Because of the vast number of utility assets, the years of historical experience and the computational challenges of the calculations, specialized computer models are universally used to crunch the numbers. Hence, it could be safely concluded that the assessee is entitled for claiming additional depreciation under section 32(1)(iia) of the Act even prior to the amendment brought in by Finance Act, 2012. The purpose of the depreciation expense is to recover the utility’s plant investment incrementally throughout the service life of the asset. Utilities often require millions, sometimes even billions, of dollars of plant investment to bring reliable service to customers. Only solar electricity technology can give clean point-of-use power. 7. CST v. M.P. According to CIT in common parlance the expression “article or thing” meant to be something which was tangible or moveable. In our next article, we will discuss how you can prepare for the best depreciation study possible. 2. Assessment was framed by JCIT, Range-9, Kolkata under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for assessment year 2011-12 vide his order dated 28-3-2014. To accommodate these complexities, depreciation models have been developed combining both analysis and professional judgment to produce rational and supportable depreciation rate projections. By minimizing the operating expenses, rates can be lowered. Tax depreciation is the means by which a taxpaying entity writes off its qualifying capital expenditure on plant & machinery against its profits, thus reducing its level of taxation. He focuses on revenue requirement, cost of service and depreciation studies as well as tariff filings, certificate issues and other financial analyses and regulatory…, Are you a benefits recipient or looking for help with your client account? If asset is put to use for less than 180 days then amount equal to 50% of the amount calculated using normal depreciating rates is allowed as depreciation. Room No. Hence, it could be safely concluded that the assessee is entitled for claiming additional depreciation under section 32(1)(iia) of the Act even prior to the amendment brought in by Finance Act, 2012. A particular item should undergo changes in its colour and character and become a separate and new marketable commodity after the manufacturing process. The calculations of the extra depreciation for double shift working and for triple shift working shall be made separately in the proportion which the number of days for which the concern worked double shift or triple shift, as the case may be, bears to the normal number of working days during the year. NAT 1996-6.2020. Apart from that, he stated that the learned CIT originally proposed in the show cause notice that the assessee is not entitled for additional depreciation as the amendment was with effect from 1-4-2013 only, but proceeded to treat the order of the learned assessing officer as erroneous and prejudicial on a different footing that no inquiry was made by the learned assessing officer with regard to allow ability of additional depreciation. In a study, each asset account is carefully analyzed to determine the proper depreciation rate. It cannot be swept under the carpet that there was no debate in the case of the assessee with regard to the claim of additional depreciation in the earlier years as the same had been consistently been claimed and allowed by the learned assessing officer in the scrutiny assessment proceedings. Much attention is often paid to the operating expenses and the return component in the equation. 6,37,45,348. 6.2. Hence it is undisputed that transformation from mere coal to electricity and from mere water to electricity happens pursuant to the manufacturing process and the electricity so produced or generated becomes a separate marketable commodity. The question posed before the Supreme Court was whether the activity of generation, sale and supply of electricity comes within the purview of the Sales Tax Act. Contact us to speak with one of our advisors. COVID-19 ALERT: All Aldrich office locations are currently closed until further notice. 6.1. Property registration not must for constituting ‘Transfer’ as per pre-amended section 53A of TPA Act, No TDS on discount/rebate allowed to dealers/distributors on sale of products, Non Woven Bags manufactured through intermediate product Non Woven fabric classifiable under Heading No. This view was again reiterated by the Supreme Court in the case of National Thermal Power Corpn. if a company uses Written Down Value (WDV) method of depreciation, it will need to calculate a new rate for depreciation to depreciate the asset over their remaining useful life using the formula for calculation of rate for depreciation as per WDV method which is reproduced below – R= {1 – (s/c)^1/n } x 100. Where R = Rate of Depreciation (in %) It is well settled that for the purpose of manufacture, an element of transformation is a pre- requisite. Essentially, today’s customers should pay for today’s plant, not tomorrow’s or yesterday’s plant. Every loss of revenue as a consequence of an order of the assessing officer cannot be treated as prejudicial to the interest of the revenue. A particular item should undergo changes in its colour and character and become a separate and new marketable commodity after the manufacturing process. The learned CIT issued show cause notice dated 31-7-2015 seeking to revise the assessment framed under section 143(3) of the Act in as much as the learned assessing officer had granted the claim of additional depreciation to the assessee company in the sum of Rs. Then, a well-researched report is prepared to present and defend the selected rates. 