INCOME TAX
INSTRUCTION NO. 5208/1994
Dated: December 22, 1994
Section(s) Referred: 32
Statute: Income - Tax Act, 1961
Under entries III(S)(xiii)(1) and (m) of Appendix I to the Income-tax Rules, 1962 dealing with rates of depreciation on Renewal Energy Devices 100 percent depreciation is admissible on wind mills and any specifically designed devices which run on wind mills and also on any special devices including electric generators and pumps running on wind energy.
2. It has been brought to the notice of the Board that there may be misuse of this concession by certain unscrupulous tax-payers. Two types of misuse are suspected. One is increasing the price of the machinery through collusion between the manufacturers and the beneficiaries so that a higher deduction can be availed of for tax purposes without actually incurring the stored expenditure. Secondly depreciation is being claimed without physically installing the machinery.
3. The Board desires that in the cases selected for scrutiny the above aspects should be fully verified before the claim is allowed, and however appropriate, certification by the administrative Ministry should be insisted upon. In other cases, selective survey may be undertaken to verify this point.
4. The Chief Commissioners, Directors General of Income-tax may coordinate among themselves and take appropriate action in this regard.
F.No. 225/359/94-ITA.II