9911796707
TMI Blog2023 (7) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... 09/Del/2021 - - - Dated:- 21-7-2023 - Shri Kul Bharat, Judicial Member And Shri M.Balaganesh, Accountant Member For the Appellant : Shri R.K.Kapoor, CA For the Respondent : Ms. Swati Joshi, CIT DR ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee for the assessment year 2015- 16 is directed against the assessment order passed u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 ( the Act ) dated 31.10.2019. The assessee has raised following grounds of appeal:- 1. That the Assessment order passed by Ld. AO under the direction of Hon'ble DRP is bad in Law. 2. The Ld Assessing Officer (AO) has grossly erred in law and in facts and circumstances of the assessee's case in making additions amounting to Rs. 3,55,95,528/- to the returned income of the assessee. The additions proposed are wholly illegal, erroneous and untenable in law and on facts of the assessee's case and are prayed to be deleted. Disallowance of depreciation and additional deprecation claimed on Solar Plant in AY 2015-16 3. That the Ld. DRP has earned in law and in facts in upholding the additions of Rs. 3,55,95,528/- made to the taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,65,908/- not taxable in the computation of taxable income earned on reinstatement of foreign currency external commercial borrowing taken for acquisition/investment in shares for acquiring an overseas company for business purposes being as revenue nature in previous assessment year as per treatment by same jurisdictional AO in the assessment order of AY 2014-15. 4.3. That the learned AO has failed to give consequential effect to the views in holding in Assessment Years 2014-15 that the gain/loss on reinstatement of ECB loans in foreign exchange is capital nature. 5. That the Ld. AO has erred in law in initiating penalty proceedings w/s 271(1)(c) for alleged concealment of income is on wholly illegal and untenable grounds since there was no concealment of any income or submission of inaccurate particulars of income, nor any default according to law by the assessee. 6. That the aforesaid grounds are without prejudice to the one another raised herein. 2. The appeal filed by the assessee is time barred by 21 months. As per the assessee, the appeal was required to be filed on 03.12.2019. However, due to Covid-19 pandemic, the appeal could not be filed on time. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been raised through this ground and decided in favour of the assessee for Assessment Year 2014-15. The Revenue has no objection in this regard. Therefore, Ground Nos.4 to 4.3 raised by the assessee are dismissed as not pressed. 6. Ground No.5 raised by the assessee is against the initiation of penalty u/s 271(1)(c) of the Act which is premature hence, dismissed. 7. Ground No.6 raised by the assessee is general in nature, needs no separate adjudication hence, dismissed. 8. Therefore, the only effective Ground No.3 raised by the assessee is related to the disallowance of depreciation of INR 3,55,95,528/-. In respect of this addition, Ld. Counsel for the assessee reiterated the submissions as made in the written submissions. For the sake of clarity, the relevant contents of the written submissions are reproduced asunder:- 2. Ground No. 3 to 3.2 and 3.5 pertain to the claim of depreciation made by the assessee on two 'Solar Power Plants' installed at two manufacturing units/factories at 'Bikaner' and 'Manesar' respectively. Although the power plants were installed and put to use during the year under consideration, however, the learned DRP whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee in IMT Manesar, Gurgaon. The cost of these plants were Rs.6,03,75,057/- and Rs.1,04,00,000/- respectively. As regards the first solar power plant, additional depreciation has been held to be allowable. However, it is in respect of second solar power plant which although admittedly installed in factory premises has been treated to have been installed in the office premises, which according to the learned DRP gets covered in the exception as contained in section 32(1)(iia) of the Income Tax Act. It is respectfully submitted that once it has been accepted that the solar power plant has been installed at the factory premises of the assessee, for which all the evidences were available, the DRP was not justified in treating the factory premises as the office premises. Your honour would appreciate that this solar power plant was of 160 Kilo Watt which was put to use for in-house production at the factory. Factory premises are mostly meant for carrying out the production activities although it does have some office part which is also very much part of the factory functioning. Therefore, it is prayed that it may please be held that the assessee was eligible for add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents related to acquisition of land, purchase of solar power plants, installation and commissioning certificate, confirming the installation and commissioning of these solar power plants during the FY 2013-14. 12.9 However, it is found that the assessee has capitalized these two Solar Plant, i.e (i) 1 MW Grid interactive Solar Photovoltaic Power Project commissioned at Bikaner, Rajasthan for a value of Rs. 6,03,75,057/- and (ii) at Manesar office premise for a value of Rs. 1,04,00,000/- in its books of account in AY 2015-16 and claimed depreciation @ 80% alongwith additional depreciation 20% during the relevant assessment year instead of AY 2014-15 in which these plants were purchased, installed, commissioned and used for the purpose of the business of the assessee. 12.10 All the evidences on record establishes that these two solar plants were installed and commissioned and put to the use of business in the FY 2013-14 relevant to AY 2014-15. 12.11 In this regard, provision of Section 32 of the Act is relevant to see which reads as under: 32. (1) In respect of depreciation of- (i) buildings, machinery, plant or furniture, being tangible assets; (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particularly after the insertion of Expln 5 to section 32(1) it clearly takes away the right of choice of the assessee to make a claim for depreciation or not. It is incumbent upon the AO to grant depreciation in the year in which the assets was owned by the assessee and put to use for the purpose of business. Hence, Panel is of the view that depreciation at the relevant rate on the solar plants has to be first given in the AY 2014-15 only. Further, it is provided in the Act that if the asset is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) or clause (iia), as the case may be. In view of the same, 50% of the normal depreciation @ 80% has to be allowed in AY 2014-15 for both solar plants. 12.17 Assessee has also claimed additional 20% depreciation on the solar plant as per the provision of section 32(1)(iia) of the Act which reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d off with above directions. 9. From the above finding, it is clear that the Ld.DRP rejected the claim on the premise that the Solar Power Plant is installed at the roof top of office building for captive use for office. However, the contention of the assessee has been that office building is part of factory premise and the electricity is used for factory only. Thus, authorities below grossly erred in appreciating the facts. The Solar Power Plant in question is of 160 Mega Watt capacity and even in the wildest of imagination, it cannot be presumed that this is installed for meeting the need of office only. We therefore, are of the considered view that authority below ought to have verified the fact by making field inquiry. Considering the fact that Solar Power Plant is of very high capacity and it is stated at bar that the office building is part of factory and electricity so generated is used for factory only. The issue is restored to the file of AO for verification. If the AO finds that the office is part of factory building and electricity is generated for captive use of factory. He would allow the depreciation as per provision of law. This ground of assessee s appeal is al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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