2017 (11) TMI 1700 - AT - Income Tax

Tribunal dismisses Revenue's appeals for multiple years, partly allows assessee's appeals.

Gujarat Chemical Port Terminal Co. Ltd. Versus Asst. Commissioner of Income-tax, Circle 1 (1) And The DCIT, Cir. 1 (1), Baroda

Gujarat Chemical Port Terminal Co. Ltd. Versus Asst. Commissioner of Income-tax, Circle 1 (1) And The DCIT, Cir. 1 (1), Baroda - TMI Issues Involved:1. Validity of reopening assessments under Section 148.2. Classification of Jetty & Trestle for depreciation purposes.3. Disallowance of deferred revenue expenditure.4. Disallowance of lease amortization charges.5. Disallowance of prior period expenses.6. Bad debts disallowance.7. Disallowance of repair and maintenance expenses as capital expenditure.8. Disallowance of minimum assured quantity expenditure.9. Disallowance of depreciation on foreign exchange loss.10. Disallowance of loan restructuring expenses.Detailed Analysis:1. Validity of Reopening Assessments under Section 148:The Revenue appealed against the CIT(A)'s orders quashing the reopening of assessments for AYs 2002-03 to 2004-05. The CIT(A) had reversed the Assessing Officer’s action, noting that there was no failure on the assessee’s part to disclose necessary particulars fully and truly. The tribunal upheld the CIT(A)’s decision, stating that the statutory provision under Section 149(1)(b) does not override Section 147 (first proviso). The reopening was deemed invalid as it was based on a change of opinion.2. Classification of Jetty & Trestle for Depreciation Purposes:The Revenue's consistent grievance was the classification of Jetty & Trestle as part of the building block entitled to a 10% depreciation rate, against the assessee's claim of it being plant and machinery eligible for 25% depreciation. The tribunal upheld the CIT(A)’s decision, referencing the Kandla Port Trust case, which classified such assets as plant and machinery.3. Disallowance of Deferred Revenue Expenditure:The assessee’s appeal for AY 2004-05 involved the disallowance of deferred revenue expenditure. The CIT(A) had followed his earlier orders confirming the disallowance. The tribunal found no reason to deviate from the earlier decision and upheld the disallowance.4. Disallowance of Lease Amortization Charges:The disallowance of lease amortization charges was also contested by the assessee. Both parties agreed that the issue had been decided in Revenue’s favor in earlier assessments. The tribunal upheld the disallowance.5. Disallowance of Prior Period Expenses:The assessee challenged the disallowance of prior period expenses for AY 2004-05. The CIT(A) had accepted similar claims in AY 2006-07. The tribunal noted that the issue was rendered infructuous due to the CIT(A)’s acceptance in the subsequent year.6. Bad Debts Disallowance:For AY 2006-07, the Revenue appealed against the CIT(A)’s decision to allow bad debts disallowance. The tribunal upheld the CIT(A)’s decision, referencing the Supreme Court’s judgment in TRF Limited, which stated that it was not necessary for the assessee to prove that debts had actually become bad.7. Disallowance of Repair and Maintenance Expenses as Capital Expenditure:The assessee contested the disallowance of repair and maintenance expenses classified as capital expenditure. The tribunal found that the expenses were for preserving and maintaining existing assets without increasing capacity, thus should be treated as revenue expenditure. The disallowance was deleted.8. Disallowance of Minimum Assured Quantity Expenditure:The disallowance of minimum assured quantity expenditure was contested for AY 2004-05. The tribunal noted that the issue had been decided in the assessee’s favor in earlier assessments and deleted the disallowance.9. Disallowance of Depreciation on Foreign Exchange Loss:The assessee challenged the disallowance of depreciation on foreign exchange loss. The tribunal upheld the CIT(A)’s decision, noting that the assets were acquired from outside India, and Section 43A applied, requiring actual payment for depreciation claims.10. Disallowance of Loan Restructuring Expenses:The assessee contested the disallowance of loan restructuring expenses. The tribunal referenced jurisdictional high court decisions allowing such expenses as revenue expenditure and directed the Assessing Officer to delete the disallowance.Conclusion:The tribunal dismissed all six of the Revenue's appeals (ITA Nos. 3115 to 3120/Ahd/2011) for AYs 2002-03 to 2006-07. The assessee’s appeal ITA No. 3077/Ahd/2011 was dismissed, while ITA Nos. 3078/Ahd/2011 and 3079/Ahd/2011 were partly allowed.