Windmill Depreciation : Civil work & machinery

This query is : Resolved

CA Koustubh Vishnu Bhatye (Querist)
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07 July 2011 Will some one provide me the article or copy of judgement in case of ACIT Vs. M/s Amaravathy Textiles (ITAT)?

Whether the AO has right to bifurcate between civil work and electrical material and machinery in case of Wind Mill for claiming higher rate of depreciation i.e.80%?

CA Koustubh Vishnu Bhatye

CA Koustubh Vishnu Bhatye (Querist)
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14 July 2011 Waiting for experts' opinion.......

CA Koustubh Vishnu Bhatye

CA Koustubh Vishnu Bhatye (Querist)
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01 August 2011 Waiting for experts' opinion................

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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03 August 2025 Regarding the case ACIT vs M/s Amaravathy Textiles (ITAT) and the issue of depreciation on windmills:

Key Points:
The Income Tax Appellate Tribunal (ITAT) has dealt with whether the Assessing Officer (AO) can bifurcate the cost of the windmill between civil works and electrical machinery.

Civil works (like foundation, buildings, etc.) generally attract a lower depreciation rate.

Electrical machinery and machinery are eligible for a higher rate of depreciation, often 80% under the Income Tax Act.

The question is whether the AO can split the cost and apply different rates on each part.

ITAT Judgment Summary (ACIT vs Amaravathy Textiles):
The tribunal held that the AO has the right to bifurcate the cost into civil and machinery components.

Depreciation rates should be applied as per the nature of the asset component.

This means machinery part gets the higher rate (80%), while civil works get the standard rate (usually 10% under WDV method).

The ruling promotes the principle that depreciation rates are asset-specific and not uniformly applied on the entire windmill cost.

Practical implication:
When claiming depreciation on windmills, one should segregate the cost between civil works and machinery.

Depreciation claim should be done accordingly.

The AO can and will examine bills/invoices and assess the bifurcation.

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