DCIT, New Delhi V. M/s Cement Corporation of India Ltd., New Delhi

ITA 5708/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1750 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 23-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 143(3); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.INTURI RAMA RAO, ACCOUNTANT MEMBER I.T.A .NO S . - 5708 & 5709 /DEL/201 3 (ASSESSMENT YEAR S - 200 6 - 07 & 2010 - 11 ) DCIT, CIRCLE - 3(1), NEW DELHI. (APPELLANT) VS CEMENT CORPORATION OF INDIA LTD., CORE - 5, SCOPE COMPLEX - 7, LODHI ROAD, NEW DELHI - 110003. PAN - AAACC0949B (RESPONDENT ) APPELLANT BY SMT. PARWINDER KAUR, SR. DR RESPONDENT BY NONE ORDER PER DIVA SINGH, JM THESE ARE TWO APPEALS FILED BY THE REVENUE ASSAILING THE CORRECTNESS OF THE TWO SEPARATE ORDERS DATED 05.08.2013 OF CIT(A) - VI, NEW DELHI PERTAINING TO 200 6 - 07 AND 2010 - 11 ASSESSMENT YEAR S . BOTH THESE APPEALS ARE BEING DECIDED TOGETHER FOR THE SAKE OF CONVENIENCE. 2. A T THE TIME OF HEARING , NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE. HOWEVER CONSIDERING THE MATERIAL AVAILABLE ON RECORD A ND THE PETITION DATED 29.06.2015 FILED BY THE ASSESSEE ON RECORD REQUESTING CLUBBING OF THE APPEALS IN 2006 - 07 AND 2007 - 08 ASSESSMENT YEARS OF THE ASSESSEE WHEREIN THE ASSESSEE HAS ANNEXED CONSOLIDATED ORDER DATED 30.03.2014 PASSED BY THE CO - ORDINATE BENCH IN ASSESSEE S OWN CASE FOR 2007 - 08 & 2008 - 09 & 2009 - 10 ASSESSMENT YEARS, IT WAS CONSIDERED APPROPRIATE TO PROCEED EX - PARTE QUA THE ASSESSEE RESPONDENT ON MERITS AFTER HEARING THE LD. SR. DR. DATE OF HEARING 02 .0 7 .2015 DATE OF PRONOUNCEMENT 12 .0 8 .2015 I.T.A .NO. - 5708 & 5709/ DEL/201 3 PAGE 2 OF 8 3. THE SOLE ISSUE IN ITA NO. - 5708/DEL/2013 IS PERTAINING TO THE QUARRY DEVELOPMENT EXPENSES. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED QUARRY DEVELOPMENT EXPENSES AMOUNTING TO RS.1,86,08,000/ - AS REVENUE EXPENSE. THE CLAIM WAS REJECTED HOLDING THE EXPENDITURE TO BE CAPITAL IN NATURE. THE ASSESSEE S EXPLANATION THAT THERE WERE TWO TYPES OF QUARRY DEVELOPMENT EXPENSE AND THE EXPENSE WHICH PERTAINED TO REMOVAL OF OVER - BURDEN AT THE LIMESTONE DEPOSITS AND EXPENSES PERTAINING TO LAYING OF ROADS, ERECTION OF STOCK YARD, CRUSHER RAMP ETC. W AS THE EXPENDI TURE WHICH W AS CAPITALIZED BY THE ASSESSEE. THE ISSUE OF THE QUARY DEVELOPMENT EXPENSES WHICH WAS REVENUE EXPENDITURE PERTAIN ED TO THE EXPENSES INCURRED FOR SALARY, WAGES ETC. A ND THIS WAS ACCEPTED IN APPEAL BY THE CIT(A) IN 2007 - 08, 2008 - 09 & 2009 - 10 ASS ESSMENT YEARS WAS NOT ACCEPTED BY THE AO . A PERUSAL OF THE AFORE - SAID ORDER OF THE CO - ORDINATE BENCH FURTHER SHOWS THAT THE CO - ORDINATE BENCH CONSIDERING THE IDENTICAL CLAIM OF THE REVENUE DISMISS ED THE APPEAL S OF THE REVENUE. IN THE AFORE - MENTIONED BAC KGROUND LD. SR.DR WAS REQUIRED TO ADDRESS THE ISSUE. 