Calcutta High Court Confirms Additional Depreciation Eligibility for Thermal Power Generation

The Calcutta High Court delivered a verdict upholding the availability of a twenty percent additional depreciation for thermal power generation activities under Section 32(1)(iia) of the Income Tax Act, thereby dismissing the appeal brought forward by the Revenue department. The litigation centered on whether power generation infrastructure qualifies for the enhanced capital write-off typically reserved for manufacturing and production units under specific tax provisions.

This decision provides direct legal backing for taxpayers in the energy sector seeking to lower their taxable profits through higher capital asset write-offs, resolving past ambiguity regarding how thermal generation assets are classified. Additional depreciation allows businesses to claim an extra tax write-off on eligible new machinery over and above normal wear and tear allowances.

Taxpayers with pending assessments or ongoing litigation regarding depreciation claims on power generation equipment should evaluate their positions in light of this judicial confirmation. Companies must verify their asset classifications and documentation to support similar claims before filing upcoming tax returns or responding to departmental scrutiny.