Case Law Details
Pr. CIT Vs. NTPC Sail Power Co. Pvt. Ltd. (Delhi High Court)
Electricity has all the necessary trappings of ‘articles’ or ‘things’ and the benefit of additional depreciation cannot be denied. As held by the Constitution Bench, electricity is capable of abstraction, transmission, transfer, delivery, possession, consumption and use like any other movable property. Following the same logic, to deny the benefit of additional depreciation to a generating entity on the basis that electricity is not an “article’ or “thing’ is in our view an artificially restrictive meaning of the provision. The benefit of additional depreciation under Section 32(1)(iia) has, therefore, been rightly granted to the assessee by the concurrent judgments of the CIT(A) and the Tribunal.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
1. This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] is directed against an order of the Income Tax Appellate Tribunal [hereinafter referred to as “the Tribunal”], dated 24.07.2018, passed in ITA No.6501/DEL/2014, dismissing the Revenue’s appeal. In the present appeal, notice has been issued only on one question – pertaining to the disallowance of additional depreciation claimed by the respondent/assessee for Assessment Year 2011-
2. The assessee is a joint venture company of two public sector undertakings and is engaged in the production of thermal power. For the assessment year in question, it declared ‘nil’ income after setting off the current year’s profits with brought forward unabsorbed depreciation. During the course of assessment proceedings, the Assessing Officer (AO) raised a query regarding the assessee’s claim for “additional depreciation”, under Section 32(1)(iia) of the Act contending that such a deduction was permissible only if the assessee was engaged in the production of any “article or thing” which, it was claimed, does not include the generation of power. The assessee, in reply, claimed to have been granted such deduction from A.Y. 2006-07 onwards.
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