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2020 (6) TMI 628 - AT - Income TaxGrant of depreciation on Solar Power Plant ( SPP ) - Year of assessment - block of asset - CIT(A) accepted the claim of the assessee and allowed it - HELD THAT - MP Power Management Co. Ltd. an instrumentality of Madhya Pradesh State Government, has awarded a contract for establishment of 16 blocks of solar power plant, and such blocks were established, thereafter it as sold to Real Gold Developers LLP, and RGD LLP further sold these 16 blocks in part to five concerns including the present two assessees. It is to be appreciated that if this solar power plant of 16 blocks is an integrated power plant and part of the block purchased by present two assessees cannot work independently, then it is to be treated that the plant was established. Though there is no specific discussion on this point, and there is no conclusion, but we would like to take note of the fact that as far as purchase of these assets, its user for the purpose of business has not been denied by the AO himself in the subsequent year. He has allowed the depreciation to the assessee in the next assessment year. In the present year only dispute is year of admissibility of the depreciation. On account of some technical ground, if it is denied in this year, then it will be admissible in the next year, thus, considering stand of the Revenue in the case of Aditya Medisales Ltd. where such depreciation has been allowed and accepted, more so when no finding was recorded that the part of the assets owned by the assessees could be used independently for generation of power in a phased manner. We construe that blocks of panel owned by assessee be treated as integrated part of 16 blocks purchased and installed by AIPL and not to be treated separately. Part of assets owned by these two assessee be treated as integrated part of total solar plant consisting of 16 blocks. If that be so, then installation of other blocks have been accepted by the department, and not challenged before the Tribunal. There is no disparity on the facts with regard to the blocks owned by the AMSL vis - vis of the assessee. We are of the view that there is no justification to interfere in the finding of the ld.CIT(A) in the cases of present two assessee also. - Decided against revenue.
Issues Involved:
1. Grant of depreciation on Solar Power Plant (SPP). 2. Acquisition and usage of assets for business purposes before the end of the accounting year. Issue-wise Detailed Analysis: 1. Grant of Depreciation on Solar Power Plant (SPP): The Revenue's main grievance in both appeals concerns the grant of depreciation on the Solar Power Plant (SPP) by the CIT(A). The facts of the case are common for both appellants, and the appeal of Unimed Technologies Ltd. (UTL) was extensively argued. UTL filed its return of income electronically, declaring a total income of ?4,45,94,808/-. During scrutiny, it was revealed that UTL added assets worth ?10,65,00,000/- on account of SPP and claimed depreciation at 80% and additional depreciation at 20%, totaling ?5,32,50,000/-. The same was observed for Sun Petrochemicals Pvt. Ltd., which declared a total income of ?3,51,52,094/- and claimed similar depreciation on SPP. The assets were not put to use for the complete year, so 50% depreciation was claimed. The CIT(A) allowed the depreciation claim, referencing a similar case of Aditya Medisales Ltd. (AMSL), where the CIT(A)-1 had allowed depreciation on SPP. The CIT(A) concluded that since the facts were identical, the appellants were entitled to claim depreciation on the SPP owned and leased out during the year for earning lease rentals assessed as business income. 2. Acquisition and Usage of Assets for Business Purposes Before the End of the Accounting Year: The AO issued a detailed questionnaire to verify the acquisition and usage of assets. The AO rejected the depreciation claim, noting discrepancies in the transportation details, inspection reports, and installation reports. The AO's comparative study highlighted that the appellants failed to prove the acquisition and usage of assets before the end of the accounting year. The CIT(A) did not make an independent analysis but relied on the AMSL case, where similar depreciation was allowed. The DR argued that the CIT(A) failed to address the AO's findings and discrepancies. The DR emphasized that for depreciation to be allowed, the assets must be purchased and put to use before the end of the accounting year. The appellants argued that the SPP was a composite block of 16, and since AMSL's depreciation was allowed, the same should apply to them. The Tribunal noted that while discrepancies raised by the AO created suspicion, the overall facts suggested that the SPP was established and leased out. The Tribunal acknowledged that the AO allowed depreciation in the subsequent year, indicating the assets were eventually used for business purposes. Conclusion: The Tribunal concluded that the SPP should be treated as an integrated plant consisting of 16 blocks, and the part owned by the appellants should not be treated separately. Since the department accepted the establishment and depreciation of SPP in AMSL's case and allowed depreciation in the subsequent year for the appellants, the Tribunal found no justification to interfere with the CIT(A)'s findings. Therefore, both appeals of the Revenue were dismissed. Final Judgment: Both appeals of the Revenue are dismissed, and the depreciation claims of the appellants are upheld. The decision was pronounced in the Open Court on 11th May 2020.
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