY FOR KEEPING THE ISSUE ALIVE. IN VIEW OF THE SETTLED POSITION OF LAW, WE UPHOLD THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUNDS RAISED. 8 . IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.03.2018 SD/ - B.R. BASKARAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 28.03.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (ASSTT. REGISTRAR/SR.P.S) ITAT, MUMBAI