The DCIT, Circle-1(1)(1), Baroda V. M/s. Gujarat Chemicals Port Terminal Company Limited, Baroda

ITA 283/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8255 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MAURYA
• Assessee Lawyers: SHIVANI PATEL
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE DCIT, CIRCLE - 1(1), VADODARA (APPELLANT) VS M/S. GUJARAT CHEMICALS PORT TERMINAL COMPANY LTD., GROUND FLOOR, MATERIAL BHAVAN, RIL (VMD), PETROCHEMICALS, VADDARA - 391346 PAN: AAACG6861A (RESPONDENT) REVENUE BY : S H RI R. P. MAURYA , SR. D . R. ASSESSEE BY: MS. SHIVANI PATEL , A.R. DATE OF HEARING : 23 - 03 - 2 018 DATE OF PRONOUNCEMENT : 10 - 05 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2009 - 10 , ARI SES FROM ORDER OF THE CIT(A) - I, BARODA DATED 12 - 11 - 2014 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE HA S RAISED FOLLOWING GROUNDS OF APPEAL: - (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION ON JETTY &. TRESTLE @ 15%, AS CLAIMED BY THE ASSESSEE, TREATING T HE SAME AS PLANT AND MACHINERY, INSTEAD OF ALLOWING 10% APPLICABLE TO BUILDINGS, THEREBY DELETING THE ADDITION OF RS 4,67,96,583/ - MADE ON ACCOUNT OF DISALLOWANCE OF EXCESS CLAIM OF DEPRECIATION. I T A NO . 283 / A HD/20 1 5 A SSESSMENT YEAR 200 9 - 10 I.T.A NO. 283 /AHD/20 15 A.Y. 2009 - 10 PAGE NO THE DCIT VS. M/S. GUJARAT CHEMICALS PORT TERMINAL COMPANY LTD. 2 (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE ID.CIT (APPEALS) ERRED IN DELETING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF DIMINUTION IN VALUE OF SPARES OF RS 27,57,433/ - FOLLOWING THE DECISION OF HIS PREDECESSOR ON THE SAME ISSUE IN A.Y. 2007 - 08, WHEREIN IT WAS HELD THAT THE METHOD OF ACC OUNTING CONSISTENTLY FOLLOWED BY THE ASSESSEE AND DIMINUTION CLAIMED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07 WAS ACCEPTED BY THE DEPARTMENT, WITHOUT APPRECIATING THAT ISSUE OF WRITE - OFF, OF STOCK CAN BE EXAMINED BY THE AO, AS EACH YEAR IS DIFFERENT AND NO RES - JUDICATA CAN BE APPLIED. 3. TH E BRIEFS FACT OF THE CASE ARE DISCUSSED UNDER THE GROUNDS OF APPEAL AS UNDER : - 4. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSEE HAS CLAIMED DEPRECIATION ON JETTY & TRESTLE @ 15% BY TREATING THE SAM E AS PLANT. THE ASSESSING OFFICER OBSER VE D AND STATED THAT WORD PLANT IS GIVEN INCLUSIVE MEANING U/S. 43(3) WHICH NOWHERE INCLUDES BUILDING. THE AS SESSING OFFICER HAS TREATED THE JETTY & TRESTLE AS BUILDING THEREFORE RESTRICTED THE DEPRECIATION TO 10%. 5. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) ON THIS ISSUE . THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY STATING THAT THIS ISSUE IS NOW DIRECTLY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE RAJKOT BENCH IN THE CASE OF K ANDLA PORT TRUST VS. A CIT 296 ITR 88 (AT)/ 204 ITD - 1. HE FURTHER STATED THAT TRIBUNAL HELD THAT THESE ITEMS ARE PART OF PLANT AND MACHINERY AS THE ASSESSEE CARRY ON BUSINESS WITH AID OF THESE ITEMS. 6. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSE SSING OFFICER FURTHER NOTICED THAT ASSESSEE HAS CLAIMED AN AMOUNT OF RS. 27 , 57 , 433/ - AS DIMINUTION IN VALUE OF STORES AND SPARES. THE ASS ESSEE EXPLAINED THAT IT HAS ADOPTED CONSI STENT POLICY TO PROVIDE SUCH LOS S FOR EXAMPLE DIMINUTION IN VALUE OF STORES AND SPARES WHICH ARE NOT USEFUL UNDER THE HEAD DIMINUTION IN VALUE OF ASSESSEE. 7. AGGRIEVED ASSESSEE FILED APPEAL BEFORE HE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY STATING TH A T THE ISSUE IS COVERED BY THE I.T.A NO. 283 /AHD/20 15 A.Y. 2009 - 10 PAGE NO THE DCIT VS. M/S. GUJARAT CHEMICALS PORT TERMINAL COMPANY LTD. 3 DECISION OF HIS P REDECESSOR IN ASSESSEE S OWN CASE IN ASSESSMENT YEAR 2007 - 08. