Is the rate of depreciation on new purchases and second hand purchases the same?

This case concerns the depreciation rate for windmills purchased and installed by a company. The assessee claimed an 80% depreciation rate on used windmills installed before April 1, 2012, based on pre-amended tax rules. However, the Assessing Officer reduced this to 15%, arguing that only windmills installed after April 1, 2012, were eligible for the lower rate, and denied the higher depreciation claimed.

IN THE INCOME TAX APPELLATE TRIBUNAL , ‘A’ BENCH, CHENNAI 

BEFORE SHRI MAHAVIR SINGH, VICE-PRESIDENT
AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER

I.T.A.No.581/Chny/2019
Assessment Year: 2015-16) 

M/s. Senthil Energy Pvt.Ltd.
6th floor, Senthil Towers,
Avinashi Road,
Coimbatore-641 018.
Appellant)

Vs 

Income Tax Officer,
Corporate Ward-4,
Coimbatore.
PAN: AASCS 7231G
Respondent)

Appellant by : Mr. N.V.Balaji, Advocate
Respondent by : Mr.Suresh Periasamy,JCIT

Date of hearing : 11.03.2021
Date of Pronouncement : 28 .04.2021 

O R D E R

PER G.MANJUNATHA, AM:

This appeal filed by the assessee is directed against the order of the learned CIT(A)-1, Coimbatore dated 21.01.2019 and pertains to assessment year 2015-16.

2. The assessee has raised following grounds of appeal:-

1. The order of the Hon’ble Commissioner of Income tax (Appeals) is opposed to law, facts and circumstances of the case and against the principles of natural justice.

2. a) The Hon’ble Commissioner of Income Tax (Appeals) erred in upholding the action of the earned assessing officer in denying the higher rate of depreciation on windmills installed prior to 01.04.2012. 

b) The Hon’bIe Commissioner of Income tax (Appeals) failed to appreciate that the term ‘instaIled’ is different from acquired and installed and the condition prescribed in New Appendix is only ‘installed”.

In view of the above grounds and such other additional grounds as may be adduced at time of hearing, it is prayed before the Hon’ble Income Tax Appellate Tribunal to,

a) reverse the order of Hon’ble CIT(A) denying the benefit of higher depreciation on windmill installed prior to 0I.04.2012.

b) give directions to the learned Assessing Officer to allow the depreciation on such windmill at the rate of 80%, and;c) pass such other consequential order as the Hon’bIe Income tax Appellate Tribunal may deem fit to render justice.”

3. Brief facts of the case are that the assessee company is engaged in the business of manufacturing power and energy filed its return of income for the assessment year 2015-16 on 28.09.2015 declaring loss of `4,53,11,195/- under the normal provisions and book profit of `1,56,45,624/- u/s.115JB of the Income Tax Act, 1961. During the year under consideration, the assessee has purchased used windmills installed on or before 31.03.2012 and claimed depreciation @ 80%, as per pre-amended Appendix-I. During the course of assessment proceedings, the Assessing Officer was of the opinion that depreciation on windmills purchased and installed on or after 01.04.2012 are eligible for depreciation @ 15% but not 80% as claimed by the assessee, accordingly, rejected excess depreciation claimed amounting to ` 4,41,26,837/- and added back to the total income. The relevant findings of the Assessing Officer are asunder:-

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