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2015 (10) TMI 394 - ITAT DELHI

2015 (10) TMI 394 - ITAT DELHI - TMI - Quarry Development Expenses - revenue v/s capital expenditure - Held that:- In the instant case, details of expenditure clearly shows that the expenses have not resulted in creation of any assets nor have they resulted in any enduring benefit to the appellant. The AO has not brought any facts on record to show as to which expenses debited under the head of 'quarry development' were capital in nature. These expenses are in the nature of salaries, wages, fuel .....

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al under consideration. No reason for deviating from the findings given by the respective CIT(Appeals) for the Asstt. Years 2007-08, 2008-09 and 2009-10 respectively as stated above. Therefore, addition made by the AO is deleted and the ground of appeal of appellant company is allowed on this issue

Depreciation on the closed units for last 8 years - Held that:- If some of the units of the assessee are closed, other units are certainly working and the depreciation is to be allowed on t .....

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these units. The additions made by him are, therefore, directed to be deleted - Decided in favour of assessee. - I.T.A .Nos.-5708 & 5709/Del/2013 - Dated:- 12-8-2015 - SMT DIVA SINGH, JUDICIAL MEMBER AND SH.INTURI RAMA RAO, ACCOUNTANT MEMBER For The Appellant : Smt. Parwinder Kaur, Sr. DR For The Respondent : None ORDER PER DIVA SINGH, JM These are two appeals filed by the Revenue assailing the correctness of the two separate orders dated 05.08.2013 of CIT(A)-VI, New Delhi pertaining to 2006-07 .....

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e s own case for 2007-08 & 2008-09 & 2009-10 assessment years, it was considered appropriate to proceed ex-parte qua the assessee respondent on merits after hearing the Ld. Sr. DR. 3. The sole issue in ITA No.-5708/Del/2013 is pertaining to the Quarry Development Expenses. The relevant facts of the case are that the assessee claimed Quarry Development Expenses amounting to ₹ 1,86,08,000/- as revenue expense. The claim was rejected holding the expenditure to be capital in nature. Th .....

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008-09 & 2009-10 assessment years was not accepted by the AO. A perusal of the aforesaid order of the Co-ordinate Bench further shows that the Co-ordinate Bench considering the identical claim of the Revenue dismissed the appeals of the Revenue. In the afore-mentioned background Ld. Sr.DR was required to address the issue. 4. The Ld.Sr.DR placed reliance upon the assessment order however considering the consolidated order of the Co-ordinate Bench, no distinguishing facts, circumstances or po .....

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that learned CIT(A) allowed the relief to the assessee following the order of his predecessor for AY 2003-04 to 2006-07 wherein the CIT(A) has held as under:- In the present case also, although the production has not been carried out in the years under consideration but the assets are kept as a stand by for the whole year. Moreover, although the production is suspended but the other activities of the units are being carried out. In such circumstances, I find that the AO was not justified in disa .....

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rned CIT(A) is accepted by the Government for AY 2003-04 to 2006-07, there would be no justification to interfere with the order of learned CIT(A) for AY 2007-08 to 2009-10 wherein he has only followed the order of his predecessor for AY 2003-04 to 2006-07. It was also pointed out by the learned counsel that now the issue is squarely covered by the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Bharat Alumunium Co.Ltd. 187 Taxmann 111, wherein their Lordships held as un .....

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the learned counsel that even if some of the units of the assessee are closed, other units are certainly working and the depreciation is to be allowed on the entire block of assets of the plant & machinery and not only individual plant and machinery of each unit of the assessee. In our opinion, the above decision of Hon'ble Jurisdictional High Court would be squarely applicable to the assessee of the assessee. When some of the units are closed and some of the units are working, then, th .....

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inally allowed the claim of the assessee, however in his order u/s 143(3)/147 dated 29.12.2011 following the view taken in 2007-08 assessment year the assessment was re-opened. The reasoning on identical facts in the above-quoted order of the Co-ordinate Bench which includes 2007-08 assessment year shows has not been upheld. In the afore-mentioned facts as they stand we find no infirmity with the following finding of the CIT(A):- 5.3. So far as the 3rd ground of appeal is concerned, an amount of .....

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sit of cement grade limestone. The expenditure pertaining to removal of overburden etc at the mines is held to be type of revenue expenditure by my predecessors CIT(A) for the AYs 2007-08 and 08-09 respectively as well as by my own decision in Appeal No 91/11-12 for A Y 2009-10 dated 29.07.2013 and in the instant case, details of expenditure clearly shows that the expenses have not resulted in creation of any assets nor have they resulted in any enduring benefit to the appellant. The AO has not .....