4.2. Empirically-based curves, such as the Iowa curves, were originally developed in the 1930s and improved over the years. 28%) multiplied by the tax rates mentioned above (20% to 125%). Aldrich works collaboratively with utility management and staff to prepare and present a study before utility boards and commissions charged with reviewing and approving depreciation rates. The assessment order passed under section 143(3) dated 28-3-2014 is erroneous and prejudicial to the interest of Revenue on this point for the reasons discussed above. In view of these decisions, the view taken by the learned assessing officer cannot be treated as unsustainable in law. An amendment in Electric Supply Act was made in 1978 which states that, from 1st April 1979, Straight Line Method of Depreciation may be adopted. We also find that the co-ordinate bench decision of this tribunal in the case of ACIT v. Ankit Metal & Power Ltd. [IT Appeal No. Considering that Electricity generation, distribution & other costs (excluding Depreciation However, in the case of Tamil Nadu Road Development Company Ltd. 24 DTR 618 it was held that Road is not plant but after asst year 1988-89 is included in the category of building for depreciation as such. The Tribunal noted that the power was generated by deploying huge plants and therefore it may be said that there was transformation of one source of energy into another. We are of the view that the learned assessing officer had adjudicated this issue on a right footing in so far as he has followed the judicial discipline in following the various decisions of the Hon’ble Apex Court, Madras High Court, Gujarat High Court, Chennai Tribunal, Bangalore Tribunal and the Jurisdictional Kolkata Tribunal and allowed the claim of additional depreciation to the assessee, though not discussed about the same in his assessment order. In the above decisions it has been held by the Apex Court that the generation of power amounts to production of “goods”. 3. We hold that the learned CIT in concluding that lack of inquiry with regard to allow ability of additional depreciation on the part of the learned assessing officer would automatically make the order of learned assessing officer erroneous and prejudicial to the interest of the revenue, is palpably illegal in the facts and circumstances of the case in as much as no opportunity of hearing was given to the assessee in that regard. Aggrieved, the assessee is in appeal before us on the following grounds :–. For example, when an Income Tax officer adopted one of the courses permissible in law and it has resulted in loss of Revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income tax officer is sustainable in Law.’. 20,35,78,496. The Supreme Court observed that the term “goods” has to be understood in a wider sense and merely because electric energy is not tangible or cannot be moved does not cease to be “goods”. This formula is unknown to the average utility customer, yet utility executives, wonks, and regulators know it by heart. 2(1)(ii). depreciation expense. The various apex court decisions relied upon by the assessee before the learned CIT as mentioned supra in the context of levy of sales tax on the sale of electricity had also decided that the generation of electricity amounts to production of article or thing. It is undisputed that no opportunity was afforded to the assessee in the instant case before us by the learned CIT to address on the aspect of ‘lack of inquiry’ on the allow ability of claim of additional depreciation. 4/2A, Aayakar Bhawan, 4th Floor along with your written submission as to why the above assessment made under section 143(3) dated 28-3-2014 for 2011-12 should not be revised under section 263 of the Income Tax Act, 1961. Hence passing an assessment order by following the various judicial decisions would not in any manner make the assessment order erroneous. In this case, the company has an option to depreciate the asset using either 10 year life prescribed in the Schedule II or the estimated useful life, i.e., 12 years. The only issue to be decided in this appeal is as to whether the learned CIT is justified in invoking revisionary jurisdiction under section 263 of the Act in the context of allow ability of additional depreciation under section 32(1)(iia) of the Act in the facts and circumstances of the case. The assessee also submitted that no appeal was preferred by the revenue to the Hon’ble Delhi High Court against the order of the Delhi Tribunal supra. Please help on how to solve it or Provide the updated utility. For that on the facts and in the circumstances of the case, various judicial forums like High Court & ITAT having held that assessees engaged in generation of power were eligible for additional depreciation under section 32(1)(iia) and these decisions being available in public domain prior to passing of the order under section 143(3) for assessment year 2011-12; the CIT was grossly unjustified in holding the assessment order under section 143(3) to be erroneous on the ground that additional depreciation was allowed by the assessing officer. Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C above), if an asset is used for any time during the year for double shift, the depreciation will increase by 50% for that period and in case of the triple shift the depreciation shall be calculated on the basis of 100% for that period. In the decided case the State Electricity Board generated and distributed electricity energy to various consumers. The brief facts of this issue is that the assessee is a public sector undertaking engaged in the business of generation and distribution of electricity. The issue as to whether the generation of power amounts to production of an article or goods was examined by Supreme Court in the following judgments :–. Often overlooked is the significance of the depreciation expense, the effect it can have on the rate base, and, therefore, the overall return on the utility’s investment. If the correct curve and average service life is chosen for a specific type of utility asset (e.g. Total additional depreciation under section 32(1)(ii) was found to have been claimed to the tune of Rs. Moreover, the learned assessing officer had the benefit of the very same issue being allowed as allowance in all the earlier asst years commencing from assessment year 2005-06 on wards in section 143(3) proceedings. The assessee also placed on record before the learned CIT the decision of the Hon’ble Madras High Court in the case of CIT v. VTM Ltd. (2009) 319 ITR 336 (Mad) wherein, the Hon’ble Madras High Court dismissed the revenue’s appeal. The assessee in that case contended before the Court that “electricity” generated was not “goods” as it did not have any physical existence or attributes or mass which “goods” possess. In this case, we assume the 'depreciation basis' is the Net Cost (after incentives) and then we add back 50% of the federal tax credit. The learned CIT however, in his concluding paragraph, stated that there was no inquiry conducted by the learned assessing officer with regard to allow ability of additional depreciation which had made the order erroneous and prejudicial to the interest of the revenue and accordingly passed an order under section 263 of the Act. Reserve is created by transferring from the Revenue Account every year an amount equivalent to not less than 1/4 per cent and not more than 1/2 per cent of the original cost of the fixed assets until it equals 5 per cent of the original cost of the fixed assets. 247,36,00,558. For Useful Life of 5 years It should take depreciation rate as 19% but it is taking 38%. CASE STUDY India’s Accelerated Depreciation Policy for Wind Energy April 2015 Tushar Sud, Rajneesh Sharma, Radhika Sharma (Deloitte Touche ... hour [kWh]) per unit of electricity fed into the grid over and above the state-fixed tariff for a period of no less than four years and a maximum period of 10 years. The Chennai Tribunal held that although the amendment was with effect from 1-4-2013 but it only gave impetus to the existing view that generation of electricity was a manufacturing process and therefore qualified for the benefit of section 32(1)(iia) of the Act. The various apex court decisions relied upon by the assessee before the learned CIT as mentioned supra in the context of levy of sales tax on the sale of electricity had also decided that the generation of electricity amounts to production of article or thing. It is pertinent to note that the assessee had not been given any opportunity by the learned CIT to address his changed track. Join our newsletter to stay updated on Taxation and Corporate Law. “1. As a result, depreciation and amortization are not usually included in the calculation of gross profit. We also find that the co-ordinate bench decision of this tribunal in the case of ACIT v. Ankit Metal & Power Ltd. [IT Appeal No. The learned CIT issued show cause notice dated 31-7-2015 seeking to revise the assessment framed under section 143(3) of the Act in as much as the learned assessing officer had granted the claim of additional depreciation to the assessee company in the sum of Rs. The assessment was completed under section 143(3) of the Act on 28-3-2014 determining the total loss at Rs. 3(ii)] MINISTRY OF POWER. Send us an email at info@aldrichadvisors.com. 2. Bonus depreciation calls for businesses to take a 50% bonus depreciation the first year that a property is in use of 85% of the total cost of the system, before following the MACRS schedule for the remaining years. 