2015 (3) TMI 676 - AT - Income Tax

Depreciation on wind electric generations - CIT(A) allowed 100% claim as against @ 25% allowed by AO - Held that - On perusal of the invoices raised towards sale of wind mill equipment and erection and commissioning of the same, it is to be noted that the price has been charged for supply, erection and commissioning of wind electrical generators. The seller of the wind mill equipment has also issued a certificate, clarifying that the equipment supplied by them to assessee is not just wind electric generator but the complete wind mill unit. Further, assessee has also obtained an opinion from a technical expert i.e. M/s Servel Krishna Engineers Pvt. who opined that wind electric generator is an integral part of the wind mill and it is specifically designed, so that they can convert mechanical energy into electrical energy when installed in a wind mill. Without the generator unit, the wind mill cannot achieve the desired purpose. Thus it has to be accepted that wind mill generator is nothing but wind mill equipment on which depreciation is allowable @ 100% as per the statutory provision. - Decided in favour of assessee.

Summary

Issues involved:
Allowance of depreciation at 100% on wind electric generators vs. 25% allowed by the Assessing Officer.

Analysis:
1. The appeals by the department were against a common order passed by the CIT(A) regarding the allowance of depreciation for the assessment years 2002-03 and 2003-04.
2. The main issue in both appeals was the allowance of depreciation at 100% on wind electric generators as opposed to the 25% allowed by the Assessing Officer.
3. The company, engaged in civil construction, had a wind mill power project, and a search operation led to the dispute over the depreciation rate. The CIT set aside the AO's order, stating that depreciation should be at 25%, not 100%.
4. During the appeal before the CIT(A), the company argued that wind electric generators were part of the wind power project and should be eligible for 100% depreciation, citing legal precedents. The CIT(A) agreed, allowing depreciation at 100%.
5. The Departmental Representative contended that the company did not prove the equipment's connection to the wind mill, while the Authorized Representative argued the opposite.
6. After reviewing the evidence, the tribunal found that the equipment claimed for 100% depreciation was integral to the wind mill, as supported by invoices and expert opinions.
7. The tribunal upheld the CIT(A)'s decision, dismissing the department's appeals and confirming the allowance of 100% depreciation on the wind mill equipment.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal precedents cited, and the final decision reached by the tribunal.