DCIT, CHENNAI V. Ennore Port Ltd., CHENNAI

ITA 369/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77372 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 14-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAMJCIT
• Assessee Lawyers: K MEENATCHI SUNDARAM
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' $ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NOS. 369 & 370/MDS/2014 ( / ASSESSMENT YEARS: 2008-09 & 2009-10) DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-II(1), NEW BLOCK, V FLOOR, CHENNAI-34. VS. M/S. ENNORE PORT LTD. 23, 1 ST FLOOR, PT LEE CHENGALVARAYA, NAIKER MAALIGAI, RAJAJI SALAI, CHENNAI-600 001. PAN:AAACE9013B ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.GURU BHASHYAM,JCIT /RESPONDENT BY : MR. K.MEENATCHI SUNDARAM, C.A / DATE OF HEARING : 8 TH MAY, 2014 /DATE OF PRONOUNCEMENT : 27 TH JUNE, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: BOTH THESE APPEALS ARE FILED BY THE REVENUE AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-II, CHENNAI DATED 28.10.2013 FOR THE ASSESSMENT YEARS 2 008-09 & 2009-10 RESPECTIVELY. THE ONLY GRIEVANCE OF THE REVENUE IN BOTH THESE APPEALS IS THAT COMMISSIONER OF INCOM E TAX (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION ON PORT CREATION CHARGES AT 15%. 2 ITA NOS 369 & 370/MDS/2014 2. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT DISALLOWED DEPRECIATION CLAIMED ON PORT CREATION CHARGES HOLDI NG THAT IN THE CASE OF THE ASSESSEE BARRIER CREATED BY ROCKS C AN NEITHER BE TREATED AS BUILDING NOR PLANT & MACHINERY. WITHO UT APPRECIATING THE SUBMISSIONS OF THE ASSESSEE THAT EXPENDITURE INCURRED FOR CREATING BREAKWATER BARRIE R FOR THE PURPOSE OF CREATING PORT, THEREFORE DEPRECIATION IS ALLOWABLE ON SUCH PORT CREATION CHARGES INCURRED BY THE ASSES SEE. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER YEA RS IN ITA NOS. 1681 & 1682/MDS/2010 DATED 29.11.2011 WHICH DECISION WAS FOLLOWED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND ALLOWED THE CLAIM OF THE ASSESSEE. 3. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER O F THE ASSESSING OFFICER. 4. HEARD BOTH SIDES. PERUSED THE ORDER OF THE LOWER AUTHORITIES AND THE DECISION OF THIS TRIBUNAL RELIE D ON. ON A 3 ITA NOS 369 & 370/MDS/2014 PERUSAL OF THE DECISION OF THIS TRIBUNAL DATED 29.1 1.2011 CITED ABOVE, WE FIND THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND THE SAID DECISION WAS FOLLOWED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND ALLOWED TH E APPEAL OF THE ASSESSEE. WHILE DOING SO, THE COMMIS SIONER OF INCOME TAX (APPEALS) OBSERVED AS UNDER:- 4 .3 I H A V E CONSID E R E D T H E ABOVE SUBMISSIONS OF THE A SS ES S EE . AS C L A IM E D B Y TH E AS S E S SEE , THE ISSU E OF DEPRECIATION ON THE PORT CR EA TION CH A RG ES H A S A LREADY B EE N D EC ID E D B Y TH E HONB LE ITAT CHENN A I IN ASSESSE E 'S OWN C ASE IN A.YS . 2002 - 03 A ND 2 003 - 04 (IN ITA NOS . 1681&1682 (MDS)/2010 D A T E D 29 . 11 . 2011) . THE R E L E V A NT PORT ION OF TH E D E CIS I ON OF T HE ITAT IS R E PRODUC E D AS UN DE R: 5. TH E SEC OND I SS U E TO BE C ON S ID E R E D BY TH E TRIBUNAL I S TH E QU ES T I ON OF D E PRECIATI O N ON EX P E NS ES IN C URR E D IN CO NN EC TION WIT H SE TTING UP OF 'BR E AKW A T E R ' IN TH E PORT . TH E ASSE S SEE HAS CON S TRUCT E D TH E BR E AKWAT E R IN TH E MOUTH OF TH E PO R T AFTE R MINING BLA C K RO C K BOULD E R S FROM IT S OWN MIN ES IN THE LAND L E A SE D OU T BY TH E G OV ER NM E NT OF TAMIL NADU . IN ORD E R T O OBTAIN TH E L E AS E SI T E FOR MINING OF TH E BOULD E RS , TH E A SSE SS EE HAD T O PAY LICENSE F EES TO TH E DI S TRI C T C O LL EC TOR FOR AND ON B E HAL F OF TH E S TAT E G O VE RNM E NT. SUCH L E A SE F EE S PA I D BY T H E A SSESSEE AS W E LL AS T H E OTH E R