2013 (1) TMI 855 - AT - Income Tax

Summary

Issues involved: Appeal against the Order by the Commissioner of Income Tax (Appeals) regarding the restriction of depreciation on a Turbine Generator (TG) set acquired by the assessee during the assessment year 2007-08 u/s.143(3) of the Income Tax Act, 1961.

Summary:
1. The only issue in the appeal was the restriction of depreciation on the TG set to 50% due to it being put to use after 30.09.2006 for less than 180 days.

2. The TG set was commissioned over two weeks starting from 06.09.2006, reaching a load of 1100 KW, and was handed over for commercial use after satisfactory operation.

3. The Tribunal found that the TG set was put to use before 30.09.2006, operating at sub-optimum levels due to insufficient steam generation, not technical issues.

4. The Tribunal disagreed with the Revenue's contention, stating that the TG set was fit for use and actually worked at a sub-optimum level before the specified date.

5. The Tribunal clarified that the TG set's operation before securing all necessary approvals was a factual matter beyond the scope of the appeal.

6. The Tribunal upheld the assessee's appeal, rejecting the Revenue's case and accepting Ground No. 1 regarding the depreciation issue.

7. Ground No. 2 regarding the penalty u/s. 271(1)(c) was not pressed and was dismissed as premature by the CIT(A), a separate proceeding from the quantum appeal.

Conclusion: The Tribunal allowed the assessee's appeal, emphasizing that the TG set was put to use before the specified date, rejecting the Revenue's restriction on depreciation and dismissing the penalty issue as separate from the quantum appeal.