The Income Tax Appellate Tribunal (ITAT), Chennai Bench allowed depreciation as there was Purchase of windmill and the same was capitalised in the books of account.
The counsel for the assessee stated the facts that the original assessment was completed by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act, 1961 and allowed depreciation claim on account of foreign exchange fluctuation relating to foreign currency term loan availed for purchase of windmills being capitalized. The assessee, Super Sales India Ltd availed depreciation at 80% on this foreign exchange loans.
Subsequently, the Revenue issued notice under Section 148 of the Income Tax Act, 1961 Act after recording reasons and reopened the assessment and disallowed the claim of depreciation on foreign exchange loss. The assessee claimed depreciation on account of foreign exchange fluctuation loss relating to foreign currency term loan availed for purchase of windmill and the same was capitalized by the assessee in its books of accounts.
The assessee made alternative claim that the assessee’s case falls under the claim of revenue expenditure because of provisions of Section 43A of the Income Tax Act, 1961 does not apply to assessee’s case for the reason that these assets are indigenous assets and not purchased from out of India.
A Division Bench consisting of Mahavir Singh, Vice President and Manoj Kumar Aggarwal, Accountant Member observed that “The assessee purchased this machinery indigenously and hence, provisions of Section 43A of the Income Tax Act, 1961 will not apply. But since the assessee has capitalized and claimed depreciation in spread over years and assessments have become final and in this year. “
“The assessee has made claim of depreciation at 80% on the loan on account of foreign exchange fluctuation loss relating to foreign currency term loan, which was availed for the purchase of this windmill and capitalised, hence we are of the view that the assessee is entitled for claim of depreciation and we allow the same” the Tribunal ruled.
Vikram Vijayaraghavan, appeared for the assessee and D. Hema Bhupal, appeared for the Respondent.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
