2009 (9) TMI 60 - HC - Income Tax

Additional Depreciation - Wind Mills even though the main business of the assessee is not producing or generating of electricity held that - It cannot also be said that setting up of a wind mill will not fall within the expression setting up of a new machinery or plant - When we find that the Tribunal has applied the law correctly in the impugned order, there is no gain saying that there was an earlier order by the Co-ordinate Bench and therefore, for that reason, this time also the Tribunal should have blindly followed its own earlier decision even if such earlier decision did not reflect the correct position of the law - the contention that the setting up of a wind mill has nothing to do with the power industry, namely, manufacture of oil seeds etc. is totally not germane to the specific provision contained in Section 32(1)(iia) of the Act. Additional depreciation allowed.

Summary

The case involves the Madras High Court judgment delivered by F. M. Ibrahim Kalifulla and Mrs. R. Banumathi, JJ. The Revenue raised substantial questions of law regarding the entitlement to additional depreciation on the purchase of Wind Mills, the correctness of allowing depreciation under Section 32(1)(iia) for assessment years 2003-2004 and 2004-2005, and the consideration of a Co-ordinate Bench judgment. The Revenue also questioned whether new machinery is eligible for additional depreciation, or if only machinery used in the main business qualifies for the exemption under Section 32(1)(iia). The Court dismissed the appeals, stating that the Tribunal correctly applied the law in allowing the additional depreciation claimed under Section 32(1)(iia). The Court found that the setting up of wind mills by the assessee, a company engaged in manufacturing and power generation, met the criteria for additional depreciation, as the provision does not require operational connectivity between the new machinery and the existing business. Therefore, the Court upheld the Tribunal's decision, dismissing the appeals and confirming the order of the Commissioner of Income-tax (Appeals). The Court found no substantial question of law to entertain the appeals.