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2021 (11) TMI 686 - HC - Income TaxAdditional depreciation @20% under Section 32(1)(iia) - assessee which generates electricity from thermal power is entitled for additional depreciation OR not? - HELD THAT - In the State of Andhra Pradesh vs. National Thermal Power Corporation 2002 (4) TMI 694 - SUPREME COURT held that electric energy can be transmitted, transferred, delivered, stored, possessed etc. in the same state as movable property. The Hon ble Supreme Court followed its earlier decision in Commissioner of Sales Tax, Madhya Pradesh, Indore vs. Madhya Pradesh Electricity Board, Jabalpur 1968 (11) TMI 85 - SUPREME COURT . Therefore, the revenue cannot dispute the fact that the electricity needs to be construed as a movable property as it being capable of being transmitted and transferred etc. Whether the respondent/assessee would be entitled to additional depreciation under Section 32(1)(iia)? - We are guided by the decision of this Court in the case of Commissioner of Income Tax, Kolkata-I vs. Ankit Metal and Power Limited 2015 (8) TMI 566 - CALCUTTA HIGH COURT as followed the decision of Hi-tech Arai Limited 2009 (9) TMI 60 - MADRAS HIGH COURT and CIT vs. VTM Ltd. 2009 (9) TMI 35 - MADRAS HIGH COURT and held that the assessee therein which was also engaged in the activity of manufacturing of power is entitled for additional depreciation under Section 32(1)(iia) of the Act. To the same effect, there are several other decisions of other High Courts and the latest being in the case of PCIT, New Delhi vs. NTPC SAIL Power Co.(P.) Ltd. . 2019 (3) TMI 207 - DELHI HIGH COURT We hold that the respondent/assessee is entitled for additional depreciation under Section 32(1)(iia) - Decided in favour of assessee.
Issues:
1. Entitlement to additional depreciation under Section 32(1)(iia) of the Income Tax Act. 2. Validity of initiation of proceedings under Section 263 of the Income Tax Act. Analysis: Issue 1: Entitlement to Additional Depreciation The primary issue in this case revolves around the entitlement of the respondent, engaged in generating electricity from thermal power, to claim additional depreciation at a rate of 20% under Section 32(1)(iia) of the Income Tax Act. The Court considered the core question of whether electricity, as a movable property capable of transmission and transfer, qualifies for additional depreciation. The Court cited the precedent set by the Hon'ble Supreme Court in the State of Andhra Pradesh vs. National Thermal Power Corporation case, establishing electricity as movable property. Relying on various decisions, including the Commissioner of Income Tax, Kolkata-I vs. Ankit Metal and Power Limited, the Court concluded that the respondent is indeed entitled to claim additional depreciation under Section 32(1)(iia) of the Act. The judgment dismissed the appeal filed by the revenue, affirming the entitlement of the respondent to the additional depreciation. Issue 2: Validity of Section 263 Proceedings The secondary issue pertains to the validity of the initiation of proceedings under Section 263 of the Income Tax Act. However, since the Court's decision favored the respondent on the primary issue of entitlement to additional depreciation, the necessity to address the validity of the Section 263 proceedings became moot. The Court explicitly stated that as the core issue was resolved in favor of the respondent, the consideration of the Commissioner's jurisdiction under Section 263 was unnecessary. Consequently, the appeal was dismissed, and the question regarding the validity of the Section 263 proceedings was not deliberated upon. In conclusion, the judgment by the High Court of Calcutta, delivered by Hon'ble Justice T.S. Sivagnanam and Hon'ble Justice Hiranmay Bhattacharyya, upheld the entitlement of the respondent to claim additional depreciation under Section 32(1)(iia) of the Income Tax Act, thereby dismissing the revenue's appeal. The Court's decision rendered the consideration of the validity of Section 263 proceedings redundant, leading to the dismissal of the appeal without further deliberation on the secondary issue.
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