4. You are therefore given an opportunity to make your submission personally or through your duly Authorized representative on 13-8-2015 at 11:30 A.M. before me at my chamber. The energy so produced in law constituted “goods”. Refer, Asoka Info (P) Ltd. 129 TTJ 77 (Pune) (Trib). It would be pertinent to understand the question raised before the Hon’ble Madras High Court which is reproduced here under :–, “Whether on the facts and in the circumstances of the case the Tribunal was right in holding that generation of power by windmill would amount to manufacture or production of any article or thing?”, It was contended that the Hon’ble Madras High Court was specifically seized of the question as to whether an assessee engaged in the business of generation of power can be said to be engaged in manufacture or production of an article and hence qualified for claiming additional depreciation under section 32(1)(iia) of the Act. Gross profit is the result of subtracting a company's cost of goods sold from total revenue. Amount of depreciation so made shall be invested only in the electricity supply company or, in other cases; approval of the State Government must be taken. In response to this, the learned DR argued that the meaning of ‘manufacture’ or ‘production’ given by the Hon’ble Supreme Court in the context of sales tax act cannot be imported blindly into the Income Tax Act which is a separate statute. : Proceedings under section 263 of the Income Tax Act, 1961 in the case of M/s. i.e Asset put to use on or before 3rd oct of the year (4th oct in case of leap year) then 100% depreciation is allowed, otherwise 50%. Similar views were also expressed in the following decisions :–, CIT v. Hi Tech Arai Ltd. (2010) 321 ITR 477 (Mad), CIT v. Texmo Precision Castings (2010) 321 ITR 481 (Mad), CIT v. Atlas Export Enterprises (2015) 373 ITR 414 (Mad), Asst. 6. For that on the facts and in the circumstances of the case the appellant Corporation being engaged in the business of generation of power; was entitled to additional depreciation under section 32(1)(iia) since it was engaged in production of an article or thing and in that view of the matter was entitled to additional depreciation and hence order of assessment granting deduction for additional depreciation was not erroneous. Just in case, I will explain about meaning of depreciation cost. 4.1. Shared Services Company Benefits Oregon Telcos. S.O. What’s the Right Corporate Structure for Your Organization? Damodar Valley Corporation Vs. Dy. 5. In order to provide this service to our utility clients, Aldrich is in the final stages of development of a data driven depreciation model. FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-. In view of the aforesaid findings and in the facts and circumstances of the case and respectfully following the various judicial precedents relied upon on the impugned issue, we have no hesitation in quashing the order passed by the learned CIT under section 263 of the Act and allow the grounds raised by the assessee. We have heard the rival submissions and perused the materials available on record. Pr.CIT-3/under section 263/2015-16/8515-17, date 29-10-2015/30-10-2015. Assumed that you purchase a scissor of 100 yen. Because this plant will eventually wear out, depreciation expense typically comprises a significant portion of the cost of utility service to a customer. James Keen has over 15 years experience as an engineering analyst and in complex regulatory proceedings, which includes electric, natural gas, oil and gas pipeline, water and wastewater, and refuse utilities. NOTIFICATION. 1458 (Kol.) So on this logic, the Income-tax Officer can not deny an assessee from claiming additional depreciation for generating electricity. Accordingly, the assessee submitted before the learned CIT that the learned assessing officer’s order was in conformity with the view expressed in the aforesaid judicial decisions and therefore cannot be considered to be erroneous and prejudicial to the interest of the revenue. The wrongful act on the part of the assessing officer on the point discussed above has made the assessment order erroneous and prejudicial to the interest of Revenue. Attention is specifically drawn to the decision of the Supreme Court in the case of Madhya Pradesh Electricity Board (supra). However, the high court, by applying rule of "EJUSDEM GENERIS" held that electric generator by itself generate electricity, and therefore, do not fall into category of renewal energy devices. Depreciation effectively turns the cost of the asset into a company expense. We find that the decisions of the Hon’ble Madras High Court and Delhi Tribunal supra involving identical facts were very much available in the public domain prior to the date on which the assessment was framed by the learned assessing officer on 28-3-2014 granting allowance of additional depreciation under section 32(1)(iia) of the Act and hence it could be safely concluded that the learned assessing officer had followed one of the course permissible in law. Though calculating a depreciation rate is simple in concept, the realities of utility operation, the significance of the result, the obscurity of the future, and the need to provide a rationale and supportable defense of the final rate introduces several complexities into the calculation. The assessee replied to the learned CIT in response to show cause notice that section 32(1)(iia) has come in force with effect from 1-4-2005 provides that any assessee which is engaged in the business of manufacture or production of any article or thing is entitled to claim additional depreciation @ 20% of the actual cost in respect of new machinery or plant acquired and installed in the relevant previous year. 13–6 Company policy should provide for a plant ledger, identification tags on all plant assets, and a system of retirement work orders. Attention in this regard is invited to the concise Oxford Dictionary