Ita/8/2014 Of Commissioner Of Income Tax Iii v. The Hutti Gold Mines Co Ltd

IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 16 DAY OF SEPTEMBER, 2014 PRESENT THR HON’BLE MR.JUSTICE N.KUMAR ANT) THR HON’ BLE MRS.JUSTICK RATHNAKALA INCOME TAX APPEAL NO.8 OF 2014 BBRITIWE Ll.COMMISSIONER OF INCOME-TAX-III,QUEENS ROAD,QUEENS ROAD, BANGALORE. iaDEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE — 12(4),14/3, 4 FLOOR,OPP: RBI NRUPATUNGA ROAD,BANGALORE - 1..CIRCLE — 12(4),14/3, 4 FLOOR,OPP: RBI NRUPATUNGA ROAD,BANGALORE - 1.. .. APPELLANT (BY SRI E.LSANMATHI, ADV.) ANT) THE HUTTI GOLD MINES CO.LITD.,( FLOOR, NATIONAL GAMES VILLAGE,KHB SHOPPING COMPLEX,KORAMANGALA,BANGALORE — 47..PAN: AABCT 4338 GC _ RESPONDENT (BY SRI A.SHANKAR AND SRI M.LAVA, ADVS.) THIS INCOMB JAX APPKAL IS FILED UNDERSECTION 260-A OF INCOME TAX ACT 19601, ARISING OUTOF|ORDERDATEHDO2-O08-2013PASSEDINITANO.832/BANG/2012, FOR THE ASSESSMENT YEAR 2008-2009, PRAYING THIS HON'BLE COURT TO: DECIDETHE.KRORGOINGOUESTIONOF|LAWAND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE!FORMULATED BY THERE HON’BLE COURT AS DEBMBED FANI)SETASIDETHE.APPBLLATEORDER|DATED:02/08/2013PASSEDBY|THERINCOME|TAX|APPELLATE TRIBUNAL, ‘“B’ BENCH, BANGALORE, INAPPEAL PROCEEDINGS NO. I.T.A.NO.832/BANG/2012 FORASSESSMENT YBAR 2008-O9Y. THIS ITA COMING ON FOR ADMISSION THIS DAY,N.KUMAR J*)DELIVERED THE FOLLOWING: JU DBGMENT This appeal is preferred by the Revenue challenging|the order passed by the Tribunal, holding that the assesseein addition to carrying on the business of gold mining is alsoin the business of generation of electricity through windmill|as second line of business and therefore, he is entitled toerant an additional depreciation under the statute. TheTribunal also went into the question as to, ‘Whether Section32(1)(tta) of the Income Tax Act, 1961, includes the business of'generation and distribution of power to avail the benefit ofadditional depreciation7-and the same was held against the|Revenue. ”.. The facts in brief are: The assessee is a company engaged in the business ofsold mining extraction and windmill power generation. Areturn was filed on 27.09.2008, declaring total income ofRs.1,30,06,59,847/-. The case was selected for scrutiny andnotice under Section 143(2) of the Income Tax Act, 1961,was issued on 13.08.2009. In the course of the scrutinyassessment, it was noticed by the Assessing Officer that theassessee on 23.01.2008, had erected and commissioned thewindmill of power generation capacity of 4.5 MW. The costof the windmill was Rs.27,58,72,601/7/-. The assessee apartfrom claiming normal rate of depreciation of 80% also|claimed additional depreciation at 10% amounting to|Rs.2,75,87,268/-. The said additional depreciation was not|allowed by the assessing authority. The assessee preferred|an appeal against the said order. The Commissioner ofIncome Tax (Appeals) allowed the appeal and directed the|assessing authority to allow the aforesaid depreciation. Agegrieved by the said order, the Revenue preferred an appealto the Tribunal. The appeal was dismissed by the Tribunal. 3. The material on record shows that the assessee is generating electricity through windmill as a second line ofbusiness. It is a product of the assessee company. It is|covered under the words “article” or “thing”, which istradable / identifiable. In other words, the electricity falls|within the definition of Sale of Goods Act, 1930, and processof generation of electricity is akin to manufacture orproduction of an “article” or “thing”. The power generatedneed not necessarily be used in the production of assessee’sown products namely mining and extraction of gold. The useof electricity in the manufacturing activity of the corebusiness of the assessee is not a precondition for the grantof additional depreciation under the statue. Therefore, we donot see any merit in this appeal. Accordingly, this appeal isrejected. 4. However, we have not gone into the question of|applicability of Section 32(1)(iia) of the Income Tax Act, 1961,