TaxTMI 
TaxTMI 
2011 (7) TMI 578
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.... Pradesh. The assessee is providing storage facility to FCI in its warehouses. The assessee also undertakes supervision of transport of stocks from various places to the warehouse maintained by the assessee and from the warehouse to other destinations. The questions that arises for consideration is whether the transit loss suffered by FCI during the course of transit should be allowed in the hands of the assessee or not. As rightly pointed out by the learned departmental representative, from the very beginning the assessee is disputing its liability towards transit loss. In spite of the objections raised by the assessee, FCI deducted the transit loss from the payment relatable to storage charges. Therefore, the assessee claims that since the deduction was made by FCI despite objection, it has to be allowed while computing the total income of the assessee. No doubt the claim made by the assessee relates to various assessment years. One of the objections of the Revenue is that since the claim relates to various years, it cannot be allowed for the assessment years under consideration. The Assessing Officer also found that the income was exempted under the provisions of section 10(29) ....
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....d as deduction while computing the total income for the relevant assessment year. After settlement of the dispute, if FCI pays the money, then it is to be treated as income of the year in which it is actually paid by FCI. Therefore, while holding that the amount deducted by FCI has to be allowed as deduction while computing the total income of the assessee, we hold that it has to be allowed in the assessment year relevant for the financial year in which the deduction was actually made by FCI. Since the details of deduction made by FCI are not available on the file of this Tribunal, we remit the matter back to the file of the Assessing Officer. The Assessing Officer shall verify the details of deduction made during the relevant financial year and allow the same as deduction while computing the total income. 4. Respectfully following the above order of this Tribunal, we are inclined to allow the claim of the assessee. This ground of appeal raised by the assessee is allowed. 5. The next ground is with regard to allowability of depreciation on cost/written down value of the warehouses and godowns. 6. Brief facts of the case are that in the assessment order, the Assessing Officer has....
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....warehouses is as under: 7.2 He submitted that the normal size of the godown is of the 5000 MT capacity. It consists of 3 equal compartments and each equal length of 137-3". Total length of 413" and 73" in width. It has both sides' verandas of 8' width. The godown is having minimum plinth height of 2' - 8' and has 18' minimum height above plinth level and 12'-6' ht gable. The godown is having cross ventilation with air inlets and ventilators (42 Nos. Air inlets and 54 Nos. Ventilators). The godown is having 12 Nos. rolling shutters on both sides of long walls with a provision of collapsible gates. The godown flooring is having graded metal rolling over cement concrete with smooth finishing. The godown is having tubular trusses at 18' height with AC sheet roofing with wind pressure of 200 kgs./sqm. The godown's each compartment is having 12 Nos. Stacks each of size 20' x 30' with a capacity of 1670 MT. 7.3 He submitted that in the godown, wooden crates are spread as dunnage to avoid the stocks getting damaged due to seepage from floor. 2600 Nos. of crates of 5 x 3' are required for 10000 capacity. Bamboo mats are spread on the crates to prevent sweating of the bags and prevent dama....
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....nbsp; 7. Taj Mahal Hotel (supra) 8. CIT v. Gujarat State Fertilizer Co. Ltd. [1996] 219 ITR 550/88 Taxman 255 (Guj.) 9. CIT v. Indian Turpentine & Rosin Co. Ltd. [1970] 75 ITR 533 (All.) 10. CIT v. S.R.P. Tools Ltd. [2000] 242 ITR 636 (Mad.) 11. CIT v. Jagadeeshchandran & Co. [1970] 75 ITR 697 (Mad.) 12. Sundaram Motors (P) Ltd. v. CIT [1969] 71 ITR 587 (Mad.) 13. CIT v. Mohan Meakin Breweries Ltd. [1980] 122 ITR 203/[1979] 2 Taxman 103 (HP) 14. Chitpore Golabari Co. Ltd. v. CIT [1971] 82 ITR 753 (Cal.) 15. CIT v. Kanodia Cold Storage [1975] 100 ITR 155 (All.) 16. CIT v. Gujarat State Fertiliser Co. [2002] 255 ITR 294/123 Taxman 651 (Guj.) 17. CIT v. Yamuna Cold Storage [1981] 129 ITR 728/6 Taxman 146 (Punj. & Har.) 18. CIT v. Union Bank of India Ltd. [1976] 102 ITR 270 (Bom.) 19. CIT v. Punjab & Sind Bank Ltd. [2000] 244 ITR 393/111 Taxman 496 (Delhi) 20. CIT v. Warner Hindustan Ltd. [1979] 117 ITR 15 (AP) 21. CIT v. Oil India Ltd. [1992] 198 ITR 701 (Cal.) 22. Ka....
