ACIT Vs Gulbrandsen Pvt. Ltd. (ITAT Ahmedabad)
Conclusion: The newly constructed storage tanks used for storing hazardous raw materials and finished products constituted an integral part of plant and machinery and were eligible for additional depreciation under section 32(1)(iia). Accordingly, the disallowance of ₹91.12 lakh was deleted.
Held: Assessee claimed additional depreciation of ₹91.12 lakh under section 32(1)(iia) on newly constructed storage tanks forming part of plant and machinery. The tanks were used for storing hazardous raw materials and finished products. AO disallowed additional depreciation on the ground that the tanks did not constitute a new plant and machinery and also observed that complete bills and vouchers relating to additions of ₹7.09 crore to the tank account had not been produced. However, normal depreciation on the tanks was allowed. CIT(A) deleted the disallowance and allowed the additional depreciation. Revenue contended that the storage tanks were not eligible for additional depreciation and that assessee had failed to furnish complete supporting bills and vouchers. Assessee submitted that the tanks were newly constructed and constituted an integral part of the manufacturing plant, being used for storage of hazardous raw materials and finished products. It was held that AO had not disallowed normal depreciation on the tanks and had accepted them as plant and machinery. Therefore, non-production of certain bills and vouchers could not justify denial of additional depreciation alone. The tanks were constructed for storage of hazardous raw materials and finished goods and formed an integral part of the manufacturing process. Once they were treated as plant and machinery, there was no reason to deny the benefit of additional depreciation on the new tanks under section 32(1)(iia).
