| The Tax Publishers2021 TaxPub(DT) 4656 (Mad-HC) : (2021) 438 ITR 0124 INCOME TAX ACT, 1961
Section 80-IA
AO that asset was put to actual physical use for any purpose before the lease transaction and the inference drawn by AO was solely based upon the claim for depreciation made by lessor. This cannot be the correct way of interpretation of a beneficial provision, which provides for deduction in certain cases, where conditions were fulfilled and the object of granting such deduction was to promote industrial growth. Merely because lessor had claimed 100% depreciation on the said asset cannot make the asset as 'previously used' to disqualify the asset from claiming deduction.
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Deduction under section 80-IA - Assessee leased out windmills - On which other person claimed depreciation - Whether such leased windmills can be said to be previously used
The assessee-company was engaged in the business of generation and distribution of electricity and for the assessment years under consideration, they filed their return of income and claimed deduction under section 80-IA of the Act. The said claim was rejected by the assessing officer on the ground that the assessee had leased out the windmills and it amounted to transfer and the windmills, which were leased out, were previously used by the lessor-company, who had claimed 100% depreciation and therefore, the windmills having been previously used for any purpose, the assessee does not fulfil the conditions stipulated in sub-section (3) of section 80-IA of the Act. Held: There was nothing brought on record by AO that asset was put to actual physical use for any purpose before the lease transaction and the inference drawn by AO was solely based upon the claim for depreciation made by lessor. This cannot be the correct way of interpretation of a beneficial provision, which provides for deduction in certain cases, where conditions were fulfilled and the object of granting such deduction was to promote industrial growth. Merely because lessor had claimed 100% depreciation on the said asset cannot make the asset as 'previously used' to disqualify the asset from claiming deduction.
Followed:Bajaj Tempo Limited v. CIT (1992) 3 SCC 78 (SC) : 1992 TaxPub(DT) 1271 (SC), Textile Machinery Corporation Limited v. CIT (1997) 186 ITR 195 : 1977 TaxPub(DT) 0805 (SC), CIT v. Nayyars Minerals Export (P) Ltd. (No.1) (1998) 231 ITR 864 (HP) : 1998 TaxPub(DT) 0339 (HP-HC), Capsulation Services (P) Limited v. CIT (1973) 91 ITR 566 (Bom.) : 1973 TaxPub(DT) 0366 (Bom-HC), CIT v. Ganga Sugar Corporation Limited (1973) 92 ITR 173 (Del) : 1973 TaxPub(DT) 0028 (Del-HC), CIT, West Bengal II v. Sainthia Rice & Oil Mills (1971) 82 ITR 778 Cal : 1971 TaxPub(DT) 0021 (Cal-HC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 1997-98 to 2002-03
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