4. THE LD.SR.DR PLACED RELIANCE UPON THE ASSESSMENT ORDER HOWEVER CONS IDERING THE CONSOLIDATED ORDER O F THE CO - ORDINATE BENCH, NO DISTINGUISHING FACTS, CIRCUMSTANCES OR POSITION OF LAW WAS CANVAS SED IN ORDER TO JUSTIFY TAKING A CONTRARY VIEW. 5 . A PERUSAL OF THE RECORD SHOWS THAT THE ISSUE WAS CONSIDERED BY THE CO - ORDINATE BENCH IN THE FOLLOWING MANNER: - 3. GROUND NO.1 IS AGAINST THE DISALLOWANCE OF DEPRECIATION ON PLANT AND MACHINERY IN ALL THE THREE YEARS AS UNDER: - ASSESSMENT YEAR AMOUNT 2007 - 08 RS.53,57,552/ - 2008 - 09 RS.45,86,536/ - 2009 - 10 RS.39,29,428/ - 4. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFOR E US. WE FIND THAT LEARNED CIT(A) ALLOWED THE RELIEF TO THE ASSESSEE FOLLOWING THE ORDER OF HIS PREDECESSOR FOR AY 2003 - 04 TO 2006 - 07 WHEREIN THE CIT(A) HAS HELD AS UNDER: - IN THE PRESENT CASE ALSO, ALTHOUGH THE PRODUCTION HAS NOT BEEN CARRIED OUT IN THE YEARS UNDER CONSIDERATION BUT THE ASSETS ARE KEPT AS A STAND BY FOR THE WHOLE YEAR. MOREOVER, ALTHOUGH THE PRODUCTION IS SUSPENDED BUT THE OTHER ACTIVITIES OF THE UNITS ARE BEING CARRIED OUT. IN SUCH CIRCUMSTANCES, I FIND THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING THE DEPRECIATION ON THE ASSETS OF THESE I.T.A .NO. - 5708 & 5709/ DEL/201 3 PAGE 3 OF 8 UNITS. THE ADDITIONS MADE BY HIM ARE, THEREFORE, DIRECTED TO BE DELETED. 5. IT WAS BROUGHT TO OUR KNOWLEDGE THAT IN AY 2003 - 04 TO 2006 - 07, THE COMMITTEE ON DISPUTES DID NOT PERMIT THE REVENUE TO FILE APPEAL AGAINST THE ORDER OF LEARNED CIT(A) ON THE ABOVE GROUND. THE ASSESSEE IS A GOVERNMENT OF INDIA UNDERTAKING AND THE HIGH POWERED COMMITTEE FORMED BY THE GOVERNMENT I.E., COD DIRECTED THE CBDT TO ACCEPT THE ABOVE ORDER. WHEN THE ABOVE ORDER OF LEARNED CIT(A) IS ACCEPTED BY THE GOVERNMENT FOR AY 2003 - 04 TO 2006 - 07, THERE WOULD BE NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF LEARNED CIT(A) FOR AY 2007 - 08 TO 2009 - 10 WHEREIN HE HAS ONLY FOLLOWED THE ORDER OF HIS PREDECESSOR FOR AY 2003 - 04 TO 2006 - 07. IT WAS ALSO POINTED OUT BY THE LEARNED COUNSEL THAT NOW THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BHARAT ALUMUNIUM CO.LTD. 187 TAXMANN 111, WHEREIN THEIR LORDSHIPS HELD