By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi Chartered Accountants
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Section 32 – Transformers, HT lines & miscellaneous civil works form part of wind mill and are entitled to depreciation @ 80% under that category. These are not separate independent Plant & Machinery but are integral part of the windmills system and have no independent existence as Plant & Machinery. The civil works such as foundations cannot be treated as buildings so as to consider them as independent assets.
Facts:
The assessee company, engaged in hotel business, forayed into business of wind mills power generation. In its return of income filed the assessee had claimed depreciation on items like transformer, HT lines, electrical supplies and certain civil work @ 80%. The Assessing Officer (AO) disallowed part of depreciation on these items. He allowed depreciation on items of plant and machinery (transformer, HT lines and electrical supplies) @ 15% and on civil works @ 10%.
Aggrieved, the assessee preferred an appeal to CIT(A). The CIT(A) following the decision in the case of ACIT vs. Rakesh Gupta (Chd Trib)[ 60 SOT 81].
Aggrieved, the revenue preferred an appeal to the Tribunal.
Held:
The Tribunal noted that the issue under consideration is squarely covered, in favor of the assessee, by the following decisions of the co-ordinate bench – ACIT vs. Rakesh Gupta [60 SOT 81 (Chd) DCIT vs. Lanco Infratech Ltd. [2014-TIOL-133-ITAT-HYD]
Following the above decisions, the Tribunal held that the items which were treated by the AO as separate independent Plant & Machinery were integral part of the windmill system and have no independent existence as Plant & Machinery. The civil works such as foundations cannot be treated as buildings so as to consider them as independent assets. The Tribunal held that these items qualify for depreciation @ 80%.
The appeal filed by the Revenue was dismissed.
