This appeal by the Revenue is directed against the order of ld.CIT(Appeals)-2, Jaipur dated 23.10.2015 pertaining to A.Y. 2011-12. The revenue has raised the following ground of appeal :- (i) Whether on the facts and in the circumstances of the case and in law the ld. CIT (Appeals) has erred in deleting the disallowance of depreciation of Rs. 59,52,377/- claimed on foundation, plant and machinery (electrical items & Internal/External Lines) treating integral part of the Wind and allowing depreciation on these items at the same rate as Wind Mill.

2. Briefly stated the facts of the case are that the case of the assessee was picked up for scrutiny assessment and while framing the assessment under section 143(3) of the I.T. Act, 1961 (hereinafter referred to as the Act) the AO vide order dated 20.02.2014 made disallowance on account of late deposit of PF & ESI and ITA No. 1001/JP/2015 ACIT vs. Gangaur Exports Pvt Ltd. disallowance of excess depreciation. The assessee aggrieved by this order, preferred appeal before ld. CIT (A) who after considering the submissions and perusing the material available on record partly allowed the appeal. While allowing the appeal, the ld. CIT (A) followed the decision of earlier year in the assessees own case and deleted the disallowance made on account of excess depreciation.

3. Now the revenue is in appeal before us.

4. The only ground raised in this appeal is against deletion of disallowance of excess depreciation of Rs. 59,52,377/-.

4.1. The ld. D/R submitted that the ld. CIT (A) was not justified in deleting the disallowance. He insisted to set aside the order of ld. CIT (A) and restore the finding of the AO.

4.2. On the contrary, the ld. Counsel for the assessee reiterated that the issue is covered in favour of the assessee by the various judicial precedents.

4.3. We have heard rival contentions and perused the material available on record. The ld. CIT (A) has decided this issue in para 3.4.1 to 3.4.6 of her order by observing as under :- 3.4.1. I have considered the facts of the case, assessment order and the written submissions of the appellant. The facts of this issue are similar to the facts in the preceding year (Assessment Year 2010-11). In Assessment Year 2020-11, the CIT (A)-II, Jaipur (Appeal No. 02/13-

14) has also decided the matter by holding as under :- The issue in question is whether the foundation, plinth structure, crane platform, control room for windmill can be considered as building or is an integral part of windmill. So also, whether electrical items and internal / external lines fall under the head plant and machinery distinct from a windmill. I have perused the case laws cited by the appellant and the Assessing Officer. The case laws which directly deal with the issue at hand are : ITA No. 1001/JP/2015 ACIT vs. Gangaur Exports Pvt Ltd.

1. DCIT VS. Aminity Developers and builders ITA No. 1505/PN/2008-09 A.Y. 2008-09 (ITAT-Pune).

2. Poonawala Finvest & Agro (P) Ltd. vs. ACIT ITA No. 188 of 2006 dated 26.06.2008 (ITAT-Pune)

3. CIT-III, Ahemdabad vs. Parry Engineering and Electronics P vt. Ltd. Tax Appeal No. 604 of 2012 dated 29.01.2013 (High Court, Gujarat).

3.4.2. It has been held in the case of Poonawala Finvest (supra)-

the emphasis for granting higher rate of depreciation as far as civil construction work is concerned, the necessity was to examine the functional test of the said structure. A categorical evidence has to be placed that the structure is not a building but it is an integral part of plant and machinery As far as the question of depreciation in respect of transformer up to DP structure was concerned, the appellant has paid certain amount for the purpose of supplying of electrical items like transformer up to DP structure, internal line up to metering. This gadget was for transmission of electrical power generated up to sub-station of MSEB at site. The electrical energy so produced by the windmill was a waste if it was not transmitted to MSEB sub-stations. The function of such unit was that the electricity so generated was required to be transferred and transmitted to cable line up to sub- station, where the actual units so generated were stored and metered. Since this was the function of transformer up to DP structure, hence it ought to be held as an integral part of the windmill.

