Income Tax Appellate Tribunal - Mumbai
Enercon Wind Farms ( Karnataka) P.Ltd, ... vs Department Of Income Tax on 30 June, 2010
1
ITA 6402-05 Enercon Wind Farms(Kar) P. Ltd.
ITA 6390-91 Enercon Wind farms(Jaisalmer) pvt. Ltd.
ITA Enercon Wind Farms(Rajasthan) Pvt. Ltd
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI 'E' BENCH
MUMBAI BENCHES, MUMBAI
BEFORE SHRI N.V. VASUDEVAN, J.M. AND SHRI R.K. PANDA, A.M.
ITA No. 6402 to 6405/Mum/2010
(Asst Years 2004-05 to 2007-08)
Income Tax Officer -8(1)3, Vs Enercon Wind Farms (Karnataka) Pvt.
Room No. 206, Ltd.,
Aayakar Bhawan, Veera Indl. Estate,
M.K. Road, Andheri (East),
Mumbai 400 020. Mumbai. 400093
(Appellant) (Respondent)
PAN NO. AABCE3106B
ITA No. 6390/Mum/2008
(Asst Years 2006-07)
ITA No. 6391/Mum/2010
(Asst Year 2007-08)
ACIT 8(1), Vs Enercon Wind Farms (Jaisalmer) Pvt.
Room No. 210 2nd floor,, Ltd.,
Aayakar Bhawan, Veera Indl. Estate, Veera Desai Road,
M.K. Road, Andheri (East),
Mumbai 400 020. Mumbai. 400093
(Appellant) (Respondent)
PAN NO. AABCE3105C
ITA No. 6392/Mum/2010
(Asst Year 2007-08)
ACIT 8(1), Vs Enercon Wind Farms (Rajasthan) Pvt.
Room No. 210 2nd floor,, Ltd.,
Aayakar Bhawan, Veera Indl. Estate, Veera Desai Road,
M.K. Road, Andheri (East),
Mumbai 400 020. Mumbai. 400093
(Appellant) (Respondent)
PAN AABCE8156G
Appellant by Shri O.A. Mao
Respondent by Shri J.P. Bairagra
Date of hearing 15.12.2011
Date of pronouncement 21.12.2011
ORDER
PER BENCH.
ITA No. 6402 to 6405/Mum/2010 filed by the Revenue are directed against the order dated 30.06.2010 of the Commissioner of Income Tax (A)- 16, Mumbai relating to Assessment Years 2004-05 to 2007-08 respectively.
2ITA 6402-05 Enercon Wind Farms(Kar) P. Ltd.
ITA 6390-91 Enercon Wind farms(Jaisalmer) pvt. Ltd.
ITA Enercon Wind Farms(Rajasthan) Pvt. Ltd ITA No. 6390 & 6391/Mum/2010 filed by the Revenue are directed against the order dated 30.06.2010 of the Commissioner of Income Tax (A)- 16, Mumbai relating to Assessment Years 2006-07 & 2007-08 respectively. ITA No. 6392/Mum/2010 filed by the Revenue is directed against the order dated 30.06.2010 of the Commissioner of Income Tax (A)-16, Mumbai relating to A.Y. 2007-08. Since identical issues are involved in all these appeals, therefore, these appeals were heard together and are being disposed of by this common order for the sake of convenience.
ITA No. 6402/Mum/2010 (A.Y. 2004-05).2. The only effective ground raised by the Revenue in this appeal reads as under:-
"On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowances made by the Assessing Officer regarding the claim of depreciation to the extent of Rs. 3,37,62,448/- on civil work, erection and commissioning of wind mill without appreciating the facts and circumstances of the case and in law."
2.1 Facts of the case in brief are that the assessee company is engaged in the business of generation of power by wind energy through wind farms and sale thereof. During the year under consideration the assessee has commenced generation and sale of commercial power. The A.O. asked the assessee to furnish details of assets owned by it. After going through the details of various assets, the A.O. asked the assessee to justify its claim of depreciation on foundation, erection and commissioning @ 80%. According to the A.O. the assessee company is not entitled to depreciation @ 80% on civil work and it is entitled to depreciation @ 5% only. 2.2 In appeal, the ld. CIT(A) relying on the decision of the Tribunal in the case of sister concern of the assessee namely Enercon Windfarms (Jaisalmer) Pvt. Ltd. Vide ITA No. 2666/Mum/2009 order dated 4.6.2010 for 3 ITA 6402-05 Enercon Wind Farms(Kar) P. Ltd.
ITA 6390-91 Enercon Wind farms(Jaisalmer) pvt. Ltd.
