2015 (10) TMI 2741 - AT - Income Tax

Disallowing the higher rate of depreciation on the components / constituents of the windmill - Commissioner of Income Tax (Appeals) restricting the rate of depreciation claimed at 80% on foundation, electrical installation and other related components of windmill - Held that - As decided in co-ordinate Bench in the case of DCIT Vs. Sushant M. Jadhav (2013 (4) TMI 846 - ITAT PUNE) to show that depreciation @ 80% is allowable on all the above components of the windmill, except expenditure on keeping the area vacant for free access. Thus we hold that the assessee is eligible to claim depreciation @ 80% on the following components / constituents of windmill - Installation, Civil work, MEDA Processing fee, MEDA Application fee, Electrical Installation, Labour charges for erection and installation, Labour charge for final testing AND Other Pre-operation Expenses capitalized - Decided partly in favour of assessee

Summary

Issues:
Disallowance of higher rate of depreciation on components of windmill

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2008-09. The assessee, a Doctor by profession, had installed a windmill during the relevant period and filed a revised return of income declaring a taxable income. The Assessing Officer disallowed a higher rate of depreciation claimed on certain components of the windmill, resulting in an addition to the income. The Commissioner of Income Tax (Appeals) upheld this decision, leading to the appeal before the Tribunal.

The assessee argued that the depreciation claimed at 80% on various components of the windmill was justified. The Tribunal considered previous decisions where depreciation at 80% was allowed on similar components of windmills. The Tribunal referred to specific expenses related to installation, civil work, processing fees, application fees, electrical installation, and labor charges for erection and installation. The Tribunal found no justification for the lower depreciation rates applied by the Assessing Officer and the Commissioner of Income Tax (Appeals).

The Tribunal cited precedents and held that the assessee was eligible to claim depreciation at 80% on the specified components of the windmill. The Tribunal noted that the Department did not provide any substantial arguments to counter the findings of the Co-ordinate Bench. Consequently, the appeal of the assessee was partly accepted, and the disallowance of depreciation on the specified components was deleted.

In conclusion, the Tribunal's decision favored the assessee's claim for higher depreciation rates on the components of the windmill, following precedents and established principles. The Tribunal's analysis highlighted the integral nature of certain expenses to the windmill's functioning, justifying the higher depreciation rates claimed by the assessee.