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TMI Blog2016 (9) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... company, engaged in the business of running a Tourist Hotel. The assessee filed its return of income on 21.09.2008, admitting total income as ₹ 70,10,580/-. Return was taken for scrutiny and assessment under Section 143(3) of the Income Tax Act (Hereinafter referred to as, the Act ) was completed on 30.12.2010, wherein the Assessing Officer disallowed the claim of depreciation of ₹ 3,78,00,000/-, on the cost of Wind Mill of ₹ 9,45,00,000/-, because the wind mill was not acquired during the relevant previous year. Reasons for arriving at the abovesaid conclusion were that, (a) The invoice for sale of the windmill was dated 31.03.2008 i.e. the last date of the relevant previous year. (b) The assessee had paid only ₹ 1,86,00,000/- out of the total cost of the windmill ₹ 9,45,00,000/- as on 31.03.2008. (c) The balance amount of ₹ 7,79,00,000/- was paid during the month of May June 2008 as follows:- Sl.No. Date of Payment Amount (Rs.) 1 06.05.2008 59,00,000/- 2 30.06.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... violation of Rule 46A, even though the CIT(A) had admitted the evidences that were not produced before the assessing officer? 5. Supporting the substantial questions of law, Mr.J.Narayanasamy, learned standing counsel for the Income-Tax Department submitted that the Tribunal has erred in holding that the assessee is entitled for depreciation on the second hand wind mill generator, even through the assessee had only paid partial monies towards the asset and had not become the owner of the asset. He further submitted that the Tribunal ought to have appreciated that the assessee itself had admitted payment of ₹ 7.59 Crores, in the instalments in the months of May' 2008 and June' 2008, after the end of the financial year and therefore, the asset was not transferred to the assessee. 6. Learned counsel for the appellant further submitted that the Tribunal ought to have appreciated the fact that the purchase invoice was dated 31.03.2008 and approval of the Superintending Engineer, Tamil Nadu Electricity Board, was communicated only on 22.04.2008. It is also his submission that the documents relied on by the respondent-assessee to conclude that they are entitled for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the supplier 07.03.2008 Land on which Wind Mill is situated transferred and registered in the name of the appellant company 10.03.2008 Application to TNEB for transfer of Wind Mill to the appellant company. 19.03.2008 Sanction of Term Loan of ₹ 700.00 Lakhs by State Bank of India for acquisition of Wind Mill 24.03.2008 Term Loan disbursed by SBI 25.03.2008 Payment of balance amount of ₹ 59.00 Lakhs by the Appellant Company to the supplier. 28.03.2008 Payment of fees to TNEB for the transfer of the Wind Mill in the name of the appellant Company 29.03.2008 Letter by TNEB for the Approval of transfer of the Wind Mill assigned to M/s.Simran Wind Project (P) Ltd., to the appellant Company 29.03.2008 Energy Purchase Agreement entered into with TNEB by the appellant-Company 29.03.2008 Consumption of Ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration and also even the actual deed of conveyance was not executed in its favor the assessee was entitled to depreciation on the assets which form part of block of assets at the end of the year as shown in depreciation schedule in the balance sheet as well as in his books of accounts this view was held in the case of Mysore Minerals Ltd Vs CIT as mentioned supra. Similarly the Honorable Madras Jurisdictional High Court also held a view which is in favor of the Assessee that the Assessee having taken over possession of the wind mill and the income from the wind mill having been assessed in the Assessees hands, the Assessees claim of depreciation on wind mill is allowable notwithstanding the fact that the wind mill are still under hypothecation with the bank in the name of Transferor Company. In the second case referred above wherein the Assessee claimed that it had purchased the windmills from its sister company and it had been duly recorded in the Assessees books of accounts and the entire consideration has also been paid by the Assessee. The entire bank loan which was taken by the sister company was also discharged by the Assessee. Therefore the Assessee is the owner fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the Assessee Company and allowed the claim of the Assessee. The Standard Textiles, Karur vs Dy. Commissioner of Income Tax, Circle Tiruchirapalli Order dated 22/06/2011, In this appeal filed by the assessee, its grievance is that depreciation of ₹ 76 lakhs claimed on Wind Mill was disallowed for the reason that only trial production was done and wind mill was not connected to the power grid. The assessee engaged in the business of exporting cotton fabrics had in the Relevant previous year claimed depreciation on a wind mill. Assessee produced a letter issued by the Executive Engineer, Tamil nadu Electricity Board (TNEB), which stated that the wind mill was commissioned on 05.03.05. As per the assessee, the trial production was started and it was not necessary to produce electricity for the whole of the year for claiming depreciation. However, the Assessing Officer was of the opinion that as per the agreement entered into by the assessee with the Member (generation) TNEB,wind mill would be connected to the power grid only on commissioning of 22 kv enercon Feeder. Therefore, as per the Assessing Officer, wind mill could not be considered connected to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the trial production of a generator unit and not for commercial production. Electricity as a commodity remains the same whether in trial production or commercial production. Rules relating to necessity of establishing commencement of commercial production cannot be transported to a case where the commodity produced is electricity. Assessee was clearly eligible for depreciation and it was unjustly denied by the Assessing Officer. On verifying the relevant records, the object of allowing higher rate of depreciation on Wind Mill is to encourage the use of energy saving and nonconventional energy generator devices. The higher allowance of depreciation at 80 to 100% allowed by the legislature is for the purpose of promoting and encouraging the use nonconventional device of energy generation. Keeping in view of the following judicial precedents wherein the depreciation claimed by the assessees have been allowed. 