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Issues involved: Appeal against the order of Commissioner of Income-tax(Appeals) regarding depreciation rate on civil and electrical components of a windmill.
Summary: Issue 1: Depreciation rate on civil and electrical components of the windmill The appeal was filed by the assessee against the order of the Commissioner of Income-tax(Appeals) confirming the rate of 10% depreciation on civil and electrical components of the windmill, instead of the 80% applicable to the windmill as a whole. The Hon'ble Karnataka High Court had previously held that if a building is planned and constructed to serve the technical requirements of the assessee, it can be treated as a plant. The Income-tax Appellate Tribunal, Chennai, considered a similar issue in the case of M/s. Asian Handloom vs. DCIT and found that civil and electrical components of a windmill are indivisible parts of the windmill plant as a whole. The Tribunal held that these components cannot be treated separately for depreciation and directed the assessing authority to grant depreciation at 80% on the entire cost of the windmill, including civil and electrical components. Consequently, the appeal filed by the assessee was allowed. Order pronounced in the open Court at the time of hearing on Thursday, the 11th day of August, 2011 at Chennai.
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