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Dy. Commissioner of Income-tax Circle 2 (1) , Hyderabad Versus Kakinada Sea Ports Limited, Hyderabad

2015 (10) TMI 76 - ITAT HYDERABAD

Entitlement for depreciation on the Railway siding and channel dredging - @ 15% being items of plant and machinery or at the rate of 10% being items of building - Held that:- As regards t claim of the assessee for depreciation at 15% on the Railway siding treating the same as plant, it is observed that this issue is squarely covered in favour of the assessee by the decision of the coordinate bench of this Tribunal in assessee’s own case for assessment year 2006-07 wherein a similar claim of the .....

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iding, treating the same as plant.

As regards the issue relating to the claim of the assessee for depreciation at 15% on channel dredging being plant, it is observed that a similar claim was made by the assessee in the case of Kandla Port Trust (supra) on wharfs, dry docks, drains, jetties, railways, rolling stock, etc., treating the same as plant and machinery and the same was allowed by the Tribunal - Decided in favour of assessee - ITA No.36/Hyd/2015, ITA No.37/Hyd/2015 : Assessmen .....

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and therefore, they are considered together and are being disposed of by this consolidated order for the sake of convenience. 2. The solitary common issue involved in all these four appeals is whether the assessee is entitled for depreciation at 15% on the Railway siding and channel dredging, being items of plant and machinery or at the rate of 10% being items of building. 3. The assessee in the present case is a company which is engaged in the business of designing, developing, operating and m .....

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e restricted to 10%. In reply, the following explanation was offered by the assessee. The Railway Sidings was laid by the port for handling of cargo while loading and unloading operations are carried out. Railway siding is the essential for incoming and outgoing cargo, and is part of the plant in relation to the business of the Prot. Hence Kakinada Sea Ports Ltd.(KPL) is eligible for claiming of depreciation of railway siding under the head Plant and Machinery and the rate of depreciation is at .....

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berth is a major capital asset and it is an instrument which makes way to ship to reach the berths and keeps the ship for loading and unloading the cargo. In our case the capital dredging is main facility for operation of port and it is not possible for operation at Port which out this dredging. Hence the facility dredging is considered Plant & Machinery and is eligible for depreciation. 4. The above explanation of the assessee was not found acceptable by the Assessing Officer. According to .....

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sessee was concerned. He held that the Railway siding thus was in the nature of building and the assessee was entitled to depreciation at the rate 10% thereon instead of 15% as claimed by the assessee. Similarly, he held that the expenditure incurred by the assessee for digging out the soil to deepen the sea way so that it can be used by ships to reach berths, was akin to construction of road on land and the same therefore, constituted building eligible for depreciation at the rate of 10%. Accor .....

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Hyd/2010, the learned CIT(A) allowed the claim of the assessee for depreciation at the rate of 15% on railway siding treating the same as plant. For this conclusion, he also relied on the decision of the Rajkot Bench of the Tribunal in the case of Kandla Port Trust V/s. ACIT (104 ITD 1). He also allowed the claim of the assessee for depreciation at 15% on channel dredging treating the same as plant, by relying on the decision of the Rajkot bench of the Tribunal in the case of Kandla Port Trust ( .....

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ilding. In the case of the appellant, there is no structure but channel is dug for facilitating the movement of ship. The dredging of channel is a continuous process and the water ways are to be created from time to time by removing the accumulated sand in the sea bed. Therefore, it does not fit into the assets classified as building . The said asset is not fitting into any other type of asset. But, such an asset is required for carrying on the business activity. Therefore, the cost incurred by .....

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l on record. As regards t claim of the assessee for depreciation at 15% on the Railway siding treating the same as plant, it is observed that this issue is squarely covered in favour of the assessee by the decision of the coordinate bench of this Tribunal in assessee s own case for assessment year 2006-07 rendered vide its order dated 7.10.2011 (supra) wherein a similar claim of the assessee was allowed by the Tribunal relying inter alia on the decision of the Hon'ble Kolkata High Court in t .....

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at 15% on channel dredging being plant, it is observed that a similar claim was made by the assessee in the case of Kandla Port Trust (supra) on wharfs, dry docks, drains, jetties, railways, rolling stock, etc., treating the same as plant and machinery and the same was allowed by the Tribunal for the following reasons given in paragraph No.18 of its order- 18. The next controversy relate to classification of various equipments as plant or building. In the instant case wharves, pavements, docks .....

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. From the record we found that in the instant case all these assets are necessary and critical apparatus/tools with which the port carries on its business and are so designed to equip itself with heavy machinery such as cranes, railway wagons and slidings, heavy goods vehicles, loader, etc., and is not merely concrete structure which can be said to be building. As per the nature of work undertaken by ports, the ports create facilities for reception of vessels and the vessels are docked and undd .....

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