AS UNDER: - THOUGH AS PER SECTION 32(1), IN ORDER TO BE ENTITLED TO CLAIM DEPRECIATION, ASSET IS TO BE OWNED BY ASSESSEES AND IT IS ALSO TO BE USED FOR PURPOSE OF BUSINESS OR PROFESSION, BUT EXPRESSION USED FOR THE PURPOSE OF BUSINESS , WHEN APPLIED TO BLOCK OF ASSETS, WOULD M EAN USE OF BLOCK OF ASSETS AND NOT ANY SPECIFIC BUILDING, MACHINERY, PLANT OR FURNITURE IN SAID BLOCK OF ASSETS AS INDIVIDUAL ASSETS LOSE THEIR IDENTITY AFTER BECOMING INSEPARABLE PART OF BLOCK OF ASSETS. 6. IT WAS POINTED OUT BY THE LEARNED COUNSEL THA T EVEN IF SOME OF THE UNITS OF THE ASSESSEE ARE CLOSED, OTHER UNITS ARE CERTAINLY WORKING AND THE DEPRECIATION IS TO BE ALLOWED ON THE ENTIRE BLOCK OF ASSETS OF THE PLANT & MACHINERY AND NOT ONLY INDIVIDUAL PLANT AND MACHINERY OF EACH UNIT OF THE ASSESSEE. IN OUR OPINION, THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE ASSESSEE OF THE ASSESSEE. WHEN SOME OF THE UNITS ARE CLOSED AND SOME OF THE UNITS ARE WORKING, THEN, THE DEPRECIATION ON THE ENTIRE BLOCK OF ASSETS WOULD BE ALLOWED. ACCORDINGLY, GROUND NO.1 OF THE REVENUE S APPEAL IS REJECTED. 7. GROUND NO.2 OF THE REVENUE S APPEAL IN ALL THE THREE YEARS IS AGAINST THE DELETION OF THE DISALLOWANCE OF QUARRY DEVELOPMENT EXPENSES IN EACH YEAR AS UNDER: - ASSESSMENT YEAR AMOUNT 2007 - 08 RS.1,79,88,000/ - 2008 - 09 RS.2,13,95,000/ - 2009 - 10 RS.1,69,19,000/ - 6 . IN THE A BOVE FACTUAL BACKGROUND WHERE THE RECORD SHOWS THAT THE AO IN THE FIRST ROUND BY HIS ORDER U/S 143(3) ORIGINALLY ALLOWED THE CLAIM OF THE ASSESSEE, HOWEVER IN HIS ORDER U/S 143(3)/147 DATED 29.12.2011 FOLLOWING THE VIEW TAKEN IN 2007 - 08 ASSESSMENT YEAR THE ASSESSMENT WAS RE - OPENED. THE REASONING ON IDENTICAL FACTS IN THE ABOVE - QUOTED ORDER OF THE CO - ORDINATE BENCH W HICH INCLUDES 2007 - 08 ASSESSMENT YEAR SHOWS HAS NOT BEEN UPHELD. IN THE I.T.A .NO. - 5708 & 5709/ DEL/201 3 PAGE 4 OF 8 AFORE - MENTIONED FACTS AS THEY STAND WE FIND NO INFIRMITY WITH THE FOLLOWING FINDING OF THE CIT(A): - 5.3. SO FAR AS THE 3 RD GROUND OF APPEAL IS CONCERN ED, AN AMOUNT OF RS.1,86,08,800/ - INCURRED BY THE APPELLANT ON ACCOUNT QUARRY DEVELOPMENT EXPENSES WAS DISALLOWED BY THE AO TREATING THE SAME AS CAPITAL EXPENDITURE . HOWEVER, THE APPELLANT HAS SUBMITTED THAT QUARRY DEVELOPMENT EXPENDITURE IS INCURRED ON RE MOVAL OF OVERBURDEN' AT THE SITE OF LIMESTONE DEPOSIT WHICH ARE FOUND BY THE SURVEY OF THE SITE AND AT DIFFERENT PLACES BY THE EXPERT GEOLOGISTS AND ONCE SITES ARE LOCATED, SOIL, STONE ETC ARE REMOVED AND EXCAVATION IS