2017 (5) TMI 1676 - HC - Income Tax

Depreciation @ 80% on Wind Turbine Machine - non segregating investment on building part and on electric item - whether depreciation @ of 80% is allowable on electrical fitting and building etc considering part of Wind Turbine Generator Machine? - HELD THAT - Issue is squarely covered by decision of KK. ENTERPRISES 2015 (2) TMI 508 - RAJASTHAN HIGH COURT as held that Civil construction and electric fittings which have no use other than for the purpose of the functioning of the windmill would become closely interconnected and are part and parcel of the windmill and therefore liable for depreciation. Legislature has provided for higher rate of depreciation of 80 per cent on renewable energy devises including windmill and any specially designed devise which runs on windmill. See CIT AHMEDABAD III Versus PARRY ENGINEERING AND ELECTRONICS P. LTD. 2014 (12) TMI 752 - GUJARAT HIGH - Decided in favour of assessee.

Summary

Issues:
Challenge to Tribunal's judgment on depreciation allowance for Wind Turbine Machine.

Analysis:
The appellant challenged the Tribunal's decision regarding the allowance of depreciation on a Wind Turbine Machine. The High Court framed a substantial question of law to determine whether depreciation at the rate of 80% should be allowed on the Wind Turbine Machine without segregating the investment on the building part and electrical item. The Court heard arguments from both parties.

The respondent's counsel argued that the issue was settled by a previous decision of the Court in Tax Appeal No. 53/2012. The Court referred to a judgment by the Gujarat High Court in Commissioner of Income Tax v. Parry Engineering and Electronics Pvt. Ltd., where it was held that a Windmill requires specialized machinery, civil construction, and electric fittings to function effectively. The civil structure and electric fittings are integral to the windmill's operation and cannot be separated. Therefore, the higher rate of depreciation at 80% on renewable energy devices, including windmills, was justified. The Court concluded that the issue should be decided in favor of the assessee against the department.

Based on the precedent and reasoning provided, the High Court dismissed the appeal, upholding the decision in favor of the assessee. The judgment emphasized the interconnected nature of the components of a Wind Turbine Machine and the specialized requirements for harnessing wind energy effectively, leading to the allowance of higher depreciation rates.