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TMI Blog2022 (4) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... unit. Each item would not have any function by itself except when it forms part of the whole system. Therefore, no infirmity could be found in the impugned order, on this issue. The grounds thus raised stands dismissed. Eligibility to claim additional depreciation u/s 32(1)(iia) - HELD THAT:- We find that it is undisputed position that the assessee has fulfilled all the conditions laid down u/s 32(1)(iia) for claiming additional depreciation. In such a case, new plant machinery as installed by the assessee would be entitled for additional depreciation since the assessee was engaged in manufacturing and production of article or thing. In the case of CIT V/s VTM Ltd. [ 2009 (9) TMI 35 - MADRAS HIGH COURT] held that in order to claim additional depreciation u/s 32(1)(iia), what is required to be satisfied is only that a new machinery or plant has been acquired and installed after 31-3-2002 by an assessee, who was already engaged in business of manufacture or production of any article or thing. The provisions do not state that setting up of a new machinery or plant, which was acquired and installed after 31-3-2002, should have any operational connectivity to article or thing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generation unit would be available only on specified Plant Machineries. The remaining plant machinery would be eligible for normal depreciation of 15% and therefore, the excess depreciation of ₹ 423.29 Lacs was required to be withdrawn. Further, the addition to other plant and machinery includes cranes, tanks, cables and equipment which are not eligible for additional depreciation. Accordingly, an assessment was framed on 18.03.2016 wherein all these adjustments / disallowances were made. However, upon further appeal, Ld. CIT(A) allowed the claim of the assessee against which revenue is in further appeal before us. The issues which form part of subject matter of appeal before us are adjudicated in succeeding paragraphs. 4. Additional Depreciation on Power Generation Unit 4.1 The assessee claimed additional depreciation of ₹ 844.47 Lacs on plant and machinery forming part of co-generation unit. It was pointed out that any new plant and machinery as acquired and installed after 31.03.2005 by an assessee engaged in the business of manufacturing and distribution of any article or thing (or in the business of generation and distribution of power) would be eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bill provides as under: - Extending benefit of initial depreciation to the power sector Section 32(1)(iia) provides for allowance of initial depreciation (in addition to normal depreciation) at the rate of 20% of the actual cost on new machinery or plant (other than ships and aircraft) to the assessee engaged in the business of manufacture or production of any article or thing in the year of acquisition and instalment. Under the existing provisions, the benefit of initial depreciation is not available on the new machinery or plant installed by an assessee engaged in the business of generation or generation and distribution of power. In order to encourage new investment by the assessees engaged in the business of generation or generation and distribution of power, it is proposed to amend this section to provide that an assessee engaged in the business of generation or generation and distribution of power shall also be allowed initial depreciation at the rate of 20% of actual cost of new machinery or plant (other than ships and aircraft) acquired and installed in a previous year. This amendment will take effect from 1st April, 2013 and will, accordingly, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith effect from April 1, 2013 but it gives impetus to the view that generation of electricity is a manufacturing process and qualifies for the benefits under section 32(1)(iia). In view of the above, the order of the Commissioner of Income-tax (Appeals) is upheld and the appeal of the Revenue is dismissed being devoid of merit. This decision has been rendered after considering the decision of Hon ble High Court of Madras in CIT V/s Texmo Precision Castings (321 ITR 481); CIT V/s VTM Ltd. (187 Taxman 319); CIT V/s Hi Tech Arai Ltd. (321 ITR 477); the decision of Hon ble Supreme Court in the case of CST V/s Madhya Pradesh Electricity Board [1970] 25 STC 188 (SC) State of Andhra Pradesh v. National Thermal Power Corporation Ltd. 2002 (4) TMI 694 (SC). This decision has subsequently been followed by other benches of the Tribunal including in the decision of Kolkata Tribunal in Damodar Valley Corporation V/s DCIT (72 Taxmann.com 127) which has subsequently been affirmed by Hon ble High Court of Calcutta which is reported at 134 Taxmann.com 63. 7. We find that except for relying upon the amendment, the revenue is not able to demonstrate that the aforesaid decisions are not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. Distribution control systems; Distributed control system is a computerized control system used to control the production line in the industry. In a sugar - Co generation plant, the controller elements are not centrally located. DCS helps in routing the control consistently. It is a system used to automate the energy flows within the factories and hence, it is evident that it is falling under the heading Instrumentation and Monitoring System for monitoring energy flows in the category Automatic Electrical Load Monitoring System . The same is eligible for claiming 80% Depreciation. d. Air compressor The air compressor is a device that converts power into kinetic energy, by compressing and pressurizing the air. This pressurized air is used to rotate the turbine and in turn power is produced. This is an integral part of power generation plant and hence falls under the 80% depreciation slab. e. Ash handling systems: The ash produced from combustion of coal and bagasse, is to be disposed off rightly. In order to do that the ash handling system is used. This transports the ash from the furnace to the ash yards. This is one of the strenuous ..... X X X X Extracts X X X X X X X X Extracts X X X X
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