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. REGARDING FIRST GROUND OF APPEAL, THE ASSESSEE COMPANY HAS CLAIMED DEPRECIATION ON JETTY & TRESTLES @ 15%. HOWEVER , THE ASSESSING OFFICER HAS RESTRICTED IT TO 10% BY TREATING THE AFORESAID ASSETS AS BUILDING AS AGAIN ST THE CLAIM OF ASSESSEE OF SUCH ASSETS AS PART OF PLANT AND MACHINERY. THE LD. CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSE AFTER PLACING RELIANC E ON THE JUDICIAL PRONOUNCEMENT OF RAJKOT BENCH OF IT AT IN THE C A SE OF KANDLE PORT TRUST VS. ACIT 296 ITR 88. WE HAVE NOTICED THAT T H E IDENTICAL ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH OF THE ITAT I N THE CASE OF THE ASSESSEE ITSELF IN P RECEDING ASSESSMENT YEARS FROM 2007 - 08 TO 2008 - 09 AND FOR ASSESSMENT YEAR 2002 - 03 VIDE ITA NO. 3080 TO 3081 AND 3121 TO 3122/AHD/2011 AND ITA NO. 3115 TO 3120/AHD/2011 RESPECTIVELY . FOLLOWING THE DECISION OF THE CO - ORDINATE BENCHES, WE UPHOLD THE DECISION OF THE LD. CIT(A). THEREFORE , THE APPEAL OF THE REVENUE IS DISMISSED ON THIS ISSUE. 9. REGARDING SECOND GROUND OF APPEAL, THE ASSESSING OFFICER HAS REJECTED THE CLAIM OF DIMINUTION IN VALUE OF STORES AND SPARES BY T REATING THE SAME AS NOTIONAL LOSS. T HE LD. COUNSEL HAS BROUGHT TO OUR NOTICE THAT THE SIMILAR ISSUE WAS AROSEN IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 VIDE ITA NO. 3121 & 3122 /AHD/2011 WHEREIN THE HON BLE AHMEDABAD BENCH OF THE ITAT HAS SET ASIDE THE MATTE TO THE FIL E OF THE ASSESSING OFFICER . WE HAVE PERUSED THE ABOVE REFERRED FIN D ING OF THE CO - ORDINATE BENCH AND T H E RELEVANT PAR T OF THE SAME IS REPRODUCED AS UNDER: - 19. WITH THE ASSISTANCE OF THE LD. DR FOR THE REVENUE AND LD.AR FOR THE ASSESSEE, WE OBSERVE THA T THE CLAIM OF THE ASSESSEE WHICH IN ESSENCE REPRESENTS WRITE OFF OF UNUSABLE STORES AND SPARES DESERVES TO BE ALLOWED ON FIRST PRINCIPLE. HOWEVER, IN THE SAME VAIN, WE DO NOT FIND ANY REFERENCE TO THE DETAILS FILED BEFORE THE AO IN THIS REGARD TOWARDS MY THOLOGY OF IDENTIFYING UNSUABLE STORES AND SPARES AND SEGREGATING THEM FOR WRITE OFF PURPOSES. THE AO HAS NOT GIVEN ANY FINDING ON THE BONAFIDES AND CORRECTNESS OF SUCH TREATMENT. THUS, WHILE THE LOSS, IF ANY, ARISING ON WRITE OFF OF STORES AND SPARES IN I.T.A NO. 283 /AHD/20 15 A.Y. 2009 - 10 PAGE NO THE DCIT VS. M/S. GUJARAT CHEMICALS PORT TERMINAL COMPANY LTD. 4 THE GIVEN SET OF CIRCUMSTANCES ORDINARILY ARE ADMISSIBLE EXPENDITURE, THE FACTUAL ASPECTS REQUIRES TO BE EXAMINED. THEREFORE, WE CONSIDER IT EXPEDIENT TO RESTORE THE ISSUE BACK TO THE FILE OF THE AO FOR EXAMINATION OF THE ISSUE DE NOVO IN ACCORDANCE WI TH LAW. THE AO, WHILE DOING SO, SHALL BE ENTITLED TO VERIFY THE PROCESS FOR IDENTIFICATION OF THE SOURCE AND SPARES WHICH ARE SUBJECTED TO WRITE OFF/DIMINUTION. NEEDLESS TO SAY, A REASONABLE OPPORTUNITY SHALL BE GRANTED TO THE ASSESSEE WHILE DETERMINING THE ISSUE. THE ISSUE IS THUS SET ASIDE TO THE FILE OF AO. RESPECTIVELY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH, WE ALSO RESTORE THIS ISSUE TO T HE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH ACCO R DI NG TO THE DIRECTION LAID D OWN IN THE DE CISION O F THE CO - ORDINATE BENCH AS SUPRA. IN THE RESULT, THE 2 ND GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES . 10 . IN THE COMBINED R ESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 1 0 - 05 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 10 /05 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,