ITAT Remands AO’s Disallowance of Additional Depreciation on 160MW Solar Power Plant Due to Office Usage

Case Details: Viney Corporation Ltd. v. ACIT - [2023] 152 taxmann.com 638 (Delhi-Trib.)

Judiciary and Counsel Details

• • Kul Bharat, Judicial Member & M. Balaganesh, Accountant Member
  • R.K. Kapoor, CA for the Appellant.
  • Ms Swati Joshi, CIT DR for the Respondent.

Facts of the Case

Assessee-company had two manufacturing units/factories at ‘Bikaner’ and ‘Manesar’. During the year under consideration, two Solar Power Plants were installed at the respective factories. While furnishing the return of income assessee claimed additional depreciation on the Solar Power Plants.

During the scrutiny proceedings, the Assessing Officer allowed the claim of additional depreciation for the solar plant installed at Bikaner. With respect to the solar power plant at Manesar, AO contended that the solar plant was installed on the office rooftop, therefore, used for captive consumption in the office premises.

Accordingly, the additional depreciation claim was denied for the Manesar solar power plant, and the income was computed accordingly.

On appeal, Dispute Resolution Panel (DRP) upheld the additions made by AO, and the matter reached the Delhi Tribunal.

ITAT Held

The Tribunal held that sufficient evidence was made available by the assessee in the form of documents related to the acquisition of land, purchase of solar power plants, and installation and commissioning certificate confirming the installation and commissioning of these solar power plants.

Further, it was held that the lower authorities were not justified in treating the ‘factory premises’ as the ‘office premises’. The Solar Power Plant in question is of 160 Mega Watt capacity, and even in the wildest of imagination, it cannot be presumed to be installed for meeting the need of the office only.

Considering the fact that the Solar Power Plant is of very high capacity and it is stated at the bar that the office building is part of the factory and electricity so generated is used for the factory only, the issue was restored to AO for subsequent verification.