2024 (12) TMI 648 - HC - Income Tax

Depreciation on solar plant - date of putting the solar plant to use - whether the generation of electricity had started on 20.03.2013 i.e., in the financial year 2012-13 or it only started on 20.04.2013 when synchronization took place with the grid, in the financial year 2013-14? - HELD THAT - When the Assessee bona fide installs any machinery and to his misfortune, it becomes defective and non-functional, it cannot be said that it is not put into use for the purpose of business. See Sri. Chamundeshwari Sugar Ltd. 2008 (10) TMI 98 - KARNATAKA HIGH COURT Thus, in view of the finding of fact that the respondent-Assessee has started generating power right from 20.03.2013 which is in the financial year 2012-13, we are of the view that the appeal filed by the appellant- Revenue on the above substantial questions of law is without merit and the appeal, as such, is dismissed against the Revenue and in favour of the Assessee.

Summary

Issues:
- Appeal challenging order allowing depreciation on solar plant
- Determining the date of putting the solar plant to use for depreciation claim

Analysis:
The appeal in question challenged an order allowing depreciation on a solar plant, specifically focusing on the date when the plant was put to use for claiming depreciation. The primary issue was whether the generation of electricity started in the financial year 2012-13 or only after synchronization with the grid in the financial year 2013-14.

The respondent's case highlighted that the solar plant was completed and approved by the Chief Electrical Inspector in March 2013, and electricity generation commenced in the same month. The respondent supplied power locally and raised invoices for the same before synchronization with the grid in April 2013. The Assessing Officer, however, contended that the plant was put to use only after synchronization with the grid.

The CIT (A) emphasized that the critical date for putting the plant to use is when it starts generating electricity, not when it synchronizes with the grid. The CIT (A) noted that the respondent had indeed generated power and supplied it, supported by invoices and certification from the Superintending Engineer, Operations. The CIT (A) found the Assessing Officer's approach contradictory and held that the plant was put to use during the relevant year, allowing the depreciation claim.

The ITAT upheld the CIT (A)'s findings, rejecting the appellant's reliance on a previous case as inapplicable to the current scenario. The ITAT affirmed that the respondent started generating power in March 2013, making the appeal by the appellant-Revenue baseless. Consequently, the appeal was dismissed in favor of the Assessee.

In conclusion, the judgment clarified that the pivotal factor for determining the date of putting a solar plant to use for depreciation purposes is the commencement of electricity generation. The detailed analysis by the CIT (A) and subsequent affirmation by the ITAT emphasized the actual utilization of the plant for business activities, supporting the Assessee's claim for depreciation.