TMI Blog2018 (12) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, the ground of appeal of Revenue is rejected - we direct the AO to allow depreciation @ 15% as claimed by the assessee on storage tank. - Decided in favour of assessee. Addition u/s 80IA in respect of income derived from operation and maintenance of storage tank by considering the same as integral part of Port - Held that:- We are of the considered view that the assessee has developed infrastructure facilities, built maintained and operated within the meaning of provisions of section 80IA (4)(i)(b). The assessee is deemed to have made due compliance of provisions of section 80IA(4)(i)(b). The assessee relied in the case of CIT v. A. L. Logistic Pvt. Ltd. [2015 (1) TMI 401 - MADRAS HIGH COURT] held that it is evident that the proposal of the assessee was accepted by the Government on certain conditions which were duly complied with by the assessee. There may not be any specific agreement, but the sequences of events clearly show that the assessee is providing CFS facility in accordance with the conditions laid down by the Government. In such circumstances, there is no need to insist for the specific execution of agreements. Where no specific agreement with the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ld. CIT(A). It was contended that 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 assessee has also placed reliance on some case laws as reported by the CIT (A) in his order at Page No. 3 and 4. However, the CIT (A) observed that the assessee has heavily relied on the Rajkot Tribunal decision in its own case for the assessment year 2002-03 and 2003-04 in I.T.A.No. 1690/RJT/2005 dtd. 18.05.2007 and 1691/RJT/2005 dtd. 28.04.2008 wherein it was held that storage tank was plants, machinery, and not a building afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 definition of plant has been given in section 43(3) by way of inclusive definition and expression of plant would include whatever apparatus is used by a business man for carrying out his business and not as stock-in trade which he buys or makes for sale but all goods and chattels fixed or movable, live or dead which he keeps for permanent employment. The learned counsel for the assessee further, supported his view by placing reliance in the case of Bharat Petroleum Corporation Ltd. v. Municipal Corporation Greater Mumbai AIR 1985 Bombay 242, Gulf Oil India v. ITO [2000] 87 ITD 588 (Mum) , CIT v. Gujarat State Fertilizers Corporation 219 ITR 550 (Gujarat) CIT V. Modi Industries 197 ITR 517 (Delhi). 8. Per contra, learned CIT(D.R.) supported the order of lower authorities and further referring to the order of the A.O. submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 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 petroleum product. Therefore, the same falls within definition of a plants which has been used by the assessee in the business of hiring them for storage petroleum products. Our view is finds support from the decisions of various High Courts and Tribunal cited above. Therefore, we are in agreement with the order of CIT (A) in allowing depreciation on the oil storage tank to the assessee at the rate prescribed for plant in the Act. Hence, the ground of appeal of Revenue is rejected. In the light of above facts, decision of Co-ordinate Bench in the case of the assessee and High Court respectfully following the same, we direct the AO to allow depreciation @ 15% as claimed by the assessee on storage tank. This grounds of appeal of the assessee is therefore, allowed. 10. Ground No. 2 States that CIT (A) erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 facility was with the appellant. The appellant has produce a certificate from KPT which reads: This is to certify that M/s. Friends Oil chemical Terminals Pvt. Ltd. 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 cargo, which forms part of the Port operations for import and export. However, the CIT (A) has written a letter to KPT which was clarified by the KPT authority vide letter dated 01.02.2010 that storage tanks, shore pipelines and other infrastructure facilities developed by M/s. Friends Oil and Chemical Terminals Private limited to KPT are not deemed part of KPT nor deemed as asset of the KPT. Thus, CIT (A) opined that this clarification sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, placed reliance in the case of Pr. CIT v. Seabird Marine Services Pvt. Ltd. [2017] 398 ITR 436 (Gujarat) and CIT v. A. L. Logistic Pvt. Ltd. 214] 374 ITR 609 (Mad) 230 Taxman 195 (Mad) , CIT v. HHA Tanks Terminals Ltd. I.T.A.No. 1279 of 2009 dtd. 19.03.2010 of Hon`ble Kerala High Court. In addition, HHA Tanks Pvt. Ltd. I.T.A.No.18/Coch/2006 dtd. 8.01.2008 of Cochin Tribunal in support of his contentions. 14. Per contra, the ld. Sr. D.R. submitted that there is no agreement with KPT entered in to by the assessee. The AO has brought in assessment order that the construction of building, storage tanks has been constructed of which ownership lies with the assessee and not with the KPT therefore, the lower authorities are justified in disallowing the claim made under section 80IA(4)(i)(b) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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. 12.09.1995 issued by KPT .The contents of the letter are reproduced as follows:- I am to refer to letter on the subject cited above and to inform you that change in name of your firm M/s. Friends Group of Industries to M/s. Friends Oil and Chemical Terminals Pvt. Ltd. in respect of land allotted admg. 25,000 sq. meters at Kandla has been noted in the records of this office. Further, you are advised to execute the lease deed in respect of the aforesaid plot between Kandla Port Trust and Friends Oil Chemical Terminals Pvt. Ltd. The other terms and condition prescribed at the time of allotment and other terms indicated in this office letter No. LAW/PL/2152_II/637 dated 1-12-94 will remain unaltered (PB-7). In view of these facts, we are of the considered view that the assessee has develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, based on findings given thereunder, these grounds of appeal of the assessee is accordingly, allowed. 21. Ground No. 2 5 States that Ld. CIT (A) erred in law and upholding action of the AO in disallowing the claim of deduction under section 80IA (4)of the Act. 22. We have heard the parties. Both parties have agreed that the facts are identical as in 2006-07. As we have allowed the claim of the assessee under section 80IA (4)(i)(b) of the Act in respect of Ground No. 2 for assessment year 2006-07. Therefore, based on the findings given thereunder, this grounds of appeal of the assessee is accordingly, allowed. 23. In the result, the appeal of the assessee is allowed for the assessment year 2008-09 in I.T.A.No. 279/RJT/2013. I.T.A.No. 278/RJT/2013/ A.Y.2008- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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