Additional depreciation u/s 32(1)(iia)

Tax queries 5031 views 6 replies

MANIAN and RAO

Chartered Accountants

32 Points Joined March 2008

A company, manufacturing rubber products and which already owned windmills, put up an additional windmill in the previous year relevant to Asst. Year 2003-04. Electricity generated is both captively used by it in its manufacturing activity and also sold to State Electricity Board. During the year, there was increase in installed capacity of rubber products by more than 20% over last year. By this, it claimed additional depreciation of 15% u/s 32(1)(iia) on all the eligible assets, including new windmill. The A.O disallowed additional depreciation on the windmill on the following grounds: (1) Eletricity produced is not an “article or thing” as contemplated in Sec. 32(1)(iia) (2) Even if so, electricity has been captively used (meaning that it wont tantamount to manufacture or production). (3) Increase in production of 20% over last year’s as required in the section should be applied even for the electricity.

Is A.O’s stand sustainable? Any decision or material to support the case may also be quoted.

Replies (6)

ranjit

Student

103 Points Joined October 2007

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thanks in advance

ranjit

Student

103 Points Joined October 2007

could anybody provide memafa notes of rajesh makkar sirs .i m real need of it.My emaid id is toranjit @ gmail.com.

thanks in advance

ranjit

Guest

453105 Points Joined August 2012

Originally posted by :MANIAN & RAO
"	A company, manufacturing rubber products and which already owned windmills, put up an additional windmill in the previous year relevant to Asst. Year 2003-04. Electricity generated is both captively used by it in its manufacturing activity and also sold to State Electricity Board. During the year, there was increase in installed capacity of rubber products by more than 20% over last year. By this, it claimed additional depreciation of 15% u/s 32(1)(iia) on all the eligible assets, including new windmill. The A.O disallowed additional depreciation on the windmill on the following grounds: (1) Eletricity produced is not an “article or thing” as contemplated in Sec. 32(1)(iia) (2) Even if so, electricity has been captively used (meaning that it wont tantamount to manufacture or production). (3) Increase in production of 20% over last year’s as required in the section should be applied even for the electricity. Is A.O’s stand sustainable? Any decision or material to support the case may also be quoted.	"

Guest

453105 Points Joined August 2012

Originally posted by :MANIAN & RAO
"	A company, manufacturing rubber products and which already owned windmills, put up an additional windmill in the previous year relevant to Asst. Year 2003-04. Electricity generated is both captively used by it in its manufacturing activity and also sold to State Electricity Board. During the year, there was increase in installed capacity of rubber products by more than 20% over last year. By this, it claimed additional depreciation of 15% u/s 32(1)(iia) on all the eligible assets, including new windmill. The A.O disallowed additional depreciation on the windmill on the following grounds: (1) Eletricity produced is not an “article or thing” as contemplated in Sec. 32(1)(iia) (2) Even if so, electricity has been captively used (meaning that it wont tantamount to manufacture or production). (3) Increase in production of 20% over last year’s as required in the section should be applied even for the electricity. Is A.O’s stand sustainable? Any decision or material to support the case may also be quoted.	"

sweta

student

21 Points Joined December 2007

can a cosmetics producing factory can claim additional depreciation.pls rep its urgent

Krishan

49 Points Joined July 2008

The provision does not state that the setting up of a new machinery or plant should have any operational connectivity to the article or thing that is already being manufactured by the assessee. Hence, the assessee is entitled to additional depreciation on setting up of a wind mill.