ITA Enercon Wind Farms(Rajasthan) Pvt. Ltd A.Y. 2004-05 decided the issue in favour of the assessee by holding as under:-
"I have considered the submissions of the appellant, the order of the A.O. and the facts of the case that wind mills energy devices is eligible for 80% depreciation as per the provision of the I.T. Act and is claimed by M/s PFC who is the owner of the wind mills in this case. The dispute is regarding the base structure i.e. the foundation on which these wind mills are installed. The appellant has also claimed depreciation on the expenditure incurred for pre- installation charges, loan processing charges and the foundation works. In this regard, similar addition was made by the Assessing Office in the case of appellant's sister concern viz. M/s Enercon Wind Farms (Iaisalmer) Pvt. Ltd. For A.Y. 2004-05 and the said addition was confirmed by my predecessor. On further appeal, the Hon'ble I.T.A.T. vide its order ITA No. 2666/Mumn/2009 dated 4th June 2010 has inter alia held as under:-
"In view of our finding above and after considering the case laws cited above, we are of the opinion that the basement constructed by the assessee to install and withhold the heavy windmill is part and parcel of the windmill and without the specially designed basement, the windmill cannot stand. Therefore, it is to be treated as plant and higher depreciation claimed by the assesee has to be allowed. When the assessee has taken a windmill on lease and constructed the basement for installing the windmill for generating power, denial of depreciation to the basement constructed by the assessee is not justified in view of our finding that the basement is part and parcel of the windmill and is to be treated as plant. The intention of the legislature is to grant higher depreciation to encourage the entrepreneurs who generate power through windmill. In the present case, though the assessee has taken the windmill on lease, the assessee had incurred huge expenditure to construct the basement to install the windmill and actually running the windmill. Hence, the assessee is eligible for higher depreciation."
Since, the Hon'ble I.T.A.T. is the last fact finding authority and the finding of the Hon'ble Tribunal is binding on the lower authorities, therefore, it is held that the foundation and its material like steel, reinforced cement, grave, earthling etc. are part and parcel of windmill without which the windmill cannot come into existence and hence the depreciation is allowable on it @ 80% on civil work i.e. foundation, erection and commissioning of a windmill. The Assessing Officer is therefore directed to treat the foundation, erection and commissioning as part and parcel 4 ITA 6402-05 Enercon Wind Farms(Kar) P. Ltd.
ITA 6390-91 Enercon Wind farms(Jaisalmer) pvt. Ltd.
ITA Enercon Wind Farms(Rajasthan) Pvt. Ltd of windmill and allow depreciation on @ 80%. Thus the ground of appeal is allowed."
Aggrieved with such order of the ld. CIT(A), the Revenue is in appeal before us.
2.2 After hearing both the sides, we do not find any infirmity in the order of the ld. CIT(A) who allowed the claim of the assessee by following the decision of the Tribunal in the case of sister concern of the assessee. The ld. D.R. could not place any material so as to take a contrary view other than the view taken by the Tribunal. We, therefore, do not find any infirmity in the order of the ld. CIT(A) and accordingly uphold the same. The ground raised by the Revenue is accordingly dismissed.
3. In the result, Revenue's appeal in ITA No. 6402/Mum/2010 for A.Y. 2004-05 is dismissed.
ITA No. 6203 to 6205/Mum/2010 for A.Y. 2005-06 to 2007-08 & 6390/ Mum/2010 for A.Y. 2006-07 & 6391 to 6392/Mum/2010 for A.Y. 2007- 08 (By Revenue).
4. The grounds taken by the Revenue in the above appeals are identical to the ground taken by the Revenue in ITA No. 6402/Mum/2010. We have already decided the issue in favour of the assessee and dismissed the appeal filed by the Revenue. Following the same ratio, the grounds raised by the Revenue in the above appeals are dismissed.
5ITA 6402-05 Enercon Wind Farms(Kar) P. Ltd.
ITA 6390-91 Enercon Wind farms(Jaisalmer) pvt. Ltd.
ITA Enercon Wind Farms(Rajasthan) Pvt. Ltd
5. In the result, all the appeals filed by the Revenue are dismissed.
Order pronounced on 21.12.2011.
Sd/- Sd/-
( N.V. VASUDEVAN ) ( R K PANDA )
Judicial Member Accountant Member
Place: Mumbai : Dated: 21.12.2011.
RK
Copy forwarded to:
1 Appellant
2 Respondent
3 CIT, Concerned, Mumbai
4 CIT(A) - Concerned, Mumbai
5 DR Bench E
6 Master File
/TRUE COPY/
BY ORDER
Dy /AR, ITAT, Mumbai