TaxTMI 
TaxTMI 
2012 (9) TMI 1263
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....he case and in law, the Ld. Commissioner of Income Tax (A) has erred in deleting the addition of Rs. 1,23,28,335/- made on account of depreciation @ 100% on temporary structures without appreciating the fact that the structures on which depreciation is claimed are not temporary structures. iii) On the facts and circumstances of the case, the Ld. Commissioner of Income Tax (A) has erred in deleting the addition of Rs. 1,63,41,890/- made on account of provisions for bund maintenance without appreciating the fact that the expenses were contingent in nature and are not allowable. iv) The appellant craves to leave, to add, alter or amend any ground of appeal raised above at the time of hearing. 3. The grounds raised in ITA No. 4443/Del/2010 read as under:- i) On the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (A) is wrong, perverse, illegal and against the provisions of law which is liable to be set aside. ii) On the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (A) has erred in deleting the addition of Rs. 2,12,500/- made on account of depreciation @ 100% on temporary stru....
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.... on "Purely temporary structures such as wooden structures". Further, Assessing Officer observed that structures comprised of the following items: - Water Pump - RCC Blocks, water tank - Electrical Wiring - 32 Containers - 8 Containers He observed that these are not wooden structures. Assessing Officer did not consider assessee's claim tenable that 100% depreciation should be provided. As regards the assessee's alternative plea that the amount incurred on account of temporary structures can be claimed as revenue expenditure u/s. 37(1) of the I.T. Act the same was not accepted by the Assessing Officer. Accordingly, Assessing Officer disallowed depreciation amounting to Rs. 1,23,38,335/- and treated the same as capital expenditure. 6. Before the Ld. Commissioner of Income Tax (A) assessee submitted that assessee had installed temporary housing units (containers) at the Project site in Hazira. The amount spent on construction of these temporary units comprised of purchase of container units, installation of Instakabins, preparing foundation for the cabins, installation of water tank, etc. Before the Ld. Commissioner of Income T....
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....pinion that 100% depreciation should be allowed to the assessee on the temporary structures constructed at the project site. 7. Against the above order the Revenue is in appeal before us. 8. Ld. Departmental Representative submitted that structures in this regard are not temporary in nature. He argued that the same were capital expenditure and the assessee derived enduring benefit form them. 8.1 Ld. Counsel of the assessee on the other hand submitted that the structures were purely temporary. Hence, assessee should be allowed 100% depreciation. 8.2 We have carefully considered the submissions and perused the records. We find that the assessee's temporary structures in this regard comprised of purchase of container units, installation of Instakabins, preparing foundation for the cabins, installation of water tank, etc. We find that the structures were erected on the land, which is not owned by the assessee company. The assessee company does not per-se have any legal rights with regard to these structures. We further find that no structures are not constructed or attached to land, i.e. they have no earth foundation and no earth flooring. Contractor has made available the ....
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.... it was held that the claim was allowable even if, structure were made of material other than wooden. Again Hon'ble Madras High court in the case of C.I.T. vs. Print Systems and Products 285 ITR 337, has held that assessee was entitled of 100% depreciation in respect of expenses incurred by it on construction of temporary structures in the lease property. 8.5 In the background of the aforesaid discussion, we hold that assessee has constructed purely temporary structures. Structures were primarily used for accommodation of the staff. Land beneath these structures is not owned by the assessee. The said land was made available by the Hazira Port to the assessee only in connection with contractual work. These structures were not constructed or attached to land i.e. they have no earth foundation and no earth flooring. The cost of temporary structures has been borne entirely by the assessee. The assessee is only allowed non exclusive access to the land for the purpose specified in the contract with Hazira Port. The case laws mentioned above duly support the case of the assessee. Hence, in our considered opinion, there is no infirmity in the order of the Ld. Commissioner of Income Tax ....
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....y offered to tax in AY 2007- 08. 10.1 Considering the above, Ld. Commissioner of Income Tax (A) referred to the decision of the Hon'ble Apex Court in the case of Bharat Earth Movers v. CIT 245 ITR 428 (SC) & noted that if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. Ld. Commissioner of Income Tax (A) further referred to the decision of the Hon'ble Apex Court in the case of Metal Box Co. Pvt. Ltd., 73 ITR 53 and noted that following principles were laid down in the said down:- (i) For an assessee maintaining his accounts on the mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice and accountancy. It is not as if such deduction is permissible only in the case of amounts actually expended or paid; (ii) Just as receipts, though not actual receipts but accrued due are brought in for income-tax assessment, so also liabilities accrued due would be t....