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DEPRECIATION (Income Tax)

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( Author )
23 April 2011

1) As per Sec. 32 of Income Tax act and rule 5(1) wind mills are eligible for an accelerated depreciation @80% under the head plant and machinery, without option.
2) As per the ‘ Guidelines for Generation based incentives’ issued by the ‘Indian Renewable energy Development Agency’ established under the control of Ministry of New and Renewable Energy, Government of India, now, from 2009, every new Wind mill owner has to get registered with the Agency for claiming Accelerated Depreciation or Generation Based incentives. They have now made it optional and both cannot be claimed at the same time.
3) Thus now the situation arises that if the Wind mill owner goes for 80% depreciation as per Income Tax act, they cannot claim Generation based incentives.
4) But the assessee intends to go for Generation based incentives. So what will be the position of Depreciation under income tax act? Can the assessee go for 15% general rate of depreciation applicable for regular plant and machinery?
5) Please provide your valuable opinion at the earliest.


CA MANOJ GUPTA

( Expert )
23 April 2011

tHE RATE OF 80 PER CENT IS MANDATORY AS PER SECTION 32 R/W RULE 5(1) AND APPENDIX I TO THE IT RULES, 1962


CA Mahesh Poddar

( Author )
24 April 2011

I accept you view.. but in the particular case if you go through the notification/circular issued by IREDA WORKING UNDER MNRE which is the controlling ministry for wind mills, they talk about registration with them to get accelerated depreciation / generation based incentive. Please guide as to which recourse should be taken in case Government itself is contradicting itself in two difference acts.... The circular can be seen at http://www.ireda.gov.in under OPERATIONAL GUIDELINES FOR WIND GBI AND AD..
THANX FOR RESPONSE


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