TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 578
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....6-07: By M/s. Friends Oil & Chemical Terminals Pvt. Ltd.: 4. Ground no. 1 states that the Ld. CIT (A) and the AO has erred in law and on facts in treating storage tanks as building and restricting depreciation allowable thereon @10% instead of 15% as claimed by the Appellant by treating the storage tank as Plant and Machinery. 5. Succinctly, facts as culled out from the orders of lower authorities are that the assessee is engaged in the business of storage of edible oil, petroleum products, chemicals etc. of various imported and their liquid storage tank terminals situated at Kandla Port. The AO disallowed depreciation claim on liquid storage tank to the extent of Rs. 4,05,541/- by restricting the allowance @ 10% as against claim @15%. The AO discussed this at Page No. 1 to 10 of his order. Briefly, the AO has observed that the storage tank is simple structure on land and only in manufacturing unit, storage tank could be considered as part of plants and machinery. There is no definition in Income Tax Act, 1961 about storage tank and warehouse and there is no difference in storage tank and warehouse and in their object. 6. Being aggrieved, the assessee filed an appeal before the ....
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....e ld. CIT (A) further, relied on some case laws as per discussion in his appellate order and arrived at conclusion that liquid storage tank are not plants and machinery for depreciation claim. 7. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that liquid cargo could be unloaded from high seas, hence, not required a platform. Liquid cargo is unloaded through storage tank. The AO treated it as simple building and CIT (A) upheld the same. However, the issue is covered in favour of the assessee by decision of Tribunal in assessee`s own case for the assessment year 2002-03 and 2003-04 in I.T.A.No. 690/RJT/2005 dtd. 18.05.2007 A.Y. 2002-03 and I.T.A.No. 1691/RJT/2005 dtd. 28.04.2008 A.Y. 2003-04. The learned counsel for the assessee submitted that the storage tanks are not RCC structure flattened to the earth. They were only made of specific quality of iron and steel and fitted with specific equipments and facilities for handling of liquid cargo and chemicals. Therefore, they cannot be said to be land or building but were essentially plants and machinery, which could be bodily, lifted and placed/ fitted anywhere. The d....
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....icable to plants and machinery as per Appendix-I. The issue is covered by decision Rajkot Tribunal decision in its own case for the assessment year 2002-03 and 2003-04 in I.T.A.No.690/RJT/2005 dtd. 18.05.2007 and 1691/ RJT/ 2005 dtd. 28.04.2008 wherein it was held that the storage tank was plants and machinery and not a building after placing reliance on the decisions of Karnataka High Court in the case of CIT v. Mahant Oil Industries Pvt. Ltd. 193 ITR 620 (Karnataka), Bombay High Court in the case of CIT v. Electro Metallurgical Works Pvt. Ltd. 207 ITR 494 (Bombay) , and Mumbai tribunal in the case of Gulf Oil Industries v. ITO 75 ITD 172 and Rajkot Tribunal in the case of Ganesh Alu Bhandar v. ITO 87 ITD 588. The Tribunal has observed :- "10. In the instant case, the assessee has constructed oil storage tank at Kandla Port Trust on the land provided by the Kandla Port Trust. The storage tank has been constructed as per prescribed specification and licensee for the storage of petroleum products has been granted by the Chief Controller of Explosives after inspection of these storage tanks. Thus, the oil storage tank has been constructed as per required specification for storing pet....
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.... given permission to the assessee on his express request to construct the storage tanks. Therefore, the contention of the assessee that it had entered in to an agreement, in compliance to provisions of section 80IA(4)(i)(b) is not true and needs to be rejected. The assessee has relied on Circular No.10/2005 dtd. 16.12.2005 which seeks to clarify the definition of Port for the purpose of infrastructure facility, but it does not take away the essential character of section 80IA(4)(i)(b), which requires the existence of an agreement with government. In view of above, the AO disallowed the claim of Rs. 1,49,36,396 under section 80IA(4)(i)(b) of the Act. 12. Being aggrieved, the assessee filed an appeal before the ld.CIT(A). The CIT(A) observed that the assessee has entered into general agreement for 30 years could not be taken as an agreement town KPT and the appellant authorizing that loading and unloading of liquid cargo that would form part of the port operations for import and export. It also did not say that the said infrastructure and facilities developed built/ maintained/operated by the Appellant rested with government. Prima-facie the ownership of the said infrastructure faci....
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....or the assessee submitted that as per lease agreement, the KPT has allotted 250000 Sq. Ft. land to the assessee on which the assessee constructed building storage tanks with permission of KPT, and developed infrastructure facilities hence, claim under section 80IA(4)(i)(b) is allowable to the assessee. The learned counsel for the assessee referred CBDT Circular No. 10 of 2005 dtd. 16.12.2005 (PB-27) in which clause "3. However, for and from assessment year 2002-03 onwards, structure at the ports for storage, loading and unloading the company will be included in the definition of "port" for the purpose of section 10 (23G) and 80IA of Income Tax Act,1961, if the following conditions fulfilled:- the concerned port authority has issued a certificate that the said structure form part of the port." The learned counsel for the assessee further referred certificate dtd. 20.10.2005 issued by the KPT wherein it is mentioned that the assessee has erected storage tanks and other infrastructure facilities on the plot of land leased to them by KPT for loading and unloading of liquid cargo which form part of port operations for import and export. The learned counsel for the assessee further, pla....
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.... Ltd. has built storage tank erected, shore pipelines and other infrastructure facilities on the plot of land leased to them by Kandla Port Trust at Old Kandla (Oil Jetties) for loading and unloading of liquid cargos which for part of the Port operations for import and export." The above infrastructure facilities have been developed, built maintained and operated by M/s. Friends Oil and Chemical Terminals Pvt. Ltd... Therefore, the assessee is not required to entered in to an agreement, in the light of CBDT Circular No.10 of 2005. Therefore, the assessee has made sufficient in compliance of provisions of section 80IA(4)(i)(b). If we examined whether in the absence of specific agreement with the Central/State Government, local authority or Statutory Body, the assessee is entitled to claim the benefit of section 80IA(4)(i). The assessee had made an application for setting up of infrastructure facilities at Kandla Port. In response to the application of the assessee, the KPT has given permission for construction loading, storage tanks with infrastructure facilities at Kandla for loading and unloading liquid cargo. The ld. Counsel for the assessee has placed on record a letter dtd. 12....
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....ons of section 80IA(4)(i) and is eligible to claim deduction under the said section. The impugned order is set aside. In view of the above, this ground is allowed. 17. Ground No. 3 & 4 states that CIT (A) erred in not offering an opportunity to cross examination Secretary, Kandla Port Trust based on whose reply the appellate order passed denying deduction under section 80IA of the Act and not allowing sufficient time to submit reply. These grounds of appeal has not been raised before us hence, same are treated as dismissed as not pressed. 18. In the result, appeal for A.Y.2006-07 is partly allowed. I.T.A.No. 279/RJT/2013 /A.Y. 2008-09 by M/s. Friends Oil & Chemical Terminals Pvt. Ltd.: 19. Ground no. 1 & 3 and 4 states that the Ld. CIT (A) and the AO has erred in law and on facts in treating storage tanks as building and restricting depreciation allowable thereon @10% instead of 15% as claimed by the Appellant by treating the storage tank as Plant and Machinery. 20. We have heard the parties. Both parties have agreed that the facts are identical as in 2006-07. As we have allowed depreciation on storage tank @ 15% in ground no. 1 for the assessment year 2006-07. Therefore, bas....