9911796707
TMI Blog2022 (7) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... en the following grounds of appeal:- 1. "That order passed u/s 250(6) of the Income Tax Act, 1961 by the learned Commissioner of Income Tax (Appeals)-5, Ludhiana is against law and facts on the file in as much as he was not justified to arbitrarily hold that the appellant was entitled to claim depreciation on power plant at written down value method as against claimed by the appellant at straight line method since last more than five years. 2. That the learned CIT (A) was not justified to hold that as the appellant was running only a captive power plant so it was not entitled to claim depreciation on straight line method." 2. During the course of hearing, the ld. A/R of the assessee submitted that the assessee is a public limited compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation on SLM basis is admissible only for undertaking engaged in "generation and generation and distribution of power" as per provisions of section 32(1)(i) of the Act. It was held by the ld. CIT (A) that since the assessee was having only a captive power plant and the power so generated was consumed in various units of appellant's manufacturing business including Tower Unit, Spinning Unit etc., the appellant was not engaged in "generation and generation and distribution of power" and hence not eligible for claiming depreciation on actual cost basis. It was submitted that disallowance made by the ld. CIT (A) is arbitrary and without appreciation of facts and position in law and our reference was drawn to the provisions of section 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aptive power plant. Moreover, a comparative chart of the depreciation claimed by the assessee since the installation of the power plant in F.Y. 2011-12 as claimed by assessee as per SLM method and calculation of depreciation as per WDV method was also obtained which is submitted for your kind perusal (copy enclosed)." 6. It was further submitted that the claim of depreciation as per provisions of section 32(1)(i) as per straight line method on actual cost basis has been consistently allowed in the past as well as in the subsequent assessment years and our reference was drawn to the copy of assessment order for assessment years 2012-13, 13-14, 14-15 and copy of intimation under section 143(1) for assessment year 2015-16 and 2016-17. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or verification. In the remand report submitted by the AO, it has been verified that the plant is a 'Captive Power Plant' which is used to generate electricity which was utilized in the various units of the assessee including Towel Unit, Spinning Unit and WTP Plan plant of the assessee. Here it is relevant to mention that depreciation on Straight Line Method (on actual cost basis) is admissible only for "undertaking engaged in generation and generation & distribution of power" as per provision of Section 32(1)(i) which for reference is reproduced below:- "(i) In case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord. The provisions of section 32(1)(i) of the Act provides that an undertaking engaged in generation or generation and distribution of power shall be allowed depreciation on such percentage on actual cost basis as per specified rules. What is relevant to note that the term used is an "undertaking" and not an "entity" or an "assessee". Therefore, what is relevant to examine in the instant case is whether the assessee has more than one undertaking and if the answer to the same is in affirmative and whether one of the undertakings is engaged in generation or generation and distribution of power, in that case, the undertaking and in turn the assessee at the entity level shall be eligible for depreciation under SLM basis. As per the Inspector r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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