2015 (10) TMI 76 - AT - Income Tax

Tribunal Upholds Allowance of Depreciation for Railway Siding - Key Decision for Port Operations

The Tribunal dismissed all appeals by the Revenue, affirming the CIT(A)'s decision to allow the assessee's claim for 15% depreciation on Railway siding ... Entitlement for depreciation on the Railway siding and channel dredging - @ 15% being items of plant and machinery or at the rate of 10% being items of building - Held that:- As regards t claim of the assessee for depreciation at 15% on the Railway siding treating the same as plant, it is observed that this issue is squarely covered in favour of the assessee by the decision of the coordinate bench of this Tribunal in assessee’s own case for assessment year 2006-07 wherein a similar claim of the assessee was allowed by the Tribunal relying inter alia on the decision of the Hon'ble Kolkata High Court in the case of CIT V/s. Birla Jute and Industries Ltd. (2003 (1) TMI 81 - CALCUTTA High Court) and in the case of Kandla Port Trust (2006 (4) TMI 243 - ITAT RAJKOT). Respectfully following the said decision of coordinate bench of the Tribunal for assessment year 2006-07, we uphold the impugned order of the learned CIT(A) allowing the claim of the assessee for depreciation at 15% on Railway siding, treating the same as plant. As regards the issue relating to the claim of the assessee for depreciation at 15% on channel dredging being plant, it is observed that a similar claim was made by the assessee in the case of Kandla Port Trust (supra) on wharfs, dry docks, drains, jetties, railways, rolling stock, etc., treating the same as plant and machinery and the same was allowed by the Tribunal - Decided in favour of assessee Issues:Whether the assessee is entitled to depreciation at 15% on Railway siding and channel dredging as plant and machinery or at the rate of 10% as building.Analysis:The appeals by the Revenue involved a common issue of whether the assessee is entitled to depreciation at 15% on Railway siding and channel dredging as plant and machinery or at the rate of 10% as building. The Assessing Officer contended that both items were akin to building and therefore subject to 10% depreciation. The assessee argued that the Railway siding and channel dredging were essential for port operations and should be considered plant and machinery eligible for 15% depreciation. The Assessing Officer disagreed, leading to the appeals before the CIT(A).The CIT(A) allowed the assessee's claim for 15% depreciation on both items, relying on previous Tribunal decisions and emphasizing the functional aspect of the assets in port operations. The Revenue challenged this decision before the Tribunal. The Tribunal, after considering the arguments and relevant precedents, upheld the CIT(A)'s decision. It noted that the assets in question were critical apparatus/tools for the port's business activities and played a significant role in revenue generation. Therefore, the Tribunal agreed with the CIT(A) that the assets should be treated as plant and machinery eligible for 15% depreciation.In conclusion, the Tribunal dismissed all the appeals by the Revenue, affirming the CIT(A)'s decision to allow the assessee's claim for 15% depreciation on Railway siding and channel dredging. The judgment highlighted the importance of the assets in facilitating port operations and generating revenue, leading to the classification as plant and machinery for depreciation purposes.