IN C ID E NTAL EXPE NDITUR E T O BRING TH E BO U LD E R S AND B L OC K S TO TH E PORT H AV E B EE N ADD ED TO TH E C OST O F T H E BR EA KWA TE R , BY TH E ASSE S SEE- PO R T . TH E E NTIR E C ON CE PT OF C ON S TRU C TION OF BREAKWAT E R AND ITS A CC OUNTING, DO C UM E NTATION A N D L E G A L FR A M E W E R E ALL C ARR IE D OUT IN T E RMS OF TH E OP E RATIONAL GUID E LIN E S I SS U ED B Y TH E MINI S TRY OF SHIPPING AND TR A NSPORT . TH E AS SE SSING AUTHORITY A CCE P TED THAT PART OF TH E DIR E CT C O S T OF CON S TRU C TING TH E BR E A K WAT E R A S A C A P IT A L ASS E T AND GRANT E D D E PR E CIATION TH E REON . BUT TH E AS SE SSING AUTHORITY DI D NOT ALLOW SU C H 4 ITA NOS 369 & 370/MDS/2014 D EP R E CIATION. ON THAT PAR T OF E XP E NS E S R E LATING TO LIC E NC E F EES AND TH E OTHER IN C ID E NTAL E XP E N SE S IN BRINGING TH E BOULD E RS AND BLO C KS FROM TH E MINING SITES TO TH E POR T . THIS PORTION OF TH E E XP E NDITUR E HA S B EE N E XCLUD E D BY TH E A S SESSING A U THORITY WH I L E GRANTING D E PR E CIATION O N BR E AKWAT E R. THI S HAS B EE N ALLOW E D BY TH E C OMMIS S ION E R OF IN C OM E- TA X (APP E AL S ). 6 . W E C ONSID E R E D TH E I SSUE. W E AGR E E W IT H T H E C OMMIS S ION E R OF IN COM E- TAX(APP E AL S ) . TH E LI CE N CE F EE WA S P AID BY TH E PO R T TRU S T TO TH E D IST RI CT CO LL EC TOR FOR OBTA I NIN G T H E LE A SE RIGHT TO EXT RAC T TH E MIN E- SIT ES FOR O BTAINI NG BOULD E RS AND BLO C K S FOR C ON S TRUCTING TH E BR E AKWAT E R AT TH E MOUTH OF T H E PORT . TH E R E FOR E , TH E LI CE NC E F EE PAID BY T H E A SSESSEE POR T - TRU ST WAS I N C URRED EXCLUSIV E LY F O R C ONSTRU C TING TH E A SSE T R EC OGNI ZE D AS ' BR E AKW A T E R '. TH E OTH E R E XPENS ES W E R E ALSO IN C URR E D BY T H E ASS ESSEE PORT - TRU S T S OL E LY F O R THE PURPOS E OF ULTIMAT E LY CON S TRUCTING TH E B R E AKWATER. TH E R E FOR E, TH E AS SESS ING AUTHORITY WAS NOT J U S TIFI E D IN EXC LUDING THO SE E XP E NDITUR E FROM THE COMPUTATION OF TH E C OST OF AS SE T WHIL E GRANTIN G D E PR E CIATION ALLOWANC E . TH E C OMMISSION E R OF INCOM E- TA X (APP E AL S ) HAS GRANT E D TH E R E LI EF , WHI C H I S RIGHTFUL IN LAW . TH E ORDER OF T H E C OMMIS S ION E R OF INCOME - TAX(APP E AL S ) ON THIS POINT IS UPH E LD. ',' 4 . 4 THU S , THE HON BLE ITAT HAD HE L D TH A T THE EXP E NS E S ON P OR T CREATION CHAR G ES (I. E . B Y W A Y OF SETTING UP OF 'BREAKWAT E R' IN THE PORT BY PUTTING ROCK BOULD E RS IN TH E M O UTH O F THE PORT) IS A CAPIT A L EXPENDITURE AN D E LIGIBLE FOR DEPRECIATION. SINC E THE PRES E NT CLA IM OF D E PR E CIA T ION IN A.YS. 2008-0 9 A ND 2009- 10 IS CONTINUATION OF TH E S A M E F AC TS , TH E A BOVE D EC ISION OF TH E ITAT IS EQU A LLY A PPLI C ABL E FOR TH E ASSESSMENT Y E ARS UND E R CO NSID E RATION AS WELL. THER E FORE, THE ASSESSING OFFIC E R IS DIRECTED TO A LLOW TH E C L A IM OF D E PR EC I A TION ON THE PORT CREATION CHARGES, AS PER THE DECISION OF TH E ITAT IN A.YS . 2 00 2 - 03 AND 2003-04 (IN ITA NOS.1 6 8 1 &1682 (MDS)/2010 DATED 29 . 11 . 20LL) , IN BO T H OF T H E A SS E SSM E NT YEARS UNDER CONSIDERATION. T H E ASSESSEE SUC CEE DS IN ITS APP EA LS IN 5 ITA NOS 369 & 370/MDS/2014 T HI S REGA RD. 5. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-OR DINATE BENCH OF THIS TRIBUNAL, WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND REJECT THE GROUNDS RAISED BY THE REVENUE. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY THE 27 TH DAY OF JUNE, 2014 AT CHENNAI. SD/- SD/- ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDRA PRASAD ) . ( ' )* ) ACCOUNTANT MEMBER / , JUDICIAL MEMBER/ ) , ) /CHENNAI, - /DATED, 27 TH JUNE, 2014 SOMU /0 10 /COPY TO: 1. APPELLANT 2. /RESPONDENT 3. 2 () /CIT(A) 4. 2 /CIT 5. 0 6 /DR 6. /GF .