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right of properties and will also not result in any enduring benefit and therefore are revenue in nature. Since there is no material change in facts and circumstances in the appeal under consideration. I do not find any reason for deviating from the findings given by the respective CIT(Appeals) for the Asstt. Years 2007-08, 2008-09 and 2009-10 respectively as stated above. Therefore, addition of ₹ 1,86,08,000/- made by the AO is deleted and the ground of appeal of appellant company is all .....

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-1 in the earlier appeal. The record shows that the facts and circumstances for making the addition and deleting the addition remain the same. Herein also the Ld. Sr. DR places reliance upon the assessment order and did not refer to any change in facts, circumstances and position of law. In the peculiar facts and circumstances, respectfully following the order of the Tribunal passed by the Co-ordinate Bench referred to in the earlier part of this order and the reasoning taken in ITA No.- 5708/De .....

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extent of ₹ 35,53,318/- in view of the fact that out of the 10 plants, only 3 plants were found to be in operation for the last 8 years as per para 14 page 51of the Annual Report filed by the assessee company which brought out that production in the following units remained suspended:- 1. Mandhar (Chattisgarh) 2. Charkhi Dadri (Haryana) 3. Akaltara (Chattisgarh) 4. Nayagaon & Nayagaon Expn. (Madhya Pradesh) 5. Kurkunta (Karnataka) 6. Adilabad (Andhra Pradesh) 7. Delhi Cement Grinding .....

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nt company is a Govt. of India Undertaking and its principal business is to manufacture and sale of cement. However, the appellant was declared a sick Undertaking by Hon ble BIFR on 8.8.1996. Subsequently a scheme was approved by BIFR vide its order dated 3.5.2006 which is under implementation. The appellant has ten cement plants out of which three plants are in a operation and as per the Sanctioned Scheme, the assets of seven other plants are to be sold. However the AO did not appreciate the fa .....

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of the appellant Company, water and electricity requirements for both office as well as residential colony was met by the operating D G Sets, that only the operating of the plants was suspended but the operation of other activities was maintained in order to sustain, till the sale of assets/units is affected as per the Sanctioned Scheme of BIFR. Moreover prior to AY 2003-04, deprecation on non-operating plants were allowed as deduction. However, the AO was of the view that the said Sanctioned Sc .....

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t expenses was disallowed by the AO treating the same as capital expenditure. However, the appellant has submitted that quarry development expenditure is incurred on removal of overburden' at the site of limestone deposit which are found by the survey of the site and at different places by the expert Geologists and once sites are located, soil, stone etc are removed and excavation is done, in order to reach the deposit of cement grade limestone. The expenditure pertaining to removal of overb .....

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ad of 'quarry development' were capital in nature. These expenses are in the nature of salaries, wages, fuel, power, rent, and other expenses for removal of overburden etc. which cannot be said to be in the nature of capital expenditure. The Hon'ble Calcutta High Court in the case CIT Vs. Katras Jharia Coal Co. Ltd (1979) 118 ITR 6 (Cal) held that expenses for removal of overburden were not for acquiring any right of properties and will also not result in any enduring benefit and the .....

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Co-ordinate Bench further brings out the fact that the issue is covered in assessee s favour as far as the present forum is concerned:- 3. Ground No.1 is against the disallowance of depreciation on plant and machinery in all the three years as under:- Assessment Year Amount 2007-08 Rs.53,57,552/- 2008-09 Rs.45,86,536/- 2009-10 Rs.39,29,428/- 4. We have heard the submissions of both the sides and perused relevant material placed before us. We find that learned CIT(A) allowed the relief to the ass .....

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nits. The additions made by him are, therefore, directed to be deleted. 5. It was brought to our knowledge that in AY 2003-04 to 2006-07, the Committee on Disputes did not permit the Revenue to file appeal against the order of learned CIT(A) on the above ground. The assessee is a Government of India undertaking and the high powered committee formed by the Government i.e., COD directed the CBDT to accept the above order. When the above order of learned CIT(A) is accepted by the Government for AY .....

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entitled to claim depreciation, asset is to be owned by assessees and it is also to be used for purpose of business or profession, but expression used for the purpose of business , when applied to block of assets, would mean use of block of assets and not any specific building, machinery, plant or furniture in said block of assets as individual assets lose their identity after becoming inseparable part of block of assets. 6. It was pointed out by the learned counsel that even if some of the uni .....

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