Principal Commissioner Of Income Tax Vadodara 1 v. Gujarat Chemical Port Terminal Co. Ltd

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 929 of 2018With R/TAX APPEAL NO. 930 of 2018 ================================================================ PRINCIPAL COMMISSIONER OF INCOME TAX VADODARA 1Versus GUJARAT CHEMICAL PORT TERMINAL CO. LTD ================================================================ Appearance:MR.VARUN K.PATEL(3802) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE M.R. SHAHandHONOURABLE MR.JUSTICE A.Y. KOGJE Date : 30/07/2018 COMMON ORAL ORDER (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1. As common question of facts and law arise in the present Appeal/s and as such, arise out of the impugned common judgment and order with respect to the same assessee but for different Assessment Years, both the Appeals are decided and disposed of by this common order. Appeal/s and as such, arise out of the impugned common judgment and order with respect to the same assessee but for different Assessment Years, both the Appeals are decided and disposed of by this common order. 2. Feeling aggrieved and dissatisfied with the impugned order passed by the learned Income Tax Appellate Tribunal (ITAT), Ahmedabad “D” Bench, Ahmedabad dated 13.11.2017 in ITA No.3078/Ahd./2011 for the order passed by the learned Income Tax Appellate Tribunal (ITAT), Ahmedabad “D” Bench, Ahmedabad dated 13.11.2017 in ITA No.3078/Ahd./2011 for the Assessment Year : 2004-2005, by which the learned Tribunal has quashed and set aside the order passed by the Assessing Officer, confirmed by the CIT (Appeals) treating / holding that the repair and maintenance expenditure incurred by the Assessee as capital expenditure and in holding that such expenses be treated as revenue expenditure and deleting the addition of income made on account of minimum guaranteed quantities by users of assessee’s storage facility, the Revenue has preferred the present Tax Appeal with the following proposed question of law :- “(a) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in holding the repair and maintenance expenditure incurred by the assessee as revenue expenditure without appreciating that such expenses resulted in enduring benefit to the assessee and therefore, the same should have been treated as capital expenditure? (b) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in deleting the addition of income of Rs.54,00,02,000/= made on account of minimum guaranteed quantities by users of assesses storage facility?” 3. The proposed question as above arises in the Tax Appeal No.930/2018 which arises out of ITA No.3079/Ahd./2011 for the Assessment Year : 2006-2007. C/TAXAP/929/2018 ORDER (b) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in deleting the addition of income of Rs.54,00,02,000/= made on account of minimum guaranteed quantities by users of assesses storage facility?” 3. The proposed question as above arises in the Tax Appeal No.930/2018 which arises out of ITA No.3079/Ahd./2011 for the Assessment Year : 2006-2007. C/TAXAP/929/2018 ORDER 4. Now so far as the impugned orders passed by the learned Tribunal in reversing the orders passed by the Assessing Officer, confirmed by the learned CIT (Appeals), holding that the repair and maintenance expenditure incurred by the assessee as capital expenditure and the impugned order passed by the learned Tribunal treating the said expenditure as revenue expenditure is concerned, at the outset, it is required to be noted that the assessee claimed expenditure which includes the painting expenses of plant and machinery and the expenses of fabrication, welding works etc. learned Tribunal in reversing the orders passed by the Assessing Officer, confirmed by the learned CIT (Appeals), holding that the repair and maintenance expenditure incurred by the assessee as capital expenditure and the impugned order passed by the learned Tribunal treating the said expenditure as revenue expenditure is concerned, at the outset, it is required to be noted that the assessee claimed expenditure which includes the painting expenses of plant and machinery and the expenses of fabrication, welding works etc. 5. It is the case on behalf of the Revenue that the said expenses are wrongly treated as revenue expenditure as expenditure was incurred for replacement of pipelines and the expenses of fabrication and welding works was while replacing the existing pipeline. However, it is required to be noted that as per the case of the assessee from the very beginning, the said expenditure was incurred for welding work of plant and machinery and it also included fabrication work, pipeline work and other miscellaneous work and also painting. It was a specific expenses are wrongly treated as revenue expenditure as expenditure was incurred for replacement of pipelines and the expenses of fabrication and welding works was while replacing the existing pipeline. However, it is required to be noted that as per the case of the assessee from the very beginning, the said expenditure was incurred for welding work of plant and machinery and it also included fabrication work, pipeline work and other miscellaneous work and also painting. It was a specific case on behalf of the assessee that as such, the assessee is engaged in providing port and port related activity especially for the liquid cargos in Class A, B and C. The same require usages of high end equipment and machinery. Due to continuous contact of sea water the joints of the machines gets frequently damaged and the same therefore, requires immediate attention and fabrication and therefore, the expenses were incurred. 6. Considering the aforesaid facts and circumstances of the case, it cannot be said that the learned Tribunal has committed any error in treating the said expenses as revenue expenditure. We are in complete agreement with the view taken by the learned Tribunal. Therefore, on facts, the learned Tribunal has committed any error in treating the said expenditure in the relevant assessment years as revenue expenditure. case, it cannot be said that the learned Tribunal has committed any error in treating the said expenses as revenue expenditure. We are in complete agreement with the view taken by the learned Tribunal. Therefore, on facts, the learned Tribunal has committed any error in treating the said expenditure in the relevant assessment years as revenue expenditure. 6. Considering the aforesaid facts and circumstances of the case, it cannot be said that the learned Tribunal has committed any error in treating the said expenses as revenue expenditure. We are in complete agreement with the view taken by the learned Tribunal. Therefore, on facts, the learned Tribunal has committed any error in treating the said expenditure in the relevant assessment years as revenue expenditure. case, it cannot be said that the learned Tribunal has committed any error in treating the said expenses as revenue expenditure. We are in complete agreement with the view taken by the learned Tribunal. Therefore, on facts, the learned Tribunal has committed any error in treating the said expenditure in the relevant assessment years as revenue expenditure. 7. Now, so far as the proposed question No.2.(b) in Tax Appeal No.929/2018 is concerned, learned Advocate for the Revenue Mr. Varun K. Patel has fairly conceded that the said issue is concluded against the Revenue in light of the decision of the Division Bench of this Court in Tax Appeal No.929/2018 is concerned, learned Advocate for the Revenue Mr. Varun K. Patel has fairly conceded that the said issue is concluded against the Revenue in light of the decision of the Division Bench of this Court in Tax Appeal No.440/2017 in the case of the very assessee, but with respect to the earlier assessment years. It is reported that such a decision has been confirmed by the Hon’ble Supreme Court as the Special Leave Petition preferred against the said decision has been dismissed. 8. In view of the above, no substantial question/s of law arise in both the Appeals. The Appeals deserve to be dismissed and are accordingly, dismissed. arise in both the Appeals. The Appeals deserve to be dismissed and are accordingly, dismissed. Sd/-(M.R. SHAH, J) CAROLINE Sd/-(A.Y. KOGJE, J)