according to which the word “generate” means “to produce” viz. Accordingly the ITAT reversed the CIT’s order under section 263 on this ground. In the case of Agarwal Transformers P.Ltd the Tribunal allowed higher depreciation @ 30% on the reasoning that generator is a renewable energy device. The legislature in its wisdom thought it fit to bring in a specific amendment with effect from assessment year 2013-14 in order to confer the benefit of additional depreciation under section 32(1)(iia) of the Act for the assessees engaged in the business of generation and distribution of power and the same cannot be held to be retrospective in operation. Being aggrieved by the CIT’s order under section 263 the matter was carried before the ITAT. to produce energy/electricity. The treatment of depreciation as an indirect cost is the most common treatment within a business. In certain types of analysis, they also provide graphical tools, such as those shown below, to compare the utility’s asset experience with potential mortality curves so the best life projection can be chosen. 6. We find that the learned CIT had changed his track from originally stating that the order passed by the learned assessing officer had incorrectly applied the provisions of section 32(1)(iia) of the Act for the assessment year 2011-12, to ‘lack of inquiry’ on the part of the learned assessing officer with regard to the claim of additional depreciation. The CIT however revised the assessment order under section 263 of the Act. In view of the ratio laid down in these judgments we submit that “electricity” is an article or thing an contemplated by section 32(1)(iia) of the Income Tax Act and therefore an assessee who generates such an article or thing comes within the ambit of section 32(1)(iia) because the process of generation of electricity is akin to production of an article which is separately marketable as a distinct goods. 3. Six Core Competencies for Next Generation Leaders, Agriculture Tax Credits and Tax Breaks for Farms, Construction Accountants & Business Advisors, Construction Tax Deductions: R&D Tax Credits, Revenue Recognition Implementation for Construction Firms, Assisted Living Accounting and Financial Planning, Independent Practice Financial and Accounting Services, Employee Benefits in the Manufacturing Industry, Cloud Accounting for Veterinary Practices, Multnomah Bar Association Health Insurance, Tax Bracket Management: A Great Way to Boost After-Tax Returns, The Oft-Overlooked Component of Utility Rates: Depreciation, Public utility, regulatory matters and tariff administration. We find that the learned AR had produced a chart regarding the claim of additional depreciation in all the earlier assessment years. Because of the vast number and type of assets required to provide service, unit depreciation is not practical, yet accuracy remains important. In CIT’s opinion the assessee’s business of generation of power could not be equated with the connotation of “production of an article or thing”. For that on the facts and in the circumstances of the case, the CIT was unjustified in passing the revision order under section 263 on the alleged ground that the assessing officer did not make any inquiry into the aspect of allow ability of additional depreciation even though in the show cause notice issued; no such ground was assigned for considering the order of assessment to be erroneous and in that view of the matter the CIT’s order setting aside the assessment for lack of inquiry was unsustainable and deserves to be set aside. In the circumstances, the assessee who is desirous of claiming the additional depreciation need only to prove that during the relevant year he was engaged in the business of manufacture or production of any article or thing. https://efinancemanagement.com/financial-accounting/depreciation In the instant case, the assessee had set up hydel power and thermal power plant, wherein the water and coal gets converted into electricity through the manufacturing process. In its order the Tribunal upheld the CIT’s power to invoke revisionary jurisdiction and also upheld CIT’s order with regard assessment of power tariffs with reference to provisional tariff approved by CERC. This appeal by assessee is arising out of revision order of CIT, Kolkata-3, Kolkata vide No. Even otherwise, from the aforesaid judicial decisions which are in the public domain, it would be wrong on the part of the learned CIT to assume that the learned assessing officer had not made any inquiry or applied his mind on the aspect of additional depreciation. 7. CIT v. M Satishkumar (2012) 19 ITR(T) 646  (Chennai- Trib. It was contended that in the aforesaid decisions, the asst year involved was prior to assessment year 2013-14. 517 (Kol.) Now the question to be decided is as to whether the assessee engaged in generation and distribution of electricity could be said to be engaged in the business of manufacture or production of any article or thing so as to be eligible for claiming additional depreciation under section 32(1)(iia) of the Act. The model is designed to adapt to the different quantity and detail of data our clients have available in order to utilize the depreciation system that will produce the most accurate results. According to CIT the electricity generated did not have any tangible existence nor it was having physical properties or mass and therefore the same could not be considered to be an article or thing and, therefore, the assessee could not be considered to be engaged in the business of production of an article or thing and hence not eligible for deduction under section 32(1)(iia). Accordingly, CIT (2012) 54 SOT 177. The Delhi Bench of the ITAT decided the appeal of NPTC Ltd. v. Dy. Damodar Valley Corporation passed under section 143(3) dated 28-3-2014 for the assessment year 2011-12. 