Income Tax Appellate Tribunal - Pune
Arvind Cotsyn (India) Ltd.,, vs Department Of Income Tax on 10 February, 2016
आयकर अपील य अ धकरण, पुणे यायपीठ "बी" पुणे म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
ी आर. के. पांडा, लेखा सद य
एवं ी !वकास अव थी, या#यक सद य के सम$
BEFORE SHRI R.K. PANDA, AM
AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No.945/PN/2015
#नधा&रण वष& / Assessment Year : 2011-12
ACIT, Ichalkaranji Circle, ..........
Ichalkaranji अपीलाथ /
Appellant
बनाम v/s
..........
Arvind Cotsyn (India) Ltd., यथ /
30, Arvind House, Respondent
Old Industrial Estate,
Ichalkaranji,
Kolhapur - 416115
PAN No. AABCA5540R
आयकर अपील सं. / ITA No.1221/PN/2015
#नधा&रण वष& / Assessment Year : 2012-13
ACIT, Ichalkaranji Circle, ..........
Ichalkaranji अपीलाथ /
Appellant
बनाम v/s
..........
Arvind Dyeing & Bleaching यथ /
Mills Pvt. Ltd., Respondent
Arvind House, Old Industrial Estate,
Ichalkaranji,
Kolhapur - 416115
PAN No. AABCA5543N
अपीलाथ क ओर से / Assessee by : None
यथ क ओर से / Revenue by : Shri Hitendra Ninawe
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing :03.02.2016 Date of Pronouncement:10.02.2016
2
ITA Nos.945 and 1221/PN/2015
आदे श / ORDER
PER VIKAS AWASTHY, JM :
These two appeals are filed by the Revenue. In ITA No.945/PN/2015 the revenue has assailed the order of CIT(A)-1 & 2, Kolhapur dated 09-03-2015 for the Assessment Year 2011-12 and in ITA No.1221/PN/2015 the revenue has challenged the order of CIT(A)-I & II, Kolhapur dated 12-06-2015 for the Assessment Year 2012-13. In both the appeals, the common ground raised by the revenue is against grant of higher rate of depreciation @80% on Civil work and portion of installation and commissioning work included in the block of assets of windmill. Since the facts in both the cases are similar and the revenue has raised identical dispute, these appeals are taken up together for adjudication.
2. The brief facts in the appeals are; the assessees have installed windmill and have claimed depreciation on the windmill in respect of Civil work, erection, commission and electrical installations @80%. The AO during the course of scrutiny assessment proceedings in the case of respective assessees have restricted the claim of depreciation on Civil works to 10% and on installation and commissioning work @15% by placing reliance on the decision of the Pune Bench of the Tribunal in the case of Poonawalla Finvest and Agro Pvt. Ltd. reported as 118 TTJ 68.
3. Aggrieved by the assessment orders the assessees preferred appeals in their respective cases before CIT(A). The CIT(A) vide impugned orders allowed depreciation @80% on Civil work as well 3 ITA Nos.945 and 1221/PN/2015 as on installation and commissioning work. The CIT(A) while granting relief to the assessees placed reliance on the decision of Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Eastman Impex in ITA No.350/2013 dated 18-12-2014 and the decision of Pune Bench of the Tribunal in the case of DCIT Vs. Aminity Developers and Builders in ITA No.1505/PN/2011 for A.Y. 2008-09 decided on 12-12-2012. Against the findings of CIT(A) in both the cases the Department is in appeal.
4. The only effective ground of appeal raised by the department in both the appeals read as under :
"On the facts and in the circumstances of the case and in law, the CIT(A) is not justified in allowing depreciation and not depreciation the fact that the earth work and foundation is nothing but civil work on which depreciation is allowable @10%, whereas installation and commissioning work constitutes block of plant and machinery on which depreciation is allowable @15%."
5. A perusal of case files show that the notices of the appeals have been issued to the respective assessees through RPAD on 20-01-2016. However, none has appeared on behalf of the assessees. Therefore, these appeals are taken up for adjudication on the basis of material available on record and the submissions made by Ld. Departmental Representative.
6. Shri Hitendra Ninawe representing the department vehemently supported the finding of the AO and prayed that the assessees are eligible to claim depreciation @10% on Civil work and 15% on the portion of installation and commissioning work of windmill. The CIT(A) has erred in granting higher rate of depreciation @80% on both the components of the windmill. In support of his submissions the Ld. Departmental Representative 4 ITA Nos.945 and 1221/PN/2015 placed reliance on the decision of Pune Bench of the Tribunal in the case of Poonawalla Finvest and Agro Pvt. Ltd., (Supra).