1. Tamil Nadu Cholride Vs.DCIT (2006) 98 lTD 1 (Chennai) 2. Chettinadu Cement Corporation Ltd., in ITA I029/Mds/2005 3. Atlost Expoit Enterprises Vs. DCIT Trichy 4. M/s.Velathal Spinning Mills Private Ltd., Vs. ACIT, Salem ITA No.202 203/Mds/2010. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Taking into account the facts of the case, the materials placed on record and also relying upon the decisions in the cases cited supra, the Assessing Officer is not justified in denying the claim of the Appellant for depreciation. Therefore the Assessing Officer is directed to delete the addition made on account of disallowance of depreciation claimed by the Appellant at ₹ 3,78,00,000/-. 11. The Deputy Commissioner of Income-Tax (Appeals), Trichy, filed an appeal before the Income-Tax Appellate Tribunal, Chennai, contending inter alia, that the Commissioner of Income Tax (Appeals) has failed to appreciate that the sale invoice was issued on 31.03.2008, whereas, agreement for sale of power with TNEB, was dated 29.03.2008 and the approval of the same was communicated by the Superintending Engineer, ECD, Tamil Nadu Electricity Board, Tirunelveli, only on 22.04.2008. 12. The appellant has further contended that the Commissioner of Income-Tax (Appeals) has erred in not considering that TNEB has not replied to the clarification sought by the assessing officer, as to how, the agreement could be entered on 20.03.2008, when the seller had issued invoice on 31.03.2008. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) Tamil Nadu Cholride v. DCIT reported in (2006) 98 ITD 1 (Chennai) (iv) Chettinadu Cement Corporation Ltd., [ITA I029/Mds/2005] (v) Atlost Expoit Enterprises v. DCIT, Trichy (vi) M/s.Velathal Spinning Mills Private Ltd., v. ACIT, Salem [ITA No.202 203/Mds/2010] (vii) Standard Textiles, Kaur v. DCIT, Trichy (viii) P.Meenakshisundaram Vs. DCIT [ITA No.26/Mds/2009] Ultimately, for the reasons recorded, the Commissioner of Income-Tax (Appeals), allowed the respondent/assessee's appeal, with a direction to the assessing officer to delete the addition made, on account of disallowance of depreciation claimed by the respondent/assessee at ₹ 3,78,00,000/-. 17. When the Deputy Commissioner of Income-Tax (Appeals), Trichy, filed an appeal before the Income Tax Appellate Tribunal, D Bench, Chennai, going through the evidence considered by the appellate authority, the Tribunal, has recorded as hereunder: 9. On perusing the paper book field by the assessee, we find that sufficient evidence were before the Revenue based on which the Ld. CIT (A) had come to a conclusion that the windmill has been purchased before 31.03.2008 and commissioned. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss it is substantiated that there is perversity. In Bhagat Construction Co. (P) Ltd., v. CIT reported in (2001) 250 ITR 291 (Del.), the Delhi High Court held that a question of fact, becomes a question of law, if the finding is either without any evidence or material or, if the finding is contrary to the evidence, or is perverse or there is no direct nexus between the conclusion of fact and the primary fact upon which that conclusion is based. But it is not possible to turn a mere question of fact into a question of law by asking whether as a matter of law the authority came to the correct conclusion on a matter of fact. 19. In M.Janardhana Rao v. Joint CIT reported in (2005) 273 ITR 50 (SC), the Hon'ble Supreme Court held that in the exercise of the powers under Section 260A, the findings of fact of the Tribunal cannot be disturbed. In the said judgment, the Apex Court further held that the tests for determining whether a substantial questions of law, is involved in an appeal are, (a) whether directly or indirectly it affects substantial rights of the parties, or (b) the question is of general public importance, or (c) whether it is an open question in the sense th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission. (3) The Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity- (a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. (4) Nothing contained in this rule shall affect the power of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer) under clause (a) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained. Exercise of power by the Commissioner of Income-Tax (Appeals, is to enable the appellate authority to pass orders, for substantial cause, while entertaining additional evidence, the appellate authority is empowered to allow additional evidence to do substantial justice, between the parties. The appellate authority may admit the evidence and decide the appeal. The appellate authority may keep the appeal pending and direct the assessing officer to ascertain the facts, essential for the purpose of deciding the appeal and then, on the basis of the remand report, decide the appeal. Where additional evidence is adduced, the other side has to be given an opportunity to explain or rebut such additional evidence. It is also well settled that if evidence has been allowed to be let in, without objection, it will not be open to the party aggrieved to raise any objection, as to its admissibility, at a subsequent stage. When all the materials were available before the appellate authority and not objected by the revenue, the contention that a report ought to have been obtained, cannot be countenanced. Exercise of jurisdiction by the appellate authority, cannot be said to be contrary to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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