-1- IN HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS 16TH DAY OF SEPTEMBER, 2014 PRESENT HON BLE MR.JUSTICE N.KUMAR AND HON'BLE MRS.JUSTICE RATHNAKALA INCOME TAX APPEAL NO.8 OF 2014 BETWEEN: 1. COMMISSIONER OF INCOME-TAX-III, QUEENS ROAD, BANGALORE. 2. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 12(4), 14/3, 4TH FLOOR, OPP: RBI NRUPATUNGA ROAD, BANGALORE - 1. APPELLANTS (BY SRI E.I.SANMATHI, ADV.) AND: HUTTI GOLD MINES CO.LTD., 3RD FLOOR, NATIONAL GAMES VILLAGE, KHB SHOPPING COMPLEX, KORAMANGALA, BANGALORE 47. PAN: AABCT 4338 C RESPONDENT (BY SRI A.SHANKAR AND SRI M.LAVA, ADVS.) -2- THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 02-08-2013 PASSED IN ITA NO.832/BANG/2012, FOR ASSESSMENT YEAR 2008- 2009, PRAYING THIS HON'BLE COURT TO: DECIDE FORGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY HON BLE COURT AS DEEMED FIT AND SET ASIDE APPELLATE ORDER DATED:02/08/2013 PASSED BY INCOME TAX APPELLATE TRIBUNAL, B BENCH, BANGALORE, IN APPEAL PROCEEDINGS NO. I.T.A.NO.832/BANG/2012 FOR ASSESSMENT YEAR 2008-09. THIS ITA COMING ON FOR ADMISSION THIS DAY, N.KUMAR J., DELIVERED FOLLOWING: JUDGMENT This appeal is preferred by Revenue challenging order passed by Tribunal, holding that assessee in addition to carrying on business of gold mining is also in business of generation of electricity through windmill as second line of business and therefore, he is entitled to grant additional depreciation under statute. Tribunal also went into question as to, Whether Section 32(1)(iia) of Income Tax Act, 1961, includes business of generation and distribution of power to avail benefit of additional depreciation? and same was held against Revenue. -3- 2. facts in brief are: assessee is company engaged in business of gold mining extraction and windmill power generation. return was filed on 27.09.2008, declaring total income of Rs.1,30,06,59,847/-. case was selected for scrutiny and notice under Section 143(2) of Income Tax Act, 1961, was issued on 13.08.2009. In course of scrutiny assessment, it was noticed by Assessing Officer that assessee on 23.01.2008, had erected and commissioned windmill of power generation capacity of 4.5 MW. cost of windmill was Rs.27,58,72,617/-. assessee apart from claiming normal rate of depreciation of 80% also claimed additional depreciation at 10% amounting to Rs.2,75,87,268/-. said additional depreciation was not allowed by assessing authority. assessee preferred appeal against said order. Commissioner of Income Tax (Appeals) allowed appeal and directed assessing authority to allow aforesaid depreciation. -4- Aggrieved by said order, Revenue preferred appeal to Tribunal. appeal was dismissed by Tribunal. 3. material on record shows that assessee is generating electricity through windmill as second line of business. It is product of assessee company. It is covered under words article or thing , which is tradable / identifiable. In other words, electricity falls within definition of Sale of Goods Act, 1930, and process of generation of electricity is akin to manufacture or production of article or thing . power generated need not necessarily be used in production of assessee s own products namely mining and extraction of gold. use of electricity in manufacturing activity of core business of assessee is not precondition for grant of additional depreciation under statue. Therefore, we do not see any merit in this appeal. Accordingly, this appeal is rejected. 4. However, we have not gone into question of applicability of Section 32(1)(iia) of Income Tax Act, 1961, -5- and question as to whether clarificatory or not is kept open to be decided at proper time. Sd/- JUDGE Sd/- JUDGE nvj Commissioner of Income-tax-III, Bangalore / Deputy Commissioner of Income-tax, Circle 12(4), Bangalore v. Hutti Gold Mines Co. Ltd