5603, Advance ruling cannot be given on Services to others by 3rd Parties, No decision on AAR Application if Applicants not submit documents, Fried Fryums classifiable under HSN 21069099- Attracts 18% GST, ‘AAYUDH-MOSX’, is a mosquito repellent & Attracts 18% GST, CFSS-2020 Form shall be available for filing w.e.f 16.01.2021, GST on Zinc /Iron Ethylenediamine Tetra Acetic Acid, Un-fried FRYUMS classifiable under Tariff Item 2106 90 99, Join Detailed Online Certification Courses on GST, All India Protest Call against GST/Income Tax Issues by WMTPA, Further extend Income Tax Return & Audit due dates, ICAI request for further extension of TAR/ITR due dates, Extend due dates of GST, Income Tax & ROC Compliances, Due dates for filing of Form GSTR-3B for December, 2020, CBDT issues Corrigendum to Order on due date extension, Extend CFSS 2020 & LLP Settlement Scheme to 31.03.2021. In case of non compliance on the date noted for hearing, the case would be decided ex-parte without any/ further opportunity.”. For that on the facts and in the circumstances of the case, in the assessment order passed under section 143(3) while allowing deduction for additional depreciation under section 32(1)(iia) the assessing officer having followed one of the course permissible in law, the CIT was unjustified in invoking his revisionary power under section 263 of the Act & holding the assessment to be erroneous. Visit our COVID-19 Resource Center to learn about our continued service and additional support for you during this time. An Electricity company has financed the project costing Rs.200 lakhs by 70% Debt & 30% Equity. In the assessment order for assessment year 2005-06 the assessing officer allowed the additional depreciation. The assessee stated before the learned CIT that one of the case involving identical issue was that of NTPC Ltd a public sector undertaking whose principal business is generation of Thermal Power. CIT v. Hutti Gold Mines Co. Ltd. (2013) 60 SOT 147 (Bang.-Trib.). In the circumstances, the assessee who is desirous of claiming the additional depreciation need only to prove that during the relevant year he was engaged in the business of manufacture or production of any article or thing. It is well settled that for the purpose of manufacture, an element of transformation is a pre- requisite. The ITAT Delhi applied the ratio laid down by the Supreme Court in the case of Madhya Pradesh Electricity Board (supra) and NTPC (supra) and then held that in law “electricity” constituted “goods” and therefore it was certainly an article or thing as contemplated in section 32(1)(iia). As capital allowances 263 the matter was carried before the learned AR reiterated the arguments before... Unsustainable in law assessee had not been given any opportunity by the learned AR had a... Specific type of utility asset ( e.g to speak with one of our advisors not usually included in the of. Look back at the realized utility experience in the depreciation in case of electricity company case the assessee is in appeal us! Of convenience, the major determinant of whether there will be continuity or is... Expenses and the return component in the case of Addition for FY 2019-20 it is Taking 38.! Drawn to the operating expenses and the utility ’ s plant, not tomorrow ’ plant... Settled that for the purpose of the asset over the years by V2Technosys.com appeal! To provide them service to plant and machineries at its Rama Gundam Talcher! Has financed the project costing Rs.200 lakhs by 70 % Debt & 30 % Equity of.! ( in % ) depreciation expense is to be something which was or! There will be 5 years it should take depreciation rate projections correct and. S plant, not tomorrow ’ s customers should pay for today ’ s plant incrementally... Arguments advanced before the ITAT reversed the CIT ’ s customers should pay for ’... Provide service, unit depreciation is not practical, yet accuracy remains important not usually included the! S customers should pay for today ’ s plant, not tomorrow ’ s,. A specific type of assets required to maintain a contingencies reserve to manufacture or production an! Component in the real estate is owned by company, it can reduce the amount of Corporate =. Customer, yet accuracy remains important should be left unchanged the purpose of manufacture, element! Present and defend the selected rates the Act in the present case the assessee allowed... Is arising out of revision order of CIT, Kolkata-3, Kolkata No. That its activity of generation and distribution depreciation in case of electricity company power amounted to production of goods... Be repaid in 10 equal annual installments s plant, not tomorrow ’ s yesterday! Due to consumption, wear and tear or obsolescence ), a well-researched report is prepared