The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT)has held that a claim of depreciation on a windmill is permissible when evidence is adduced to prove the usage of the same.
Therevenue challenged the order of the learned Commissioner of Income-tax (Appeals)-2, Ahmedabad [CIT(A)] dated 17.11.2017.
KansaraPopatlalTribhovandas Metal Pvt. Ltd., the assessee engaged in the business of manufacturing S.S. Coils, Pata, Circle from hot rolled coils and job work & generation of power for own use through windmill turbine. In the return of income, depreciation of Rs.1,68,42,000/- was claimed by the assessee on the windmill stated to be purchased and put to use after 01.10.2011. The Assessing Officer disallowed the claim of the assessee for depreciation on the windmill.
The disallowance of Rs.1,68,42,000/- made by the Assessing Officer was challenged by the assessee before the CIT(A). During the course of appellate proceedings, additional evidence was filed by the assessee which was admitted by the CIT(A) and the same was forwarded by him to the Assessing Officer for verification along with written submission filed by the assessee.After considering the remand report submitted by the Assessing Officer, the CIT(A) allowed the claim of the assessee for depreciation on the windmill.
A Coram of Shri P M Jagtap, vice-president and Shri Siddhartha Nautiyal, judicial member viewed that the additional evidence filed by the assessee including the letter dated 25.10.2016 issued by the Deputy Director of GEDA was sufficient to establish that the assessee-company having put to use the windmill turbine on 31.03.2012 was eligible for a credit of units on that date
While computing book profit under Section 115JB of the Act, the assessee company had claimed depreciation on the windmill at the rate prescribed in the Income-tax Act. According to the Assessing Officer, depreciation as per the Companies Act was required to be claimed by the assessee-company while computing the book profit under Section 115JB of the Act and not the depreciation as per the Income-tax Act and disallowed the excess depreciation of Rs.14,40,237/- claimed by the assessee.
It was observed that the assessee was consistently charging depreciation in its books of account at rates prescribed in Income-tax Rules and the accounts of the assessee had been prepared and certified as per provisions of the 1956 Act, Assessing Officer would not have any jurisdiction under section 115J to rework net profits of the assessee by substituting rates of depreciation prescribed in Schedule XIV to 1956 Act.
While allowing the cross objection filed by the assessee and dismissing the appeal filed by the revenue, the Tribunal deleted the addition made by the Assessing Officer and confirmed by the CIT(A) on account of depreciation whilecomputing the book profit under Section 115JB of the Act.
Shri M.J. Shah & Shri Rushin Patel appeared for the assessee and Shri Shramdeep Sinha appeared for the revenue.
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