Parry Enginnering & Electronics ... vs Department Of Income Tax

सुनवाई क तार ख/ Date of Hea ring : 8/05/2015 घोषणा क तार ख /Date of P ronouncement: 9/06/2015

आदेश /O R D E R

PER SHRI S.S. GODARA, JUDICIAL MEMBER

This Revenue's appeal for A.Y.2008-09, arises from order of CIT(A)-XI, Ahmedabad dated 2.11.2011 passed in case no.CIT(A)- XI/99/10-11 reversing the Assessing Officer's finding disallowing assessee's claim of depreciation @80% on the civil work, electric installation and other development expenses pertaining to the installation of wind mills amounting to Rs.29,19,323/-, in proceedings u/s.143(3) of the Income Tax Act in short 'the Act'.

2. Facts of the case are in a narrow compass. The assessee-company manufactures steel windows, channels, tees and trades in iron and steel ITA No.166/Ahd/2012 Parry Engineering & Electronics P. Ltd.

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material. It filed its return on 30.9.2008 stating nil income along with book profits of Rs.1,20,63,633/-. The Assessing Officer took up scrutiny. He inter alia disallowed the assessee's claim of depreciation @80% regarding its wind mill and other integral parts thereof namely civil construction and other works by following his reasoning adopted for preceding assessment year 2007-08. The impugned disallowance of Rs.21,19,323/- stood made in assessment order dated 6.5.2010.

3. The CIT(A) has accepted the assessee's corresponding grounds as under:

"5. Vide ground no. 7 and 8, the appellant has contested disallowance of depreciation of Rs. 21,19,323/-. The A.O. had dealt with this addition in para no. 3 of the assessment order. The A.O. was of the opinion that only on the integral part of wind mill, depreciation is allowable at the rate of 80% while on the investments which is not integral part of wind mill, the depreciation should be allowed at the rate of 15% because they are normal plant & machinery. The same disallowances had already been made by the A.O. in the immediately preceding year i.e. A.Y. 2007-08. The A.O. has recomputed WDV for the current year and allowed depreciation as per the criterion discussed above. The A.O. has worked out allowable depreciation on wind mill at Rs. 4,89,074/- only. The assessee claimed depreciation on wind mill at Rs. 26,08,397. This way, the A.O. has disallowed depreciation on wind mill of Rs. 21,19,323/- ( Rs 26,08,397 -4,89,074).

5.1 During the appellate proceedings, the appellant submitted as under:

"1. The impugned addition on account of disallowance of depreciation on Windmill has been made on the basis of findings and observations made in the assessment order for A. Y.2007-08 in case of the appellant itself.

2. The appellant while disputing the said disallowance of depreciation to the extent of Rs.21,19,323/- as worked out by the AO on page 7 of the assessment order has to state at the outset that the said working and the disallowance suffers from the following mistakes apart from the fact that the said disallowance itself is consequential to your honour's decision ITA No.166/Ahd/2012 Parry Engineering & Electronics P. Ltd.

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in the case of appellant's appeal for A.Y.2007-08, which is also pending for disposal with your honour.

(a) The AO has not allowed depreciation @ 80% on the increased opening WDV of windmill as per the assessment order for A.Y.2007-08 in view of disallowance made in A.Y.2007-08.

(b) The AO has incorrectly worked out the disallowable depreciation of Rs.21,79,323/- on part of the cost of windmill treated by him as not being part of windmill and eligible for only 15% depreciation as against 80% claimed by the appellant.

The AO has made the said working while taking the WDV as per the appellant as against the increased WDV on account of disallowance made by himself in assessment order for A.Y.2007-08.

(c) The AO has also failed to allow additional depreciation without giving any reasons whatsoever and without considering our elaborate submission on the same as furnished during the course of assessment proceedings.

(d) The AO while working out the disallowance has failed to consider and/or completely ignored the detailed working of depreciation claimed by the appellant and depreciation as per the disallowance made in A.Y.2007-08 as furnished to him during the course of assessment proceedings. The copy of the said letter is enclosed herewith vide Annexure - 1 for immediate reference.

3. That as evident from the said chart the allowable depreciation even as per the AO's own working and considering the disallowance made in A.Y.2007-08 comes to Rs.1,94,70,895/- as against the claim of Rs. 1,88,43,144/- in the return of income due to increased WDV in view of disallowance of depreciation made in A. Y.2007-08.

4. It is nevertheless submitted that since the issue under consideration is consequential to your honour's decision on the same issue in the appeal for A. Y.2007-08, the AO be directed to recomputed the depreciation accordingly.

5. Without prejudice to above, the appellant relies upon the elaborate submission, factual as well as legal as placed in the written submissions for A.Y. 2007-08 filed before your Honour.

ITA No.166/Ahd/2012 Parry Engineering & Electronics P. Ltd.

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The same are not reproduced hereunder in order to avoid repetition, the issue being identical and consequential to the issue in A. Y.2007-08.

In view of above facts and legal position, the AO be directed to allow depreciation on windmill as claimed in the return of income and the disallowance of Rs.21,19,3237- be cancelled."

5.2 I have carefully considered the rival submission. I have also gone through the assessment order and the submissions of the Id. A.R. It is seen that this issue has been decided by me in the immediately preceding year in the case of appellant. In the A.Y. 2007-08, it was held by me that as per the provisions of the IT. Act, depreciation is to be allowed on renewable energy devices which includes wind mills. The IT Act does not envisage to dissect a device into part and allow depreciation on different rates. In view of this, depreciation was held to be allowable on the total investment on wind mills. In the same appeal, I have also held that additional depreciation of Rs 35,66,299/- is also allowable to the appellant. In view of above facts, I do not agree with the methodology of allowing depreciation on wind mills followed by the A.O. The A.O. is directed to allow depreciation on the entire investment of wind mills as per the provisions of IT. Act. In view of this, the disallowance made by the A.O. of Rs. 21,19,323/- is ordered to be deleted. This ground of appeal is allowed."

4. We have heard both sides and perused the case file. The sole issue in the present case is regarding depreciation @80% on the civil work, electric installation and other development expenses pertaining to installation of assessee's wind mills. There is no dispute that facts of the impugned assessment year are identical to those involved in the preceding assessment year. The CIT(A) holds the abovesaid heads to be integral parts to the assessee's wind mills for granting depreciation relief @80%. It has come on record that the Revenue came in appeal before the tribunal in preceding assessment year 2007-08. A co-ordinate bench upheld the CIT(A) order in assessee's favour. The Revenue filed Tax Appeal No.604 of 2012. The hon'ble jurisdictional high court in its oral order dated 29.1.2013 upholds the tribunal's order so far as the instant ITA No.166/Ahd/2012 Parry Engineering & Electronics P. Ltd.

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issue is concerned. The Revenue fails to point out any distinction on facts. Therefore, we uphold the CIT(A) order under challenge. The Revenue's sole substantive ground is dismissed.

5. The Revenue's appeal is dismissed.

Order pronounced in the Court on this day, the 9 th June, 2015 at Ahmedabad.

Sd/- Sd/- (N.S. SAINI) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 09/06/2015 Prabhat Kr. Kesarwani, Sr. P.S. आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आयु त / Concerned CIT

4. आयकर आयु त(अपील) / The CIT(A)-III, Ahmedabad

5. वभागीय त न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

आदेशानुस ार / BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad