TMI Blog2022 (8) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... .4202 to 4204/Del/2019 - - - Dated:- 3-8-2022 - Shri Challa Nagendra Prasad, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member For the Assessee : Shri Upvan Gupta, CA For the Revenue : Shri Abhishek Kumar, Sr. DR ORDER PER BENCH These four appeals are filed by the assessee against different orders of the Ld. Commissioner of Income Tax (Appeals)-22, New Delhi for the assessment years 2011-12 to 2014-15 in sustaining the order of the Assessing Officer who denied the claim for 100% depreciation on temporary structures constructed by the assessee in the project sites. 2. Briefly stated the facts are that the assessee company was set up as a Joint Venture between SK Engineering and Construction Co. Ltd. (SK E C), Korea and Karamchand Thapar Bros. Ltd. (KCT) of India in the ratio of 60:40 respectively. The joint venture was set up to execute construction contracts awarded by Indian Strategic Petroleum Reserves Ltd. (ISPRL). The assessee joint venture the SKE C-KCT JV was awarded two contracts by ISPRL viz. Mangalore Project and Padur Project for the construction of underground crude oil, reservoir which was signed and executive a preliminary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts depreciation claim for on such building which was disallowed. Therefore, observing that the assessee has not been able to furnish any evidence to substantiate its claim of temporary construction, the AO denied the claim for 100% depreciation on such temporary structures and accordingly completed the assessment. 3.2 Before the Ld. CIT(A) the assessee made elaborate submissions as to why the construction made by the assessee are purely temporary structures and allowable for 100% depreciation. The assessee also requested for admission of the following additional evidences: - 1. Copy of ledger maintained by the assessee in its books of account for the temporary structures. 2. Copy of vouchers along with payment invoices for constructing temporary structures. 3. The photographs of the temporary construction. 4. The assessee also contended before the Ld.CIT(A) that the AO did not ask for any specific evidence to be produced such as vouchers, bills/invoices which were available with the assessee made disallowance of depreciation claimed. The assessee relied on the following decisions in support of its contention that depreciation is allowable at 100% on purely temporary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures erected by the assessee for the purpose of execution of the projects at Mangalore and Padur sites were cleared and the land is handed over to the client namely ISPRL. The Ld. Counsel therefore submits that these structures are purely temporary structures and they are entitled for 100% depreciation as provided in the schedule of depreciation in support of his above contention reliance was placed on the following decisions: 1. Shalivahana Constructions Ltd. Vs. DCIT: (12 SOT 406, Hyd.) 2. DCIT Vs. Win Medicare Limited: (17 taxmann.com 104, Delhi) 3. CIT Vs. Print Systems Products: (285 ITR 337, Mad.) 4. DCIT Vs. Mitsubishi Heavy Industries Ltd.: (61 TTJ 656, Delhi) 5. Comfort Living Hotels (P) Ltd. Vs. CIT: (363 ITR 182, Delhi) 7. The Ld. DR strongly supported the orders of the authorities below. The Ld. DR further submits that similar disallowance was made while completing the assessment for the AY 2010-11 which was also accepted by the assessee. The Ld. DR submits that the claim of the assessee was denied in the absence of any evidence furnished by the assessee in support of its claim for depreciation. 8. In reply the Ld. Counsel for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n at 10%. We further noticed that in the appeal proceedings for the AY 2014-15 before the Ld. CIT(A) the assessee made detailed submission and also furnished evidences in the form of ledger, vouchers, indicating various payments made to various contractors, sub contractors for construction of various structures, etc. However, the Ld.CIT(A) denied the claim for depreciation observing that in the tax audit report the assessee claimed depreciation at 10% and the same was enhanced to 100% in the computation of income and the enhanced claim for depreciation at 100% in the computation of income is an afterthought. 10. The evidences produced by the assessee in the form of certificate from S. Maitra Co., Government approved valuer, site clearance certificate and contractor demobilization, checklist clearly suggest that the assessee made temporary site facilities by constructing site offices, store, work shop and canteen for the projects to be executed at Mangalore and Padur Projects and these are temporary construction/facilities and these temporary constructions and facilities were later on demolished and removed from the sites after completion of the projects. 11. In the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ridge was constructed. Subsequently, vide letter dated 28.8.1991 submitted to the AO, it was submitted that the said expenditure has been incurred towards civil words attributable to the construction of bridges, maintenance and removal of bye-pass or debtor, upgrading and maintenance of roads, and removing and restoration of the miscellaneous obstacles on the way to site from Khandla. It was further stated on behalf of the assessee that bridge constructed on a temporary basis which were subsequently demolished did not result in any benefit of enduring nature and such an expenditure was necessary business expenditure for carrying out the execution of contract work. It was also submitted that such temporary construction, even if it is treated as capital expenditure will be eligible for grant of depreciation @ Rs.100 per cent. The Assessing Officer treated the said expenditure as of a capital nature and disallowed the same in view of the judgment of Hon ble Allahabad High Court in the case of CIT Vs. Bazpur Cooperative Sugar Factory Ltd. (1982) 30 CTR (All) 266: (1983) 142 ITR 1 (All.). 3.3 (ii) The CIT(A) held that the bridge over river Yamuna was constructed by the assessee-com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic Works Department also confirms the fact that the bridge and bye-pass roads constructed for the said transportation were of temporary nature. The assessee, therefore, either acquired any capital asset nor derived any benefit of enduring nature by incurring such expenditure. The expenditure was incurred because of a business necessity and, therefore, is clearly allowable as revenue expenditure. The allowability of such expenditure is fully supported by the aforesaid judgments referred to in the order of the CIT(A). We, therefore, do not find any justification to interfere with the view taken by the CIT(A) in relation to ground No. 3. 13. The Hon ble Delhi High Court in the case of Comfort Living Hotels (P) Ltd. Vs. CIT (supra) held as under: 7. The second question, i.e., depreciation at 100% of roofing was claimed by the assessee on the basis that the construction was temporary in nature. The Assessing Officer disallowed this on the assumption that the construction included two sets of toilets and that it involved the use of marble and false ceiling. The Tribunal was persuaded to uphold this view more or less on the strength of the same reasoning, i.e., use of marble gla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stations and is made in the premises which were not owned by the assessee. These modifications are stated to be made for the optimum utilization of the space and for better and more efficient working of the office staff. No material had been brought on record to suggest that such statement of the assessee is incorrect. If it is so, the work done by the assessee will fall under item 4 which describes the rate of depreciation of 100% in respect of purely temporary erection such as wooden structure . In this view of the situation, we do not find any infirmity in the order of the CIT(Appeals) vide which the necessary relief has been given to the assessee, we decline to interfere. 15. The Hon ble Madras High Court in the case of CIT Vs. Print Systems Products Ltd. (supra) held as under: 11. In respect of the second question, the Tribunal has given a finding that the assessee has made temporary partitions, false ceiling and given the walls a coat of paint. The only objection of the Revenue was that since the property was acquired by the assessee and not taken on lease, the temporary erection would have to be treated as revenue expenditure. The Revenue is not in a position to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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