INCOME TAX ACT, 1961

Section 37(1)

Depreciation - Year of allowability - Establishment of solar power plant (SPP) owned by assessee in relevant year -

Assessee at the relevant time was engaged in manufacturing and dealing with pharmaceutical products and also development/sale of product technologies relating to pharmaceutical formulation. On scrutiny of the accounts, it revealed to the AO that the assessee-company had made an addition in the assets on account of Solar Power Plant on which depreciation at the rate of 80% and additional depreciation at the rate of 20% was claimed under the head 'Finance Lease Assets'. A perusal of the record would further show that M/s. Alpha Infrapop (P) Ltd. ('AIPL') got a contract from MP Power Management Co. Ltd. ('MPPMCL') and 'MPPMCL' to install a 'SPP' with a capacity of 20MW DC. A power purchase agreement was signed by 'MPPMCL' and 'AIPL' on 19-10-2012. M/s. Real Gold Developers LLP ('RGD') had purchased the assets and made investment of Rs. 120 crores. It was required to establish 16 blocks. These assets were later on given on lease to 'AIPL'. According to these assessees, they have purchased these assets and later on given them on lease. In order to satisfy himself that assessees had acquired assets and put them for use of their business purpose, the AO had called for various details, and issued a detailed questionnaire. AO after going through such details rejected the claim of the assessee. Held: MP Power Management Co. Ltd. an instrumentality of Madhya Pradesh State Government, had awarded a contract for establishment of 16 blocks of solar power plant, and such blocks were established, thereafter it as sold to Real Gold Developers LLP, and RGD LLP further sold these 16 blocks in part to five concerns, including the present two assessees. As far as purchase of these assets, its user for the purpose of business had not been denied by the AO himself in the subsequent year. He had allowed the depreciation to the assessee in the next assessment year. In the present year only dispute is year of admissibility of the depreciation. When no finding was recorded that the part of the assets owned by the assessees could be used independently for generation of power in a phased manner. Part of assets owned by these two assessees be treated as integrated part of total solar plant consisting of 16 blocks. If that be so, then installation of other blocks have been accepted by the department, and not challenged before the Tribunal. There was no disparity on the facts with regard to the blocks owned by the AMSL vis-a-vis of the assessee. There was no justification to interfere in the finding of the CIT(A) in the cases of present two assessees also, therefore, there was no merit in these two appeals, they were dismissed.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

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