Facts of the Case

For the relevant assessment year, the respondent-assessee claimed depreciation on a windmill installed for the generation of electricity. The claim was based on the assertion that the windmill had been installed and commissioned before 31 March 1996.

The Assessing Officer disallowed the depreciation claim on the ground that the assessee had failed to establish that the windmill was commissioned before 31 March 1996 and, therefore, was not entitled to depreciation for the year under consideration.

On appeal, the Commissioner of Income Tax (Appeals) re-examined the evidence available on record and reversed the findings of the Assessing Officer. The Revenue challenged the order before the Income Tax Appellate Tribunal; however, the Tribunal also upheld the assessee’s claim and affirmed that the windmill had been commissioned before 31 March 1996.

 

Issues Involved

  1. Whether the assessee had successfully established that the windmill was commissioned before 31 March 1996.
  2. Whether depreciation under Section 32 could be denied on the ground that commissioning before the prescribed date was not proved.
  3. Whether any substantial question of law arose from the concurrent findings of fact recorded by the Commissioner (Appeals) and the Tribunal.

 

Petitioner’s Arguments (Revenue)

  • The Revenue contended that the assessee had failed to prove that the windmill had been commissioned before 31 March 1996.
  • It was argued that in the absence of satisfactory evidence regarding commissioning, depreciation could not be granted.
  • The Revenue challenged the orders of the Commissioner (Appeals) and the Tribunal granting depreciation to the assessee.

 

Respondent’s Arguments (Assessee)

  • The assessee maintained that the windmill had been duly installed and commissioned before 31 March 1996.
  • It relied upon the evidence placed on record before the appellate authorities.
  • The assessee argued that both the Commissioner (Appeals) and the Tribunal had correctly appreciated the evidence and had rightly concluded that the windmill stood commissioned before the relevant cut-off date.

 

Court Order / Findings

The Delhi High Court observed that both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal had concurrently found, on appreciation of the evidence, that the windmill installed by the assessee had been commissioned before 31 March 1996.

The Court held that these findings were pure findings of fact and did not suffer from any perversity. Since the concurrent factual findings were based on evidence and were not shown to be erroneous or unreasonable, no substantial question of law arose for consideration.

Accordingly, the appeal filed by the Revenue was dismissed.

 

Important Clarification

  • A concurrent finding of fact by the Commissioner (Appeals) and the Tribunal regarding commissioning of an asset will ordinarily not be interfered with by the High Court unless such finding is shown to be perverse.
  • Where evidence establishes that a windmill or other plant and machinery was commissioned before the relevant date, depreciation cannot be denied merely on the basis of a different factual view of the Assessing Officer.
  • The High Court's jurisdiction under Section 260A is confined to substantial questions of law and does not extend to re-appreciation of evidence in the absence of perversity.

Sections Involved

  • Section 32 of the Income-tax Act, 1961 – Depreciation on Plant and Machinery
  • Principles relating to commissioning and use of assets for depreciation purposes under the Income-tax Act, 1961.

 

Link to Download the Order

https://delhihighcourt.nic.in/app/case_number_pdf/2006:DHC:24079-DB/61317012006ITA432006_130325.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.