DONE, IN ORDER TO REACH T HE DEPOSIT OF CEMENT GRADE LIMESTONE . THE EXPENDITURE PERTAINING TO REMOVAL OF OVERBURDEN ETC AT THE MINES IS HELD TO BE TYPE OF REVENUE EXPENDITURE BY MY PREDECESSORS CIT(A) FOR THE AYS 2007 - 08 AND 08 - 09 RESPECTIVELY AS WELL AS BY MY OWN DECISION IN APPEAL NO 91/11 - 12 FOR A Y 2009 - 10 DATED 2 9.07.2013 AND IN THE INSTANT CASE, DETAILS OF EXPENDITURE CLEARLY SHOWS THAT THE EXPENSES HAVE NOT RESULTED IN CREATION OF ANY ASSETS NOR HAVE THEY RESULTED IN ANY ENDURING BENEFIT TO THE APPELLANT. THE AO HAS NOT BROUGHT ANY FACTS ON RECORD TO SHOW AS TO WHICH EXPENSES DEBITED UNDER THE HEAD OF 'QUARRY DEVELOPMENT' WERE CAPITAL IN NATURE. THESE EXPENSES ARE IN THE NATURE OF SALARIES, WAGES, FUEL, POWER, RENT, AND OTHER EXPENSES FOR REMOVAL OF OVERBURDEN ETC. WHICH CANNOT BE SAID TO BE IN THE NATURE OF CAPI TAL EXPENDITURE . THE HON'BLE CALCUTTA HIGH COURT IN THE CASE CIT VS. KATRAS JHARIA COAL CO. LTD (1979) 118 ITR 6 (CAL) HELD THAT EXPENSES FOR REMOVAL OF OVERBURDEN WERE NOT FOR ACQUIRING ANY RIGHT OF PROPERTIES AND WILL ALSO NOT RESULT IN ANY ENDURING BENE FIT AND THEREFORE ARE REVENUE IN NATURE. SINCE THERE IS NO MATERIAL CHANGE IN FACTS AND CIRCUMSTANCES IN THE APPEAL UNDER CONSIDERATION. I DO NOT FIND ANY REASON FOR DEVIATING FROM THE FINDINGS GIVEN BY THE RESPECTIVE CIT(APPEALS) FOR THE ASSTT. YEARS 2007 - 08, 2008 - 09 AND 2009 - 10 RESPECTIVELY AS STATED ABOVE. THEREFORE, ADDITION OF RS.1,86,08,000/ - MADE BY THE AO IS DELETED AND THE GROUND OF APPEAL OF APPELLANT COMPANY IS ALLOWED ON THIS ISSUE. 7. IN VIEW OF THE ABOVE PECULIAR FACTS AND CIRCUMSTANCES, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER AS THE ISSUE IS COVERED ON FACTS IN FAVOUR OF THE ASSESSEE. IN THE ABSENCE OF ANY DISTINGUISHING FACTS OR CIRCUMSTANCES THE DEPARTMENTAL GROUND DEVOID OF MERIT IS DISMISSED. 8. IN THE RESULT , ITA NO. - 5708/DEL/2013 I S DISMISSED. ITA NO. - 5709/DEL/2013 9 . I N I TA NO. - 5709/DEL/2013 , TWO GROUNDS HAVE BEEN RAISED BY THE REVENUE. IT IS SEEN THAT G ROUND NO. - 2 IS IDENTICAL TO GROUND NO. - 1 IN THE EARLIER APPEAL . THE RECORD SHOWS THAT THE FACTS AND CIRCUMSTANCES FOR MAKING TH E ADDITION AND DELETING THE ADDITION REMAIN THE SAME. HEREIN ALSO THE LD. SR. DR PLACES RELIANCE UPON THE ASSESSMENT ORDER AND DID NOT REFER TO ANY CHANGE IN FACTS, I.T.A .NO. - 5708 & 5709/ DEL/201 3 PAGE 5 OF 8 CIRCUMSTANCES AND POSITION OF LAW . IN THE PECULIAR FACTS AND CIRCUMSTANCES, R ESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL PASSED BY THE CO - ORDINATE BENCH REFERRED TO IN THE EARLIER PART OF THIS ORDER AND THE REASONING TAKEN IN ITA NO. - 5708/DEL/2013 GROUND NO. - 2 IS DISMISSED. 