ACIT, Salem V. Kutti Spinners Pvt Limited, Tiruchengode

ITA 755/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77256 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 18-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI IRS
• Assessee Lawyers: T VASUDEVAN
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ I.T.AS. NO.755 &756/MDS/2013 ( / ASSESSMENT YEARS : 2007-2008 & 2008-2009) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I(1), SALEM. ( !% /APPELLANT) VS M/S. KUTTI SPINNERS PVT. LIMITED, 83, SALEM ROAD, TIRUCHENGODE 637 211. [PAN:AABCK4426E] ( &'!% /RESPONDENT) / APPELLANT BY : SHRI. ANIRUDH RAI, IRS, CIT-DR / RESPONDENT BY : SHRI. T. VASUDEVAN, ADVOCATE /DATE OF HEARING : 27.03.2014 ! /DATE OF PRONOUNCEMENT : 08.05.2014 #( / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER THE APPEALS HAVE BEEN FILED BY THE REVENUE ASSAIL ING THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS), SALEM, FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09. BOTH ORDERS A RE DATED 30.01.2013. I.T.A.NOS.755 & 756/MDS/2013 :- 2 -: 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THE PRESEN T APPEALS IS RATE OF DEPRECIATION ON ELECTRICAL CABLES & FITTING S CONNECTED WITH WINDMILL. 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE MANUFACTU RE AND SALE OF COTTON YARN. THE ASSESSEE HAS ALSO ERECTED A WINDMILL. THE ASSESSEE CLAIMED DEPRECIATION @80% ON ALL COMPONE NTS OF WINDMILL INCLUDING ELECTRICAL FITTINGS, CABLES ETC. THE AS SESSING OFFICER IN SCRUTINY ASSESSMENT FOR BOTH THE ASSESSMENT YEARS U NDER CONSIDERATION HELD THAT THE ASSESSEE IS NOT ENTITLE D TO CLAIM DEPRECIATION AT THE RATE OF 80% ON ELECTRICAL INSTA LLATIONS CONNECTED WITH WINDMILL. THE ASSESSING OFFICER RESTRICTED DE PRECIATION ON ELECTRICAL COMPONENTS TO 10%. AGGRIEVED AGAINST TH E ASSESSMENT ORDERS FOR A.Y. 2007-08 & 2008-2009, THE ASSESSEE P REFERRED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) SAL EM. IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE BY RELYING ON THE DECISI ON OF TRIBUNAL IN THE CASE OF M/S. VELLATHAL SPINNING MILLS (P) LTD., IN ITA NOS.2082 AND 2083/MDS/2010 DATED 30.06.2011. NOT SATISFIED WITH THE ORDERS OF THE I.T.A.NOS.755 & 756/MDS/2013 :- 3 -: COMMISSIONER OF INCOME TAX (APPEALS) THE REVENUE HA S COME IN APPEAL BEFORE THE TRIBUNAL. 4. SHRI. ANIRUDH RAI REPRESENTING THE DEPARTMENT SUBMITTED THAT ELECTRICAL LINES FOR THE POWER TRANSMISSION AND ELE CTRICAL FITTINGS ARE DISTINCT AND INDEPENDENT FROM THE WINDMILL. THE ELE CTRICAL CABLES AND ELECTRICAL FITTINGS ARE ELIGIBLE FOR DEPRECIATION AT THE RATE OF 10% ONLY. THE ELECTRICAL COMPONENTS ATTACHED TO WINDMILL ARE SEPARATE ELEMENTS AND THE SAME ARE NOT INTEGRAL PARTS OF WINDMILL. 5. ON THE OTHER HAND, SHRI. T. VASUDEVAN, APPEARI NG ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ELECTRICAL FITTINGS AND CABLES ARE INTEGRAL PARTS OF WIND MILL. THE LEARNED COUNSEL F OR THE ASSESSEE VEHEMENTLY SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND FURTHER PLACED RELIANCE ON THE DECIS ION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. MADRA S CEMENTS LTD IN ITA NOS.1391, 1392 & 1655/MDS/2011 DECIDED ON 24 TH JULY, 2012. 6. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELO W PERUSED. THE ONLY ISSUE RAISED IN THE APPEALS IS WITH REGARD TO RATE OF DEPRECIATION ON ELECTRICAL FITTINGS/CABLES ATTACHED TO WINDMILL. THE ASSESSEE HAS I.T.A.NOS.755 & 756/MDS/2013 :- 4 -: CLAIMED 80% DEPRECIATION ON ELECTRICAL FITTINGS, WH EREAS, THE STAND OF REVENUE IS THAT ELECTRICAL FITTINGS, ARE NOT INTEG RAL PARTS OF WINDMILL AND THUS QUALIFY FOR DEPRECIATION AT THE RATE OF 10 %. WE FIND THAT THIS ISSUE HAS COME UP BEFORE TRIBUNAL IN SEVERAL CASES, AND IN ALL CASES THE TRIBUNAL HAS BEEN TAKING A CONSISTENT VIEW BY H OLDING ALL THE CONSTITUENTS OF WINDMILL AS SINGLE UNIT. THE TRIBU NAL IN ITA NO.2291/MDS/2008 IN THE CASE OF M/S. ASIAN HANDLOO M VS. DCIT DECIDED ON 20 TH NOVEMBER, 2009 HAS HELD : SPECIALIZED FOUNDATION AND SPECIALIZED AREA SPECIFICALLY EARMARKED TO FACILITATE A FLOW OF WIND WITHOUT HINDRANCE, AND SPECIALIZED ELECTRICAL FITTINGS AND HIGH TENSION LINES ARE ALL BASIC REQUIREMENTS FOR A WIND MILL PLANT. NONE OF THESE REQUIREMENTS INCLUDING THE PREMISES C AN BE SEEN DETACHED FROM WHAT IS CALLED A WIND MILL SI NCE A WIND MILL TO WORK THESE ARE ESSENTIAL. ALL THESE A RE NECESSARY INPUTS GOING INTO ULTIMATE COST OF SUCH W IND MILL. 7. SIMILAR VIEW HAS BEEN TAKEN BY THE CO-ORDINATE BENC H OF THE TRIBUNAL IN THE CASE OF M/S. MADRAS CEMENTS LTD (S UPRA). IN VIEW OF ABOVE, WE HOLD THAT ELECTRICAL CABLES, FITTINGS AND OTHER ELECTRICAL WORKS CONNECTED WITH WINDMILL ARE SINGLE COMPOSITE UNIT AND ARE THUS ELIGIBLE FOR DEPRECIATION AT THE RATE OF 80%. WE D O NOT FIND ANY ERROR IN THE IMPUGNED ORDERS. I.T.A.NOS.755 & 756/MDS/2013 :- 5 -: 8. THE APPEALS OF THE REVENUE ARE DISMISSED BEI NG DEVOID OF MERITS. ORDER PRONOUNCED ON THURSDAY, THE 8TH OF MAY, 2 014, AT CHENNAI. SD/- SD/- ( . . . ) (DR. O.K. NARAYANAN) / VICE PRESIDENT ( ! ) (VIKAS AWASTHY) ' # / JUDICIAL MEMBER '# /CHENNAI, $% /DATED:08.05.2014. KV %& '( )( /COPY TO: 1. * APPELLANT 2. / RESPONDENT 3. + ( )/CIT(A) 4. + /CIT 5. (,- . /DR 6. -/ 0 /GF.