2014 (7) TMI 1190 - AT - Income Tax

Allowance of depreciation on foundation and other civil work of wind mill - Held that - There is no infirmity in the order of the Ld. CIT(A) who rightly directed the Assessing Officer to recalculate the depreciation after giving effect to the order of the ITAT 2011 (11) TMI 725 - ITAT JODHPUR , depreciation was changed for the A.Y. 2006-07 which had the impact on the depreciation for the A.Y. 2007-08. The assessee brought forward the unabsorbed depreciation for both the preceding assessment years i.e. A.Y. 2006-07 & 2007-08 which was claimed against the income for the year under consideration and as there was change in actual depreciation which was to be allowed after giving appeal effect of the ITAT order 2011 (11) TMI 725 - ITAT JODHPUR , the Ld. CIT(A) rightly directed the Assessing Officer to allow depreciation after considering the decision of the ITAT and recalculate the allowable depreciation on the wind mill. We do not see any infirmity in the order of the Ld. CIT(A) on this issue. - Decided against revenue Deduction u/s 80IA from the profit of eligible business - Held that - The Hon ble Madras High Court in the case of CIT Vs. Emerald Jewel Industries (P) Ltd. reported in (2010 (8) TMI 648 - Madras High Court) held that the assessee-company is eligible for deduction u/s 80IA of the Act in respect of wind mill installed by it and unabsorbed depreciation of the earlier years could not be reduced from profit for computing the deduction u/s 80IA of the Act. - Decided against revenue

Summary

Issues Involved:
1. Appeal against the order of Ld. CIT(A), Jodhpur regarding depreciation and deduction u/s 80IA of the Income Tax Act.

Detailed Analysis:

Issue 1: Depreciation on Foundation and Civil Work of Wind Mill
- The department filed an appeal against the order of Ld. CIT(A) regarding the allowance of depreciation on foundation and civil work of a windmill.
- The Assessing Officer disallowed excess depreciation claimed by the assessee based on discrepancies in the unabsorbed depreciation figures for previous assessment years.
- The CIT(A) directed the Assessing Officer to recalculate the depreciation based on a previous ITAT decision, which impacted the depreciation for the relevant years.
- The ITAT upheld the CIT(A)'s decision, stating that the recalculated depreciation was justified due to changes in the actual depreciation allowed.
- The ITAT found no error in the CIT(A)'s order on this issue.

Issue 2: Deduction u/s 80IA of the Income Tax Act
- The second issue concerned the deduction under section 80IA of the Income Tax Act claimed by the assessee.
- The Assessing Officer rejected the claim due to setting off unabsorbed depreciation against the profit of the eligible business, resulting in no profit left for the deduction.
- The CIT(A) allowed the claim, following a previous ITAT decision, which the department appealed.
- The ITAT upheld the CIT(A)'s decision, citing consistency with previous ITAT judgments and a Madras High Court decision supporting the eligibility of the assessee for the deduction.
- The ITAT dismissed the department's appeal on this issue, affirming the CIT(A)'s decision.

In conclusion, the ITAT Jodhpur dismissed the department's appeal against the Ld. CIT(A)'s order, upholding the allowance of depreciation and deduction u/s 80IA of the Income Tax Act in favor of the assessee. The judgment was pronounced on 25th July 2014.