DCIT, CHENNAI v. M/s. Ennore Port Limited, CHENNAI

ITA 1682/CHNY/2010 | 2003-2004
Pronouncement Date: 29-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 168221714 RSA 2010
Assessee PAN AAACE9013G
Bench Chennai
Appeal Number ITA 1682/CHNY/2010
Duration Of Justice 1 year(s) 1 month(s) 18 day(s)
Appellant DCIT, CHENNAI
Respondent M/s. Ennore Port Limited, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 29-11-2011
Date Of Final Hearing 29-11-2011
Next Hearing Date 29-11-2011
Assessment Year 2003-2004
Appeal Filed On 11-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH CHENNAI BEFORE DR. O.K.NARAYANAN VICE-PRESIDENT AND SHRI HARI OM MARATHA JUDICIAL MEMBER ITA NOS.1681 & 1682(MDS)/2010 & C.O. NOS.136 & 137(MDS)/2010 ASSESSMENT YEARS: 2002-03 & 2003-04 THE DEPUTY COMMISSIONER OF INCOME-TAX COMPANY CIRCLE II(1) CHENNAI. VS. M/S.ENNORE PORT LIMITED 23 RAJAJI SALAI CHENNAI-600 001. PAN AAACE9013G. (APPELLANT) ( RESPONDENT/CROSS OBJECTOR) APPELLANT BY : SHRI R.B.NAIK IRS COMMISSIONER OF INCOME-TAX. RESPONDENT BY : SHRI K.MEENATCHI SUNDARAM FCA. DATE OF HEARING : 29 TH NOVEMBER 2011 DATE OF PRONOUNCEMENT : 29 TH NOVEMBER 2011 O R D E R PER DR.O.K.NARAYANAN VICE-PRESIDENT: THESE TWO APPEALS ARE FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEARS ARE 2002-03 AND 2003-04. THE CROSS OBJECTIONS ARE FILED BY THE ASSESSEE. THE APPEALS AND THE CROSS - - ITA 1681 & 1682 & CO 136 & 137OF 2010 2 OBJECTIONS ARE DIRECTED AGAINST THE ORDERS OF THE C OMMISSIONER OF INCOME-TAX(APPEALS)-III AT CHENNAI DATED 30-7-2 010. THEY ARISE OUT OF THE ASSESSMENTS COMPLETED UNDER SECTIO N 143(3) READ WITH SECTION 147 OF THE INCOME-TAX ACT 1961. 2. WE HEARD SHRI R.B.NAIK THE LEARNED COMMISSIONE R OF INCOME-TAX APPEARING FOR THE REVENUE AND SHRI K .MEENATCHI SUNDARAM THE LEARNED CHARTERED ACCOUNTANT APPEARI NG FOR THE ASSESSEE. 3. THE FIRST ISSUE RAISED BEFORE THE TRIBUNAL IS T HAT THE COMMISSIONER OF INCOME-TAX(APPEALS) WENT WRONG IN A LLOWING DEPRECIATION ON ELECTRICAL FITTINGS AT THE RATE OF 25% AS AGAINST THE RATE OF 15% ALLOWED BY THE ASSESSING AUTHORITY. IT IS THE CASE OF THE REVENUE THAT THE ENTRY OF FURNITURE AND FIT TINGS GIVEN IN THE DEPRECIATION TABLE INCLUDES ELECTRICAL FITTING S AS WELL AND THEREFORE THE RATE OF DEPRECIATION APPLICABLE TO E LECTRICAL FITTINGS SHOULD BE THE SAME AS APPLICABLE TO FURNITURE AND F ITTINGS WHICH IS 15%. THE CASE OF THE ASSESSEE IS THAT ELECTRICA L FITTINGS ARE NOT AS SUCH IDENTIFIABLE WITH FURNITURE AND FITTING S AND THIS FACT - - ITA 1681 & 1682 & CO 136 & 137OF 2010 3 HAS BEEN OVERLOOKED BY THE ASSESSING AUTHORITY WHE REAS THE NATURE OF DIFFERENT SUCH FITTINGS WAS WELL APPRECIA TED BY THE COMMISSIONER OF INCOME-TAX(APPEALS). 4. WITHOUT PREJUDICE TO THE FINDING OF THE COMMISSIONER OF INCOME-TAX(APPEALS) ON HIS FINDING OF THE EXACT NATURE OF ELECTRICAL FITTINGS ENTITLED FOR DEPRECIA TION AT 25% WE ONLY SAY THAT THE COMMISSIONER OF INCOME-TAX(APPEAL S) COULD HAVE CALLED FOR A REMAND REPORT FROM THE ASSESSING AUTHORITY SO THAT IF AT ALL A MISREADING OF THE FACT IS MADE BY THE ASSESSING AUTHORITY THAT COULD HAVE BEEN REALIZED BY THAT AU THORITY AND THE MATTER SETTLED THERE. IN MATTERS OF SHEER FACTS I T IS ALWAYS BETTER TO APPRECIATE THE FRAMEWORK WITH MEANINGFUL MUTUAL DISCUSSION RATHER THAN CONTESTING ON THE GROUND OF ENORMOUS AR GUMENTS. IN THE PRESENT CASE WHEN THE ASSESSEE CONTENDS THAT T HE ASSESSING AUTHORITY HAS MISCONSTRUED A PORTION OF T HE ELECTRICAL FITTINGS AS FURNITURE AND FITTINGS THE POSITION CO ULD HAVE BEEN BETTER CURED BY THE COMMISSIONER OF INCOME-TAX(APPE ALS) AFTER HAVING A WORD WITH THE ASSESSING AUTHORITY THROUGH A REMAND REPORT. THEREFORE THE PROCEDURE ADOPTED BY THE CO MMISSIONER - - ITA 1681 & 1682 & CO 136 & 137OF 2010 4 OF INCOME-TAX(APPEALS) IN DECIDING THIS ISSUE IS NO T ACCEPTABLE. THE FACTS ALWAYS REMAIN THE SAME AND THE SAME CAN B E EXPLAINED BY THE ASSESSEE TO THE SATISFACTION OF TH E ASSESSING AUTHORITY AS WELL. THE ORDER OF THE COMMISSIONER O F INCOME- TAX(APPEALS) ON THIS POINT IS SET ASIDE AND THE ISS UE IS REMITTED BACK TO THE ASSESSING AUTHORITY FOR FRESH CONSIDERA TION IN THE LIGHT OF THE SUBMISSIONS THAT MAY BE MADE BY THE ASSESSEE AS WELL AS KEEPING IN MIND THE OBSERVATIONS MADE BY THE COMMIS SIONER OF INCOME-TAX(APPEALS). 