10. THE FOLLOWING ISSUE HAS BEEN AGITATED BY THE RE VENUE IN GROUND NO. - 1: - 1. WHETHER THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING DEPRECIATION OF RS.35,53,318/ - ON THE CLOSED UNITS FOR LAST 8 YEARS, IGNORING THAT THE CONDITION OF SECTION 32(1) ARE NOT FULFILLED. 11 . THE RELEVANT FACTS OF THE SAME ARE FOUND DISCUSSED IN PARA 3 OF THE ASSESSMENT ORDER AT PAGES 1 TO 4 OF THE SAME WHEREIN THE AO DISALLOWED THE ASSESSEE S CLAIM OF DEPRECIATION TO THE EXTENT OF RS.35,53,318/ - IN VIEW OF THE FACT THAT OUT OF THE 10 PLANTS, ONLY 3 PLANTS WERE FOUND TO BE IN OPERATION FOR THE LAST 8 YEARS AS PER PARA 14 PAGE 51OF THE ANNUAL REPORT FILED BY THE ASSESSEE COMPANY WHICH BROUGHT OUT THAT PRODUCTION IN THE FOLLOWING UNITS REMAINED SUSPENDED: - 1. MANDHAR (CHATTISGARH) 2. CHARKHI DADRI (HARYANA) 3. AKALTARA (CHATTISGARH) 4. NAYAGAON & NAYAGAON EXPN. (MADHYA PRADESH) 5. KURKUNTA (KARNATAKA) 6. ADILABAD (ANDHRA PRADESH) 7. DELHI CEMENT GRINDING UNIT 8. BHATINDA GRINDING UNIT (NOT COMMISSIONED) 1 2. THE RECORD SHOWS THAT THE ASSESSEE CANVASSED BEFORE THE AO THAT THE ISSUE HAD BEEN AGITATED SUCCESSFULLY BEFORE THE CIT(A). HOWEVER HOLDING THAT THE ISSUE HAS NOT BEEN ACCEPTED BY THE REVENUE AS FURTHER APPEAL HAS BEEN FILED, THE DISALLOWANCE WAS MADE. 1 3. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE FACTS HAVE BEEN SUMMED UP IN PAGE 2 OF THE IMPUGNED ORDER BY THE CIT(A) IN THE FOLLOWING MANNER: - ' STATEMENT OF FACTS: - THE APPELLANT COMPANY IS A GOVT. OF INDIA UNDERTAKING AND ITS PRINCIPAL BUSINESS IS TO MANUFACTURE AND SALE OF CEMENT. HOWEVER, THE APPELLANT WAS DECLARED A SICK UNDERTAKING BY HON BLE BIFR ON 8.8.1996. SUBSEQUENTLY A SCHEME WAS APPROVED BY BIFR VIDE ITS ORDER DATED 3.5.2006 WHICH IS UNDER IMPLEMENTATION. THE APPELLANT HAS TEN CEMENT PLANTS OUT OF WHICH THREE PLANTS ARE IN A OPERATION AND AS PER THE SAN C TIONE D SCHEME, THE ASSETS OF SEVEN OTHER PLANTS ARE TO BE SOLD. HOWEVER THE AO DID NOT APPRECIATE THE FACTS AND DISALLOWED THE I.T.A .NO. - 5708 & 5709/ DEL/201 3 PAGE 6 OF 8 DEPRECIATION OF RS 35,53,318/ - ON NON - OPERATING PLANTS ON THE GROUND THAT THE IMPLEMENTATION OF THE SECOND PHASE OF SANCTIONED SCHEME DURING THE FYS 2006 - 07 AND 2007 - 08 TO BE FUNDED OUT OF THE SALE PROCEEDS OF THE SEVEN NON OPERATING UNITS. DEPRECATION CLAIMED FOR THE ASSTT YEAR UNDER CONSIDERATION WAS MAINLY