Depreciation of the windmills purchased in the same year, prior to the date of search, should be granted in the regular assessment

CIT, Chennai Vs A R Mercantile Pvt. Ltd. (Madras High Court)- The Tribunal accepted the case of the assessee based on the letter issued by the Assistant Executive Engineer of the Tamilnadu Electricity Board, that the windmill was commissioned on 30.09.1995. Following the earlier order in the case of Assistant Commissioner of Income Tax Vs. Kences Foundation (P) Ltd [2006 (203) CTR (Mad) 249], wherein a similar relief was granted to the assessee, the present appeal of the assessee was allowed.

Given the fact that the issue regarding the commission of windmill on 30.9.1995 is disclosed in the books of accounts and calls for depreciation under the regular assessment year, in view of Section 158BB(1)(d) of the Income Tax Act, 1961, we do not find any ground to consider the said issue, as a question of law. The Tax Case Appeal stands dismissed.   

CIT, Chennai Vs A R Mercantile Pvt Ltd

Madras high Court

DATED: 18-07-2011

Tax Case (Appeal) No. 881 of 2004

Prayer: Appeal filed against the order of the Income Tax Appellate Tribunal “B” Bench, dated 19.4.2004, in IT(SS) A No.76/Mds/97, under Section 260 A of the Income Tax Act, 1961.

JUDGEMENT

(Judgement of the Court was made by CHITRA VENKATARAMAN,J.)

Though the Revenue had raised two questions of law before this Court in the appeal preferred in respect of the block assessment years covering the period from 1986 to 1987 to 1996-1997 and up-to 23.2.1996, yet this Court had admitted only the second question of law, which reads as follows:

“Whether in the facts and circumstances of the case, the depreciation of the windmills purchased in the same year, prior to the date of search, should be granted in the regular assessment or the block assessment.?”

2. Learned counsel appearing for the assessee pointed that having regard to the fact that the first question regarding the fixing the date of the commissioning of the windmill is not admitted and that the income disclosed in the regular books of accounts had to be considered for a regular assessment and not under the special procedure relating to the surcharge cases, the assessee was granted 100% depreciation.

3. In the light of the fact that second question alone was framed and the first question, as regards the date of commission thus having attained a finality, the issue itself is academic for this Court to consider. A reading of the order of the Tribunal shows that the assessee’s place of business was searched, on 23.2.1996. In the block assessment proceedings, the Assessing Officer assessed the income for the block period 1986-1987 to 1996-1997, upto 23.2.1996, at 60% plus 15% surcharge. The assessee claimed 100% depreciation of the windmill purchased and commissioned, which was further restricted by the officer to 50% on the ground that there was no evidence that it was commissioned prior to 30.9.1995.

4. The Tribunal accepted the case of the assessee based on the letter issued by the Assistant Executive Engineer of the Tamilnadu Electricity Board, that the windmill was commissioned on 30.9.1995. Following the earlier order in the case of Assistant Commissioner of Income Tax Vs. Kences Foundation (P) Ltd [2006 (203) CTR (Mad) 249], wherein a similar relief was granted to the assessee, the present appeal of the assessee was allowed.

5. The learned counsel for the assessee pointed out that in the case of Assistant Commissioner of Income Tax Vs. Kences Foundation (P) Ltd [2006 (203) CTR (Mad) 249], this Court had already considered the issue and accepted the case in favour of the assessee.

6. Leaving aside the said decision, even going by the findings of the Tribunal, which has been accepted by this Court, in view of the rejection of the first question raised, and given the fact that the issue regarding the commission of windmill on 30.9.1995 is disclosed in the books of accounts and calls for depreciation under the regular assessment year, in view of Section 158BB(1)(d) of the Income Tax Act, 1961, we do not find any ground to consider the said issue, as a question of law. The Tax Case Appeal stands dismissed. No costs.