THE DCIT, CIRCLE-1(1)(1), BARODA vs. M/S. GUJARAT CHEMICALS PORT TERMINAL COMPANY LIMITED, BARODA

The revenue has 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 the 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.

The briefs fact of the case are discussed under the grounds of appeal as under:-

During the course of assessment proceedings, the assessee has claimed depreciation on Jetty & Trestle @ 15% by treating the same as plant. The assessing officer observed and stated that word plant is given inclusive meaning u/s. 43(3) which nowhere includes building. The assessing officer has treated the Jetty & Trestle as building therefore restricted the depreciation to 10%.

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 Kandla Port Trust Vs. ACIT 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.

During the course of appellate proceedings, the assessing officer further noticed that assessee has claimed an amount of Rs. 27,57,433/- as diminution in value of stores and spares. The assessee explained that it has adopted consistent policy to provide such loss for example diminution in value of stores and spares which are not useful under the head diminution in value of assessee.

Aggrieved assessee filed appeal before he ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee by stating that the issue is covered by the

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 against 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 reliance on the judicial pronouncement of Rajkot Bench of ITAT in the case of Kandle Port Trust vs. ACIT 296 ITR 88. We have noticed that the identical issue has been decided by the Coordinate Bench of the ITAT in the case of the assessee itself in preceding assessment years from 2007-08 to 2008-09 and for assessment year 2002-03 vide ITA No. 3080 to 3081and 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.

Regarding second ground of appeal, the assessing officer has rejected the claim of diminution in value of stores and spares by treating the same as notional loss. The 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 file of the assessing officer. We have perused the above referred finding of the Co-ordinate Bench and the relevant part 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 that 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 mythology 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

In the combined result, the appeal of the revenue is partly allowed.