Case Law Details
Pr. CIT Vs Mahalaxmi Infra Projects Ltd. (Bombay High Court)
Windmill was erected in the area which required special foundation of reinforced cement concrete and that the said reinforced cement concrete formed integral part of the windmill. Therefore, assessee was eligible for higher rate of depreciation on the civil construction, electric and other installations in the process of erecting and installing windmill. The Tribunal has also followed the decision of this Court in the case of Commissioner of Income Tax Vs. Herdilla Chemicals Ltd. reported in (1995) 216 I.T.R. 742 (Bom) in allowing the claim of the assessee.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. These appeals are admitted for consideration on following reframed substantial questions of law :-
(a) Whether, the respondent / assessee fulfills the requirement stipulated in Section 80IA(4) of the Income Tax Act, 1961 once the conclusion reached is that it is contractor and not developer as stated in the sub-section?
(b) Whether, in the facts and circumstances of the case the Income Tax Appellate Tribunal was right in holding that even if the Assessee is termed as contractor he had developed, operated and maintained infrastructural facility and hence entitled to the deductions within the meaning of sub-section?
2. Registry is directed to communicate a copy of this order to the Tribunal. This would enable the Tribunal to keep the papers and proceedings relating to the present appeals available, to be produced when sought for by the Court.
3. Mr. Naniwadekar, learned Counsel appearing for the respondent waives service.
4. To be heard along with Income Tax Appeal Nos. 183 and 184 of 2012.
5. We notice that the Revenue has proposed following additional questions for our consideration :
(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in allowing depreciation @80% on civil construction, electrical and other nonintegral installations ?
(ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in allowing depreciation @80% on civil work on which depreciation was allowable @ 10% and since civil works are not specially designed devices, the same are not entitle for higher rate of depreciation?
(iii) Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in allowing higher rate of depreciation on electrical and other installations without appreciating the fact that electrical items are not part of electricity generating apparatus but are part of electricity selling apparatus and these constitute the block ‘Plant and Machinery’ on which depreciation is allowable @15% ?
6. In so far as question No. (i) is concerned, the same arises out of the additions made by the assessing officer under section 41(1) of the Income Tax Act, 1961 (“the Act” for short) on account of bogus claim of liability. The Tribunal while giving relief to the assessee, referred to the decision of the Supreme Court and other decisions holding that merely because period of 3 years expired from arising of the liability would not automatically mean that the liability has ceased. We do not find any error in the view of the Tribunal.
7. Question nos. (i), (ii) and (iii) relate to the Revenue’s objection to the assessee claiming higher rate of depreciation on the civil construction, electric and other installations by the assessee in the process of erecting and installing windmill. The Revenue argues that the expenditure in such activities cannot be seen as a part of installation of windmill and, therefore, the depreciation prescribed for the same would not be available to the assessee. We notice that the similar question had come up for consideration before this Court in Income Tax Appeal No.1326 of 2010, wherein the appeal was dismissed by order dated 14th June, 2017 making following observations:
“2. The Tribunal has recorded finding of fact that windmill was erected in the desert area of Rajasthan which required special foundation of reinforced cement concrete and that the said reinforced cement concrete formed integral part of the windmill. The Tribunal has also followed the decision of this Court in the case of Commissioner of Income Tax Vs. Herdilla Chemicals Ltd. reported in (1995) 216 I.T.R. 742 (Bom) in allowing the claim of the assessee. In our opinion, the finding recorded by the Tribunal that RCC foundation forms integral part of the windmill is a finding of fact and no question of law arises from the same. Hence the appeal is dismissed with no order as to costs.”
8. In the result, these additional questions are not entertained.
