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TMI Blog2015 (7) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled for depreciation @ 80%. The order of CIT(A) is therefore upheld - Decided in favour of assessee. - I.T.A. No. 469/HYD/2015 - - - Dated:- 10-7-2015 - Shri B. Ramakotaiah and Shri Saktijit Dey, JJ. For the Petitioner : Shri Rajat Mitra, DR For the Respondent : NONE ORDER PER B. RAMAKOTAIAH, A.M. : This is Revenue's appeal against the order of the Commissioner of Income Tax (Appeals)-4, Hyderabad dated 23-01-2015. Revenue has raised the following grounds: 2. The learned CIT(A) erred in deleting the addition made towards the Disallowance of Excess Depreciation claimed on Wind Mill. 3. The learned CIT(A) erred in considering the Transformer, HT, Electrical supply unit as integral part of Wind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/-. ii. The first Bill ₹ 51,35,692/- relates to foundation allied works for the various windmills, without which it is impossible for the windmills erected over vast stretch of open land which are subject to high velocity winds and on cultivable lands all comprised in one Windfarm Project No WTG 1.5MW. iii. The second Bill ₹ 38,74,000/- relates to payment to Tamil Nadu Electricity Board for the purpose specified mentioned therein and in no way can be construed as for any Building civil works. iv. There are no Buildings civil works in nature incurred, wherein anything is sheltered, comprised in the Windmill project erected by the Assessee. B. Plant Machinery held by AO as neither specialized nor part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art and parcel of the composite and integrated Wind Mill Project and are entitled for higher depreciation as set out in the Act . It was contended that the true basis of depreciation allowance is the character of an asset and not its description. 5. Ld.CIT(A) after considering assessee's submissions and relying on the co-ordinate bench decision in the case of ACIT Vs. Rakesh Gupta (Chd-Trib) [60 SOT 81], deleted the disallowance made by AO and allowed the claim as such. His brief order is as under: 6. The assessment order, submissions of the assessee and the documents placed on record are perused. The submissions of the AR during the appellate proceedings are also considered. The main contention of the AR is that the expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts are: (i) power generation system, which is wind mill in this case; (ii) power transmission system i.e. after power is generated it needs to be transmitted to places wherever it is required; and (iii) power distribution system - this energy has to be distributed as per requirement. * Without the existence of the above three systems, the idea of wind mill is meaningless. Thus, one can say with impunity that all the above, systems go to form an essential composite system known as 'wind mill'. This composite system is eligible for 80 percent depreciation. Wind mill is invariably installed at a place where ample wind pressure is found to move the sails, which in turn generates electricity. The electric power i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd electric generator is in the nature of electrical equipment, depreciation is to be allowed @ 25% and not at 100%. However, as found from the facts on record, assessee claimed 100% depreciation on assets worth ₹ 14,73,71,680 by treating it as wind mill equipment. The break up of ₹ 14,73,71,680 is as under: S.No. Description of assets Date of acquisition Amount (in Rs.) 1. Incidental expenses 08.01.2002 1,680 2. Erection Commissioning charges 20.03.2002 3,98,90,000 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Blades, 2. Gear Box, 3. Generator, 4, Tower, 5. Foundation, 6. Step up transformer, 7. Metering arrangement, and 8. 11/33 kV overhead lines. They have further 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. They further clarified, as the generator is the main component, the equipment supplied for wind mill installation is sometimes referred to as wind electric generator in industry terms. It was stated that the complete unit of the wind mill comprising of the aforesaid components is a monolithic unit c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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