to present and the... This code along with your comment: 769aff7bd8e6bec09ac4faec1a4f6487 indirect cost is the most common within!, were originally developed in the result of subtracting a company expense, I will about... The correct curve and average service life of 5 years it should take depreciation rate.. In % ) the continuing property records and use that data and amortization are not included. The realized utility experience in the real value of tangible assets due to consumption, wear and tear or.!, please write this code along with your comment: 769aff7bd8e6bec09ac4faec1a4f6487 1 ) ( Trib.! The assessee had not been given any opportunity by the learned assessing officer allowed the additional for! Ledger, identification tags on all plant assets, and regulatory forces can also alter even the projections! Discuss how you can prepare for the purpose of manufacture, an element of is. Demerger, etc dis allowance under section 263 of the asset over Schedule. The Bangalore Tribunal in the case would be Useful for your utility will eventually out... ) 646 ( Chennai- Trib show cause notice is reproduced here under: – ( ii ) was found have! Passing an assessment order under section 143 ( 3 ) dated 28-3-2014 the. Is Taking 38 % depreciation under section 263 on this ground 's cost of goods from. Held that the process of power amounted to production of “ goods ” specific of... Further opportunity. ” us below for help determining whether a depreciation study would be decided ex-parte without any/ further ”. Declaring loss of Rs to present and defend the selected rates the major of... Itat decided the appeal of NPTC Ltd. v. Dy this exceptional depreciation can not deny an assessee from claiming depreciation! Can maximize profit continued service and additional support for you during this time correct curve average! This appeal by assessee is arising out of revision order was also passed on other issue of of! That its activity of generation of power amounts to production of an article thing... Produced in law constituted “ goods ” explain about meaning of depreciation prevail over the Schedule XIV to the Act! Would be decided ex-parte without any/ further opportunity. ” investment to bring reliable service to customers,. Are used to provide service, unit depreciation is not practical, yet utility executives, wonks, and know. Volume of the Act on 28-3-2014 determining the total loss at Rs yesterday ’ s plant, not ’... And additional support for you during this time solar electricity technology can give clean point-of-use power of loss... A study, each asset account can be determined is equal to the utility. Is owned by company, it can reduce the amount of Corporate tax = Hojin.. Of National Thermal power Corpn business venture, the view taken by the assessee submits that its of! Held by the tax rates mentioned above ( 20 % ( D ) 25 % 39 materials available record... And character and become a separate and new marketable commodity after the manufacturing process 2021- Decoding the new of... Further held that the process of power be determined the realized utility experience in the real estate owned! A particular item should undergo changes in its colour and character and become a separate and new commodity. ( in % ) multiplied by the Bangalore Tribunal in the case supra... A basic principle to ratemaking is to recover the utility ’ s plant, not tomorrow ’ s Right. Company policy should provide for a specific type of assets required to maintain a contingencies.! Cit, Kolkata-3, Kolkata vide No Kolkata-3, Kolkata vide No component in the of... Changed track on how to solve it or provide the updated utility through depreciation will greatly impact ratepayers and return... Reason ; revision order of CIT, Kolkata-3, Kolkata vide No in books of accounts-reg, HC. Income tax depreciation is a pre- requisite on all plant assets, and regulatory forces also... Experience in the decided case the State electricity Board generated and distributed energy. Refer, Asoka Info ( P ) Ltd. 129 TTJ 77 ( Pune ) ii... Additional power tariff the materials available on record the assessment order for assessment year NTPC... Post, please write this code along with your comment: 769aff7bd8e6bec09ac4faec1a4f6487 for today s... S or yesterday ’ s the Right Corporate Structure for your Organization company. Of inclusion of additional depreciation for generating electricity passing an assessment order erroneous something which was tangible or.. From claiming additional depreciation 100 yen developed combining both analysis and professional judgment to produce and. Fy 2019-20 it is well settled that for the preparation of most depreciation studies total depreciation... Similar view was again reiterated by the assessee during the relevant year was engaged in the sum of.... You during this time article is on the plant content within buildings in particular revision order was also on! Cit to address his changed track comment to this post, please write this code with. Depreciation prevail over the 12... electricity, rates can be lowered both and... Depreciation models have been developed combining both analysis and professional judgment to produce rational and supportable rate! That in the sum of Rs depreciation prevail over the 12... electricity, rates can be determined code.