FOR OFFICE EQUIPMENTS AND DIESEL GENERATION SET USED FOR DAY TO DAY FUNCTIONING AND IN ORDER TO MAINTAIN UP KEEP OF THE OFFICES, FACTORY AND CAMPUS OF THE UNITS OF THE APPELLANT COMPANY, WATER AND ELECTRICITY REQUIREMENTS FOR BOTH OFFICE AS WELL AS RESIDENTIAL COLONY WAS MET BY THE OPERATING D G SETS, THAT ONLY THE OPERATING OF THE P LANTS WAS SUSPENDED BUT THE OPERATION OF OTHER ACTIVITIES WAS MAINTAINED IN ORDER TO SUSTAIN, TILL THE SALE OF ASSETS/UNITS IS AFFECTED AS PER THE SANCTIONED SCHEME OF BIFR. MOREOVER PRIOR TO AY 2003 - 04, DEPRECATION ON NON - OPERATING PLANTS WERE ALLOWED AS DEDUCTION. HOWEVER, THE AO WAS OF THE VIEW THAT THE SAID SANCTIONED SCHEME OF THE SALE PROCEEDS OF SEVEN UNITS IS ONLY ON PAPER AND THAT THE SAME WAS NOT IMPLEMENTED TILL DATE. 14 . A PERUSAL OF THE FINDING AT PARA 5.2 SHOWS THAT THE ISSUE WAS CONCLUDED IN FAVOUR OF THE ASSESSEE BY THE THE CIT(A) FOLLOW I N G THE FINDING ON THE SAME FACTS TAKEN IN 2009 - 10 ASSESSMENT YEAR. FOR READY - REFERENCE, THE SAME IS REPRODUCED HEREUNDER: - 5. 2 . SO FAR AS THE 2 ND GROUND OF APPEAL IS CONCERNED, AN AMOUNT OF RS. 2,38,45,256 / - INCURRED BY THE APPELLANT ON ACCOUNT QUARRY DEVELOPMENT EXPENSES WAS DISALLOWED BY THE AO TREATING THE SAME AS CAPITAL EXPENDITURE . HOWEVER, THE APPELLANT HAS SUBMITTED THAT QUARRY DEVELOPMENT EXPENDITURE IS INCURRED ON REMOVAL O F OVERBURDEN' AT THE SITE OF LIMESTONE DEPOSIT WHICH ARE FOUND BY THE SURVEY OF THE SITE AND AT DIFFERENT PLACES BY THE EXPERT GEOLOGISTS AND ONCE SITES ARE LOCATED, SOIL, STONE ETC ARE REMOVED AND EXCAVATION IS DONE, IN ORDER TO REACH T HE DEPOSIT OF CEME NT GRADE LIMESTONE . THE EXPENDITURE PERTAINING TO REMOVAL OF OVERBURDEN ETC AT THE MINES IS HELD TO BE TYPE OF REVENUE EXPENDITURE BY MY PREDECESSORS CIT(A) FOR THE AYS 2007 - 08 AND 08 - 09 RESPECTIVELY AS WELL AS BY MY OWN DECISION IN APPEAL NO 91/11 - 12 FOR A Y 2009 - 10 DATED 29.07.2013 AND IN THE INSTANT CASE, DETAILS OF EXPENDITURE CLEARLY SHOWS THAT THE EXPENSES HAVE NOT RESULTED IN CREATION OF ANY ASSETS NOR HAVE THEY RESULTED IN ANY ENDURING BENEFIT TO THE APPELLANT. THE AO HAS NOT BROUGHT ANY FACTS ON RE CORD TO SHOW AS TO WHICH EXPENSES DEBITED UNDER THE HEAD OF 'QUARRY DEVELOPMENT' WERE CAPITAL IN NATURE. THESE EXPENSES ARE IN THE NATURE OF SALARIES, WAGES, FUEL, POWER, RENT, AND OTHER EXPENSES FOR REMOVAL OF OVERBURDEN ETC. WHICH CANNOT BE SAID TO BE IN THE NATURE OF CAPITAL EXPENDITURE . THE HON'BLE CALCUTTA HIGH COURT IN THE CASE CIT VS. KATRAS JHARIA COAL CO. LTD (1979) 