DCIT Vs Jai Jai Ram Singh Infrastructure Private Ltd. (ITAT Delhi)
Revenue challenged the order of CIT(A), whereby the CIT(A) had directed AO to allow 100% depreciation on shuttering material treating it as a purely temporary wooden structure.
Assessee, an infrastructure company engaged in construction contracts, had originally claimed ₹3.03 crore as shuttering material cost in its Profit & Loss account. During reassessment,e AO treated the same as capital expenditure, capitalised it, & allowed 15% depreciation, thereby making an addition of ₹2.57 crore over the assessed income.
CIT(A) accepted Assessee’s alternative plea that once the expenditure is capitalised, depreciation @100% is allowable under New Appendix-I of Income-tax Rules for “purely temporary erections such as wooden structures (i.e., shuttering etc.)”. The entire ₹3.03 crore expenditure was thus allowed.
Tribunal examined whether shuttering material qualifies for 100% depreciation as “temporary erection” or only 15% as normal plant & machinery. Referring to the Full Bench judgment of Telangana & Andhra Pradesh High Court in S. Vijay Kumar v. CIT (376 ITR 226), it noted that each component of shuttering (plates, beams, jacks, props) cannot be used independently & collectively constitutes a plant used in construction activity. The High Court had held that: “Merely because each item of shuttering costs less than ₹5,000, it cannot be treated as an independent plant eligible for 100% depreciation.”
