Income Tax Appellate Tribunal (ITAT), New Delhi ruled that Electricity has all necessary trappings of “articles” hence addition liable to be deleted.
The issue stands adjudicated by the order of the Tribunal authored by the same Bench in the case of the Revenue for the A.Y 2006-07 in ITA No 3590/Del/2014 vide order dated 04.05.2022.the assessee in the present appeal is NTPC Limited.
In the above-mentioned case, the revenue has challenged the action of the CIT(A) in allowing additional depreciation of Rs. 449.49 crores on the following two contentions: (i) that the activity of power generation cannot be considered as manufacturing of an article or thing, so as to be entitled for additional depreciation. (ii) that the CIT(A) erred in placing reliance on the decision of coordinate bench of the Tribunal in appellant’s own case for AY 2005-06, ignoring the fact that the matter is subjudice as the department has preferred an appeal before the Supreme Court on this issue.
The Tribunal took into consideration, the judgment in Supreme Court in the case of CST v. M.P. Electricity Board, and in the case of State of AP &Ors. v. National Thermal Power Corpn. Ltd. and Orshas held that electricity is capable of abstraction, transmission, transfer, delivery, possession, consumption and use like any other movable property and thus qualifies to be goods. The Court further held that electric energy has all trapping of an article or goods. The process of its generation is also akin to manufacture or production of an article or thing. It is being generated in huge plants though scientifically one may say it is trans formation of one source of energy into the other.
The Tribunal in the case mentioned beforehand held that “Thus, taking into consideration all these aspects, we are of the view that admissibility of additional depreciation cannot be denied to the assessee merely on the ground that electricity is not an article or thing. The order of the Learned CIT(Appeals) is reversed to this extent and the disallowance is deleted.”
In the present appeal the Tribunal held that “Since, the matter stands covered by the order of the Tribunal in the assessee’s own case, keeping in view the absence of any change in the factual position, the addition made in the instant year is liable to be deleted.”
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