118 ITR 6 (CAL) HELD THAT EXPENSES FOR REMOVAL OF OVERBURDEN WERE NOT FOR ACQUIRING ANY RIGHT OF PROPERTIES AND WILL ALSO NOT RESULT I N ANY ENDURING BENEFIT AND THEREFORE ARE REVENUE IN NATURE. SINCE THERE IS NO MATERIAL CHANGE IN FACTS AND CIRCUMSTANCES IN THE APPEAL UNDER CONSIDERATION , I DO NOT FIND ANY REASON FOR DEVIATING FROM THE FINDINGS GIVEN BY THE RESPECTIVE CIT(APPEALS) FOR TH E ASSTT. YEARS 2007 - 08, 2008 - 09 AND 2009 - 10 RESPECTIVELY AS STATED ABOVE. THEREFORE, ADDITION OF RS. 2,38,45,256/ - MADE BY THE AO IS DELETED AND THE GROUND OF APPEAL OF APPELLANT COMPANY IS ALLOWED ON THIS ISSUE , AS WELL. I.T.A .NO. - 5708 & 5709/ DEL/201 3 PAGE 7 OF 8 15 . A PERUSAL OF THE FOLLOWING RE ASONING OF THE CO - ORDINATE BENCH FURTHER BRINGS OUT THE FACT THAT THE ISSUE IS COVERED IN ASSESSEE S FAVOUR AS FAR AS THE PRESENT FORUM IS CONCERNED: - 3. GROUND NO.1 IS AGAINST THE DISALLOWANCE OF DEPRECIATION ON PLANT AND MACHINERY IN ALL THE THREE YEARS AS UNDER: - ASSESSMENT YEAR AMOUNT 2007 - 08 RS.53,57,552/ - 2008 - 09 RS.45,86,536/ - 2009 - 10 RS.39,29,428/ - 4. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFOR E US. WE FIND THAT LEARNED CIT(A) ALLOWED THE RELIEF TO THE ASSESSEE FOLLOWING THE ORDER OF HIS PREDECESSOR FOR AY 2003 - 04 TO 2006 - 07 WHEREIN THE CIT(A) HAS HELD AS UNDER: - IN THE PRESENT CASE ALSO, ALTHOUGH THE PRODUCTION HAS NOT BEEN CARRIED OUT IN THE YEARS UNDER CONSIDERATION BUT THE ASSETS ARE KEPT AS A STAND BY FOR THE WHOLE YEAR. MOREOVER, ALTHOUGH THE PRODUCTION IS SUSPENDED BUT THE OTHER ACTIVITIES OF THE UNITS ARE BEING CARRIED OUT. IN SUCH CIRCUMSTANCES, I FIND THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING THE DEPRECIATION ON THE ASSETS OF THESE UNITS. THE ADDITIONS MADE BY HIM ARE, THEREFORE, DIRECTED TO BE DELETED. 5. IT WAS BROUGHT TO OUR KNOWLEDGE THAT IN AY 2003 - 04 TO 2006 - 07, THE COMMITTEE ON DISPUTES DID NOT PERMIT THE REVENUE TO FILE APPEAL AGAINST THE ORDER OF LEARNED CIT(A) ON THE ABOVE GROUND. THE ASSESSEE IS A GOVERNMENT OF INDIA UNDERTAKING AND THE HIGH POWERED COMMITTEE FORMED BY THE GOVERNMENT I.E., COD DIRECTED THE CBDT TO ACCEPT THE ABOVE ORDER. WHEN THE ABOVE ORDER OF LEARNED CIT(A) IS ACCEPTED BY THE GOVERNMENT FOR AY 2003 - 04 TO 2006 - 07, THERE WOULD BE NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF LEARNED CIT(A) FOR AY 2007 - 08 TO 2009 - 10 WHEREIN HE HAS ONLY FOLLOWED THE ORDER OF HIS PREDECESSOR FOR AY 2003 - 04 TO 2006 - 07. IT WAS ALSO POINTED OUT BY THE LEARNED COUNSEL THAT NOW THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BHARAT ALUMUNIUM CO.LTD. 187 TAXMANN 111, WHEREIN THEIR LORDSHIPS HELD AS UNDER: - THOUGH AS PER SECTION 32(1), IN ORDER TO BE ENTITLED TO CLAIM DEPRECIATION, ASSET IS TO BE OWNED BY ASSESSEES AND IT IS ALSO TO BE USED FOR PURPOSE OF BUSINESS OR PROFESSION, BUT EXPRESSION USED FOR THE PURPOSE OF BUSINESS , WHEN APPLIED TO BLOCK OF ASSETS, WOULD M EAN USE OF BLOCK OF ASSETS AND NOT ANY SPECIFIC BUILDING, MACHINERY, PLANT OR FURNITURE IN SAID BLOCK OF ASSETS AS INDIVIDUAL ASSETS LOSE THEIR IDENTITY AFTER BECOMING INSEPARABLE PART OF BLOCK OF ASSETS. 6. IT WAS POINTED OUT BY THE LEARNED COUNSEL THA T EVEN IF SOME OF THE UNITS OF THE ASSESSEE ARE CLOSED, OTHER UNITS ARE CERTAINLY WORKING AND THE DEPRECIATION IS TO BE ALLOWED ON THE ENTIRE BLOCK OF ASSETS OF THE PLANT & MACHINERY AND NOT ONLY INDIVIDUAL PLANT AND MACHINERY OF EACH UNIT OF THE ASSESSEE. IN OUR OPINION, THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE ASSESSEE OF THE ASSESSEE. WHEN SOME OF THE UNITS ARE CLOSED AND SOME OF THE UNITS ARE WORKING, I.T.A .NO. - 5708 & 5709/ DEL/201 3 PAGE 8 OF 8 THEN, THE DEPRECIATION ON THE ENTIRE BLOCK OF ASSETS WOULD BE ALLOWED. ACCORDINGLY, GROUND NO.1 OF THE REVENUE S APPEAL IS REJECTED. 7. GROUND NO.2 OF THE REVENUE S APPEAL IN ALL THE THREE YEARS IS AGAINST THE DELETION OF THE DISALLOWANCE OF QUARRY DEVELOPMENT EXPENSES IN EACH YEAR AS UNDER: - ASSESSMENT YEAR AMOUNT 2007 - 08 RS.1,79,88,000/ - 2008 - 09 RS.2,13,95,000/ - 2009 - 10 RS.1,69,19,000/ - 16 . IN THE AFORE - MENTIONED PECULIAR FACTS AND CIRCUMSTANCES WHEREIN THE ONLY ARGUMENT OF THE LD. SR. DR WAS THAT SHE RELIES UPON THE ASSESSMENT ORDER AND NO DISTINGUISHING FACT, CIRCUMSTANCE OR A DECISION CONTRARY TO THE VIEW BEING TAKEN WAS BROUGHT TO OUR NOTICE , W E FIND THAT IN THE ABSENCE OF POINTING OUT ANY INFIRMITY IN THE IMPUGNED ORDER THE GROUND HAS TO BE DISMISSED. ACCORDING AS NO GOOD REASON HAS BEEN MADE OUT TO COME TO A CONTRARY CONCLUSION RESPECTFULLY THE FOLLOWING THE ORDER OF THE CO - ORDINATE BENCH IN THE SAME SET OF FACTS AND CIRCUMSTANCES , THE DEPARTMENTAL GROUND IS DISMISSED . 17 . IN THE RESULT, THE APPEALS OF THE RE VENUE ARE DISMISSED AS PER THE PRONOUNCEMENT MADE AT THE TIME OF HEARING ITSELF . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 2 T H OF AUGUST , 2015. S D / - S D / - (INTURI RAMA RAO) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 2 /08 /2015 * AMIT KUMAR * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI