2017 (3) TMI 895 - HC - Income Tax

Appeal dismissed, Jetty classified as temporary structure, 100% depreciation upheld. Court affirms Tribunal decision.

Commissioner of Income Tax Versus M/s. Anand Transport

The appeal was dismissed, upholding the Tribunal's decision that the Jetty should be classified as a temporary structure, warranting 100% depreciation. ... Depreciation on 'Jetty' at 100% under the head 'Building - Temporary Structure' - Held that:- A bare perusal of the meaning of the word Jetty would show that, it is, in the nature of a construction, which is used, either as a landing stage, a small pier, bridge, staircase or a construction, built into the water to protect the harbour. The utility of a Jetty is limited by its construct. It is used to obtain either access to a Vessel, or, protect the harbour.The provisions of the contract, as quoted by the Tribunal, would show that, the Jetty/loading platform was constructed, in this particular case, by the Assessee, on BOT basis, for a period of three (3) years, from the date of commencement of the vessel loading operation. Jetty/loading platform, in this case, was erected by the Assessee, in order to effectuate its business under the contract, entered into with MMTC, which was tenure based, and, therefore, could not have been treated as anything else, but a temporary erection. Upon completion of the contract, the Assessee was required to dismantle it. The fact that the Jetty had other contraptions attached to it, such as, a conveyor belt, to facilitate the process of loading, cannot convert such a structure into a plant. Therefore, even, if, the functional test is employed, the main function of a Jetty, in the facts of the instant case, was to provide a passage or, a platform to ferry articles onto the concerned Vessels. This could have been done manually. That it was done by using a conveyor belt, would not, to our minds, convert a Jetty into a plant. In sum, the Tribunal has reached the same conclusion and, thus, reversed the decision of the Assessing Officer and CIT(A) by allowing depreciation at the rate of 100%. We agree with the conclusions reached by the Tribunal, which, according to us, is a pure finding of fact. Issues:1. Depreciation rate for a Jetty - 100% under 'Building - Temporary Structure' or 25% under 'Plant'2. Classification of Jetty as a temporary structure or a plant3. Applicability of Delhi Tribunal's decision over Chennai Tribunal's decisionAnalysis:1. The appeal questioned the correct depreciation rate for a Jetty - whether it should be 100% under 'Building - Temporary Structure' or 25% under 'Plant.' The Tribunal found that the Jetty was temporary, leading to the entitlement of 100% depreciation. The Assessee had initially claimed 100% depreciation amounting to a significant sum. The Revenue contended that the Jetty was a plant, not a temporary structure, and disallowed excess depreciation claimed.2. The nature of the Jetty was crucial in determining its classification. The Tribunal examined the purpose, periodicity, and use of the structure. The dictionary meaning of Jetty was considered, defining it as a landing stage or pier. The Jetty in question was erected temporarily to fulfill a specific contract with a limited operational period. It was agreed that upon contract completion, the Jetty had to be dismantled, indicating its temporary nature. The presence of a conveyor belt for loading did not alter its classification as a temporary structure.3. The Tribunal's decision was based on factual findings and material presented. It was highlighted that the Jetty's primary function was to provide access for loading, not to act as a plant. Therefore, the Tribunal reversed the Assessing Officer and CIT(A)'s decision, allowing 100% depreciation. The Court agreed with the Tribunal's factual conclusions, stating no substantial legal question arose for consideration.In conclusion, the appeal was dismissed, emphasizing the Tribunal's factual determination regarding the Jetty's classification and depreciation rate.