5. THE SECOND ISSUE TO BE CONSIDERED BY THE TRIBUN AL IS THE QUESTION OF DEPRECIATION ON EXPENSES INCURRE D IN CONNECTION WITH SETTING UP OF BREAKWATER IN THE P ORT. THE ASSESSEE HAS CONSTRUCTED THE BREAKWATER IN THE MOUT H OF THE PORT AFTER MINING BLACK ROCK BOULDERS FROM ITS OWN MINES IN THE LAND LEASED OUT BY THE GOVERNMENT OF TAMIL NADU. I N ORDER TO OBTAIN THE LEASE SITE FOR MINING OF THE BOULDERS T HE ASSESSEE HAD TO PAY LICENCE FEES TO THE DISTRICT COLLECTOR F OR AND ON BEHALF OF THE STATE GOVERNMENT. SUCH LEASE FEES PAID BY T HE ASSESSEE AS WELL AS THE OTHER INCIDENTAL EXPENDITURE TO BRIN G THE BOULDERS - - ITA 1681 & 1682 & CO 136 & 137OF 2010 5 AND BLOCKS TO THE PORT HAVE BEEN ADDED TO THE COST OF THE BREAKWATER BY THE ASSESSEE-PORT. THE ENTIRE CONCE PT OF CONSTRUCTION OF BREAKWATER AND ITS ACCOUNTING DOCU MENTATION AND LEGAL FRAME WERE ALL CARRIED OUT IN TERMS OF TH E OPERATIONAL GUIDELINES ISSUED BY THE MINISTRY OF SHIPPING AND T RANSPORT. THE ASSESSING AUTHORITY ACCEPTED THAT PART OF THE DIREC T COST OF CONSTRUCTING THE BREAKWATER AS A CAPITAL ASSET AND GRANTED DEPRECIATION THEREON. BUT THE ASSESSING AUTHORITY DID NOT ALLOW SUCH DEPRECIATION ON THAT PART OF EXPENSES RELATING TO LICENCE FEES AND THE OTHER INCIDENTAL EXPENSES IN BRINGING THE BOULDERS AND BLOCKS FROM THE MINING SITES TO THE PORT. THIS PORTION OF THE EXPENDITURE HAS BEEN EXCLUDED BY THE ASSESSING AUTH ORITY WHILE GRANTING DEPRECIATION ON BREAKWATER. THIS HAS BEEN ALLOWED BY THE COMMISSIONER OF INCOME-TAX(APPEALS). 6. WE CONSIDERED THE ISSUE. WE AGREE WITH THE COMMISSIONER OF INCOME-TAX(APPEALS). THE LICENCE F EE WAS PAID BY THE PORT TRUST TO THE DISTRICT COLLECTOR FO R OBTAINING THE LEASE RIGHT TO EXTRACT THE MINE-SITES FOR OBTAINING BOULDERS AND BLOCKS FOR CONSTRUCTING THE BREAKWATER AT THE MOUTH OF THE PORT. - - ITA 1681 & 1682 & CO 136 & 137OF 2010 6 THEREFORE THE LICENCE FEE PAID BY THE ASSESSEE POR T-TRUST WAS INCURRED EXCLUSIVELY FOR CONSTRUCTING THE ASSET REC OGNIZED AS BREAKWATER. THE OTHER EXPENSES WERE ALSO INCURRE D BY THE ASSESSEE PORT-TRUST SOLELY FOR THE PURPOSE OF ULTIM ATELY CONSTRUCTING THE BREAKWATER. THEREFORE THE ASSESS ING AUTHORITY WAS NOT JUSTIFIED IN EXCLUDING THOSE EXPENDITURE FR OM THE COMPUTATION OF THE COST OF ASSET WHILE GRANTING DEP RECIATION ALLOWANCE. THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS GRANTED THE RELIEF WHICH IS RIGHTFUL IN LAW. THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) ON THIS POINT I S UPHELD. 7. THE GROUNDS RAISED BY THE REVENUE IN BOTH THE APPEALS ARE THE SAME AND THEREFORE THE ABOVE FIND INGS ARE APPLICABLE TO BOTH THE APPEALS UNDER CONSIDERATION. 8. THE ASSESSEE HAS FILED CROSS OBJECTIONS TO SUPP ORT THE ORDERS OF THE COMMISSIONER OF INCOME-TAX(APPEAL S). IN VIEW OF THE ORDERS PASSED IN THE APPEALS FILED BY THE RE VENUE THESE CROSS OBJECTIONS ARE LIABLE TO BE DISMISSED. - - ITA 1681 & 1682 & CO 136 & 137OF 2010 7 9. IN RESULT THESE APPEALS FILED BY THE REVENUE AR E TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON TUESDAY THE 29 TH OF NOVEMBER 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI DATED THE 29 TH NOVEMBER 2011. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.