D.b. Income Tax Appeal v. M/S. Mehru Electricals & Mechanical Engineers Pvt. Ltd., Alwar

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJAIPUR BENCH, JAIPUR D.B. INCOME TAX APPEAL NO.135/2014Commissioner of Income Tax, Alwar Vs. M/s. Mehru Electricals & Mechanical Engineers Pvt. Ltd., Alwar Date of Order : 18[th] May, 2016 HON'BLE MR. JUSTICE M.N.BHANDARIHON'BLE MR. JUSTICE MR. J.K.RANKA Mrs.Parinitoo Jain, for the appellant- revenue.Mr.HR Kumawat, for the non-appellant – assessee. By the Court : By this Income Tax appeal, a challenge is made tothe order of Income Tax Appellate Tribunal (for short “theTribunal”) dated 28[th] February, 2014 whereby the appealpreferred by the assessee was allowed. Learned counsel for the revenue submits that rateof depreciation was an issue before the Tribunal but withoutproper appreciation of law as well as facts, the appeal wasallowed in favour of the assessee. The assessee had claimeddepreciation and additional depreciation in excess to the rateand was not otherwise admissible on a room constructed alongwith cost of erection & installation of electrical items coveredunder “Plant & Machinery” for a wind mill. Learned counsel for the appellant submits thatcontroversy raised in the present case is pending consideration before this Court in other cases also. The Tribunal, however,allowed the appeal in reference to other judgments, whichincludes, the judgment in the case of Banswara Syntex LimitedVs. CIT in ITA NO.37/Jodh/2012. If, at all, the depreciation was admissible then adispute about rate of depreciation was required to be addressedby the Tribunal but it had failed to decide the issue aforesaid.Accordingly, the order of the Tribunal may be set aside whilemaintaining the order passed by the CIT. Learned counsel for the assessee has contested theappeal and submitted that the Commissioner has madeobservations against the judgment passed by the Madras HighCourt in the case of CIT Vs. Hi Tech Arai Ltd. reported in(2010) 321 ITR 477 (Mad.) as well as Income Tax AppellateTribunal, Delhi (for short “the Tribunal at Delhi”) on the issueabout admissibility of depreciation. The judgment of MadrasHigh Court was further challenged before the Apex Court andthe appeal therein has already been dismissed confirming theorder of Madras High Court. The controversy therein was aboutadmissibility of the depreciation. The Apex Court upheld thejudgment of Madras High Court, thus issue aforesaid no moresurvives. When the electrical items as well as construction is attached to the wind mill then depreciation would be at the rateclaimed by the assessee. The depreciation and additionaldepreciation has been allowed by the Assessing Officer. Therevenue has unnecessarily raised the issue despite controversyhaving been settled. The Commissioner ought to have notinterfered in the order passed by the assessing authority andthus, the Tribunal has rightly set aside the order in the appealpreferred before it. Accordingly, it may be maintained. We have considered submissions made by learnedcounsel for the parties and scanned the matter carefully. It is a case where two issues have been raised bythe revenue. The first issue is regarding depreciation claimed oncivil foundation as well as on electric turbine generator for thewind mill. The Commissioner has made a reference of judgmentof Madras High Court in the case of Hi Tech Arai Ltd. (supra) soas the order passed by the Tribunal at Delhi. The observationsare however that department has not accepted the verdict ofthe High Court, though the judgment of Madras High Court inthe case of Hi Tech Arai Ltd. (supra) has been affirmed by theApex Court. In view of the above, learned counsel for revenuecould not contest the issue in regard to the admissibility of We have considered submissions made by learnedcounsel for the parties and scanned the matter carefully. It is a case where two issues have been raised bythe revenue. The first issue is regarding depreciation claimed oncivil foundation as well as on electric turbine generator for thewind mill. The Commissioner has made a reference of judgmentof Madras High Court in the case of Hi Tech Arai Ltd. (supra) soas the order passed by the Tribunal at Delhi. The observationsare however that department has not accepted the verdict ofthe High Court, though the judgment of Madras High Court inthe case of Hi Tech Arai Ltd. (supra) has been affirmed by theApex Court. In view of the above, learned counsel for revenuecould not contest the issue in regard to the admissibility of depreciation. The issue before the Madras High Court was againof a wind mill where depreciation on power generation wasclaimed. It was found that main business of the assessee wasnot of producing or generating electricity and thus, the MadrasHigh Court decided the issue in favour of the assessee andagainst the revenue. The issue having been confirmed by theApex Court on dismissal of appeal, we are unable to take adifferent view as has been taken by the Madras High Court andhas to be applied herein also. The other issue is regarding rate of depreciation. According to the revenue, rate of depreciationclaimed by the assessee should not have been allowed. The issueaforesaid has not been decided by the Tribunal properly. We find that when the civil work and electricgenerator are taken to be a part of wind mill, rate as isapplicable for the depreciation for wind mill would apply to thepresent case also. In the background aforesaid, we do not find thateven a dispute can be raised regarding rate of depreciationadmissible to the assessee. In our opinion, the Tribunal hasrightly allowed the appeal. Finding no illegality therein, we areunable to cause interference in the order passed by the Tribunal. Accordingly, the appeal in hands of the revenue is dismissed. (J.K.RANKA), J (M.N.BHANDARI), J. S/No.25Preeti, P.A. All cor r ect ion s m ade in t h e j u dgm en t / or der h ave been in cor por at ed in t h ej u dgm en t / or der bein g em ailed. Pr eet i Asopa P.A.