Case Law Details
DCIT Vs Chettinad Cement Corp. Ltd. (ITAT Chennai)
As per depreciation schedule, the depreciation is allowed on buildings @5% for which the buildings are mainly used for residential purposes except hotels and boarding houses. The depreciation is allowed @10% on buildings used mainly for residential purposes and not covered by the category of 5% depreciation. The remaining two items are 100% depreciation category. The cement silos are structures specifically designed for preserving the cement from dampening and to keep the finished product intact. Any leakage of wall, the products will be got damaged and cannot be put to use and the entire production gets spoiled. Therefore, the cement silos are required specific design and construction and can be used only for the purpose of preserving the finished product of cement. Such structures cannot be used for residential purposes by human beings. Therefore, cement silos cannot fall under the category of buildings for the purpose of depreciation. As held by Hon’ble Supreme Court in 247 ITR 268, the buildings specifically designed and integral part of generating station should be considered as plants entitled for higher depreciation. Similarly, the cement silos are to be treated as integral part of the cement plant for storage and distribution of final product. Therefore we are of the considered the opinion that the cement silos are to be treated as plant and eligible for higher rate of depreciation.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This is an appeal filed by the Revenue against the common order dated 30.03.2016 in ITA Nos.53, 50(a) & 73/14-15/CIT(A)-17 of Commissioner of Income Tax (Appeals)-17, Chennai, for Assessment Years 2007-08, 2009-10 & 2012-13. Since the issues involved in these three appeals are common, for the sake of convenience and brevity all the three appeals are disposed in common order.
2. First issue in this appeal of the Revenue for the AY 2007-08 is relating to the disallowance of proportionate interest expenditure amounting to Rs.106.52 lakhs towards 80IA unit. The assessee debited to an amount of Rs.1725 lakhs towards interest and claimed the entire expenditure from non-80IA Unit. The AO held that the expenditure was common and apportioned between 80IA/non-80IA units. The assessee went on appeal before the Ld.CIT(A) and Ld.CIT(A) allowed the relief and Revenue is in appeal before us.
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