7. We have heard the submissions made by the Ld. Departmental Representative and have perused the orders of the authorities below. The CIT(A) granted depreciation @80% on Civil work as well as portion of installation and commissioning of windmill by placing reliance on the decision of the Coordination Bench of the Tribunal in the case of Aminity Developers and Builders (Supra) and the decision of Hon'ble Punjab & Haryana High Court in the case of Eastman Impex (Supra). We find that in the case of Aminity Developers and Builders (Supra), the Coordinate Bench has considered the decision rendered in the case of Poonawalla Finvest and Agro Pvt. Ltd., (Supra) and has distinguished the same. The Tribunal after detailed discussion on the issue finally concluded that Civil work comprising of foundation of the windmill is an integral part of windmill erection. Therefore, the same is eligible for depreciation at the same rate as is applicable in the case of windmill. Similarly, the cost of commissioning and erecting windmill cannot be said to be separate from the windmill as it is directly related to the functioning of the windmill. Therefore, the same rate of depreciation will apply on the cost of commissioning of the windmill. The relevant extract of the order of the Tribunal in the case of DCIT Vs. Aminity Developers and Builders (Supra) is reproduced herein below :
"4. In the present case, the functional test of the foundation has been explained by the Ld CIT(A). The Ld CIT(A) has also explained, more particularly, in the case of M/s. Chaphalkar Brothers (Supra) how the 5 ITA Nos.945 and 1221/PN/2015 foundation is the integrated part of the wind mill as the same is to be erected having technical expertise to sustain the load of the turbine. In the case of Poonawala Finvest & Agro (P) Ltd. (Supra), the Tribunal emphasized on the functional test. So far as the foundation is concerned, as discussed by the Ld CIT(A), the functional test is fulfilled. There should not be quarrel that civil work is involved in the erection of the foundation, but every civil work cannot be treated as civil work as required for bringing construction. In our opinion, cost on the foundation of the wind mill is eligible for the depreciation at the rate 180% or the rate which is applicable to the wind mill as it is integral part of cost of wind mill erection. Same way, the cost for commission and erection cannot be said to be separate from the wind mill as it is directly related to the functioning of wind mill. The Ld CIT(A) has rightly allowed the depreciation on the pro rata basis on the cost of foundation to the extent of the civil work. We may refer to here the decision of the ITAT Ahmedabad Bench in the case of ACIT Vs. Parry Engineering & Electronics, ITA No. 3317/Ahd/2011 dated 2nd March 2012, in which it is held that the foundation is a part of the turbine and is eligible for the rate of depreciation which is applicable to the wind mill. We find no reason to interfere with the order of the CIT(A) on this issue. Accordingly, the same is confirmed."
8. The Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Eastman Impex (Supra) after considering the judgments rendered in the case of CIT Vs. K.K. Enterprises reported as 108 DTR 109 by Hon'ble Rajasthan High Court and the Hon'ble Gujarat High Court in the case of CIT Vs. Parry Engineering and Electronics Pvt. Ltd. reported as 49 taxmann.com 252 has held that Civil work and installation and commissioning work of windmill are eligible for depreciation @80%.
9. Similar view has been taken by various Coordinate Benches of the Tribunal granting higher rate of depreciation on the Civil work as well as cost of commissioning and installation of windmill. Thus in view of the facts of the case and the decisions of Hon'ble High Courts and the Coordinate Bench of the Tribunal, we are of the considered view that there is no infirmity in the orders passed by the CIT(A). The impugned orders passed by the 6 ITA Nos.945 and 1221/PN/2015 CIT(A) in the respective appeals are upheld and the appeals of the revenue are dismissed being devoid of any merit.
10. In the result, both the appeals of the revenue are dismissed.
Order pronounced on Wednesday the,10th day of February, 2016.
Sd/- Sd/-
(R.K. PANDA) (VIKAS AWASTHY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
पुणे Pune; दनांक Dated : 10th February, 2016.
सतीश आदे श क) *#त,ल!प अ-े!षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. The CIT(A)-I & II, Kolhapur
4. The CIT-I & II, Kolhapur
5.
$वभागीय 'त'न(ध, आयकर अपील य अ(धकरण, "बी" पुणे / DR, ITAT, "B" Pune;
6. गाड- फाईल / Guard file.
आदे शानस
ु ार/ BY ORDER,
स या$पत 'त //True Copy//
// True Copy //
//स या$पत 'त //True C // व/र0ठ 'नजी स(चव / Sr. Private Secretary
आयकर अपील य अ(धकरण, पण
ु े / ITAT, Pune