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.... is an integral part of the plant and machinery. The finding that the ore shed is plant is recorded on the basis of evidence adduced and is a question of fact. Under these circumstances, the directions given by the Tribunal to treat the ore shed as plant and allow depreciation and extra shift allowance, cannot be regarded as erroneous. Therefore, the second question referred to this court for its opinion will have also to be answered in the affirmative and it is accordingly answered." 7.7 In the case Express Newspapers Ltd. v. Dy. CIT [2006] 280 ITR 452/152 Taxman 465 (Mad.) held that these scaffolding material constitute plant and observed as follows: "The assessee company derived its income from property, finance and leasing business. It claimed depreciation for the assessment year 1989-90 on scaffolding material given on lease at the rate of hundred per cent on the ground that each of the scaffolding material costs less than Rs. 5,000 and hence the entire value should be allowed as depreciation on the ground that each of the scaffolding material constituted 'plant' used for the purpose of business. The Assessing Officer allowed depreciation only at the rate of 33A per cent ho....
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.... are plant and therefore the assessee is entitled to depreciation on the basis that they are to be treated as plants and not buildings. The analysis of the Tribunal that the platforms come under the definition of 'building' under the rules is not correct because the Tribunal has really not appreciated the essential and fundamental activity of these platform, the nature of agreement and the factual foundation. If the contract and the activity are understood in proper perspective, there can be no iota of doubt that the assessee is dealing in business with this kind of platform, but not letting them as buildings. It may apparently so appear but on deeper probe and closer scrutiny, something a different picture gets frescoed from where it becomes clear that it is utilised for the business purpose. Consequently, the reference is answered in the negative, against the revenue and in favour of the assessee." 7.9 The Supreme Court in the case of Karnataka Power Corpn. (supra) has held as follows: "The question whether a building can be treated as plant, basically, is a question of fact and where it is found as a fact that a building has been so planned and constructed as to serve an asse....
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....g Officer. The members of the Appellate Tribunal visited the studio along with the departmental representative and the assessee's representative. It was notice that the studio was situated in a big landscape. The building was designed in such a way with the wooden partitions which would be removed for creating different settings or scenes. The Tribunal held that part of the studio building constituted plant. On a reference: Held, that in this case the assessee had satisfied the functional test. Part of the studio building would come within the term 'plant' and in that view, the assessee was entitled to depreciation at the rate applicable to plant and machinery." 7.12 The Karnataka High Court in the case of Dy. CIT v. Astra IDL Ltd. [2001] 247 ITR 654/115 Taxman 622 held that: "The building used for manufacture of pharmaceuticals, medical and medical preparations to be plant. He submitted that in order to find out whether a building is to be treated as a mere building or should be considered as a plant a functional test has to be applied. A wide meaning is to be attributed to the term 'plant' because of the functional test." In the above case, the assessee was a company engaged ....
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.... Representative, the ratio of judgment of SC in the case of Karnataka Power Corpn. (supra) is not applicable. In that case, the Hon'ble Supreme Court had an occasion to examine the issue whether a building can be treated as a plant. In that case, the generating station building was so designed and constructed so as to be an integral part of the power generation system and hence the Hon'ble Apex Court considered it to be a plant entitled for investment allowances. But in the present case, the warehouse of the assessee are normal godowns having normal features expected to be therein a warehouse to prevent the material to be damaged due to moisture, insects etc. Further he relied on the judgment of Allahabad High Court in the case of CIT v. Kanodia Warehousing Corpn. [1980] 121 ITR 996/3 Taxman 223. 11. We have heard both the parties on this issue and perused the materials available on record. The contentions of the DR is that the judgment in the case of Anand Theatres is applicable to the facts of the present case. According to learned counsel for the assessee, the words 'plant' and 'building' are not mutually exclusive. 'Plant' may include building in certain set of circumstances a....
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.... to claim investment allowance under section 32A. The decision in Karnataka Power Corpn. (supra) is clearly distinguishable inasmuch as installation of plant for the purposes of business of generation or distribution of electricity or any other form or power has been specifically envisaged as one of the business in which investment in installing plant or machinery to become eligible claim deduction on account of investment allowance subject to fulfilment of other conditions. The SC in Karnataka Power Corpn.'s case (supra) while applying the test that where a building is so planned or constructed as to serve an assessee's special technical requirement, it will qualify to be treated as a plant for the purpose of investment allowance, held that an assessee's generating station business was an integral part of its generation, system and, therefore, it is a plant and is entitled to investment allowance. Thus, the decision in Karnataka Power Corpn.'s case (supra) is distinguishable on facts inasmuch as there the investment in building was held to be a business apparatus of a business of generating electricity to which the provisions of section 32A were made applicable. 14. We have also ....