04 August 2008
A company manufacturing certain products also owned windmills. It put up an addl. windmill in the P.Y relevant to A.Y 2003-04. Electricity generated is both captively used by it and sold to Electricity Board. With increase in installed capacity of its manufactured products by more than 20% over last year, it claimed additional depreciation u/s 32(1)(iia) on all new eligible assets including windmill. A.O disallowed such claim on windmill for reasons below:
1) Electricity produced is not an “article or thing” as contemplated in Sec. 32(1)(iia) 2) Even if so, electricity has been captively used 3) There is no installed capacity for windmill.
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