3.4.3. In the case of Aminity Builders And Developers (supra) it has been held that

there should not be quarrel that civil work is involved in the

erection of the foundation, but every civil work cannot be treated as civil work as required for bringing construction. In our opinion, cost on the foundation of the wind mill is eligible for the depreciation at the rate 80% or the rate which is applicable to the wind mill as it is integral part of cost of wind mill erection.

3.4.4. It has been held in the case of Parry Engineering & Electronics Ltd. (supra) that

Windmill would require ITA No. 1001/JP/2015 ACIT vs. Gangaur Exports Pvt Ltd. a scientifically designed machinery in order to harness the wind energy to the maximum potential. Such device has to be fitted and mounted on a civil construction, equipped with electric fittings in order to transmit the electricity so generated. Such civil structure and electric fittings, therefore, it can be well imagined, would be highly specialized. Thus, such civil construction and electric fitting would have no use other than for the purpose of functioning of the windmill. On the other hand, it can be easily imagined that windmill cannot function without appropriate installation and electrification. In other words, the installation of windmill and the civil structure and the electric fittings are so closely interconnected and linked as to form the common plant. As already noted, the legislature has provided for higher rate of depreciation of 80 per cent on renewable energy devises including windmill and any specially designed devise, which runs on windmill. The civil structure and the electric fitting, equipments are part and parcel of the windmill and cannot be separated from the same. The assessee claim of higher depreciation on such investment was, therefore, rightly allowed

.

3.4.5. In view of the above judgments, it is held that foundation, electrical items internal / external lines are an integral part of the windmill and are so closely interconnected and linked with the windmill so as to form a common plant as windmill. Therefore, depreciation of the above items has to be allowed at the same rate as windmill.

3.4.6. In respect to the civil work for the control room etc. it has been held in the case of Poonawala Finvest (supra)

In the instant appeal nothing was on record to establish that on the touchstone of functional test the control room or site development expenditure or even internal roads, were so designed that they could only be used for power generation as done by the windmill and meant for no other use. There was nothing on record, such as a report from a qualified person to establish that the site construction of control room, internal road, etc, was designed in such a manner to facilitate the power generation and distribution of windmill.

In this case also, the appellant has not been able to establish that the civil ITA No. 1001/JP/2015 ACIT vs. Gangaur Exports Pvt Ltd. work for the control room, plinth platform or the crane platform is an integral part of the plant and machinery of windmill. The civil work for the control room is a mere structure to house the equipment of the control room since the civil work of the control room has not been specially designed for a windmill. Therefore, depreciation on the civil work for the control room, plinth platform and crane platform, shall be allowable at the rate applicable to a building. Following the above judgment of my predecessor CIT (A)-II, in the assessees own case for the Assessment Year 2010-11. The depreciation on foundation, electrical items, internal / external lines are an integral part of the windmill and depreciation is allowed at the same rate as windmill, and depreciation on the civil work for the control room, plinth platform and crane platform, shall be allowable at the rate applicable to a building. The ground of appeal is partly allowed. The ld. CIT (A) has given a detailed finding of fact. The revenue has not controverted these findings. We, therefore, find no infirmity in the order of ld. CIT (A), which is hereby upheld. The ground of the revenue is rejected.

5. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 17/06/2016. Sd/- Sd/- Vh-vkj-ehuk] ( dqy Hkkjr) ( T.R. MEENA) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 17/06/2016. Das/ vknsk dh izfrfyfi vxzsf"kr@Copy of the order forwarded to:

1. The Appellant- The ACIT, Circle-6, Jaipur.

2. The Respondent- M/s. Gangaur Exports Pvt. Ltd., Jaipur.

3. The CIT(A).

4. The CIT,

5. The DR, ITAT, Jaipur

6. Guard File (ITA No. 1001/JP/2015) vknskkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar ITA No. 1001/JP/2015 ACIT vs. Gangaur Exports Pvt Ltd.