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It is only by an amendment to section 32(i)(ii), the power generating units were included to get the benefit of additional depreciation. It is referring to this position and provisions of section 32(l)(ii) only, the Courts in Damodar Valley Corporation and NTPC cases decided in the issue in favour of the assessee.

4.8 Now coming to section 32AC, as per Memorandum to Finance Act, 2013, this section was introduced as a measure to promote socio-economic growth. «Incentive for acquisition and installation of new plant or machinery by manufacturing company. In order to encourage substantial investment in plant or machinery, it is proposed to insert a new section 32AC in the Income Tax Act to provide that where an assessee, being a company,

(a) is engaged in the business of manufacture of an article or thing; and (b) invests a sum of more than Rs.100 crore in new assets (Plant or machinery) during the period beginning from 1st April, 2013 and ending on 31st March, 2015." In the said Memorandum, the power generating companies were not included. In the absence of specific inclusion of power generating units into the purview of section 32AC, the benefits mentioned in section 32(l)(ii) cannot be extended to power generation companies. Therefore, the case laws relied upon by the assessee, which were rendered in the context of 32(l)(iia) cannot be applied to provisions of section Telangana State Power Generation Corporation L td., Hyd.

In the scrutiny assessment, The Ld. Assessing Officer amongst other additions to the income/ disallowances of the claims, has disallowed the claim made for Rs. 319,08,63,958/- investment allowance U/s. 32AC of Income Tax Act. 1961. The Ld. Assessing Officer denied the claim of Investment Allowance u/s 32AC solely on the ground that generation of power cannot be treated as a manufacturing activity and the benefits mentioned under that section rot be extended to power generating companies as such companies have not been specifically m:luded in this section. In the appeal, the ld. Commissioner of Income Tax (Appeals) bas appealed the disallowance of Investment allowance and stated that power generation companies are not included specifically in the purview of Section 32AC.
In the appeal before the Ld. Commissioner of Income Tax (Appeals), It was Submitted that-
(i ) To be eligible for deduction U/s 32AC, The assessee must be a company engaged the business of manufacture or production of any article or thing,
(ii) It should acquire and install new asset during the previous year and such investment should exceed 25 Crores and such company assessee will be eIigible of sum equal actual cost of new asset.

The appellant submitted that, it is satisfying all the required attributes specified in section 32AC and that it is generating "ELECTRICITY". The Hon'ble Supreme Court in the case of CST Vs Madhya Telangana State Power Generation Corporation L td., Hyd.