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TMI Blog2015 (3) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... at in ship building/ship repair industry the exact quantity of items required for building/repair of a ship cannot be ascertained in advance. Hence, a margin of 2% to 5% excess quantity will be procured for smooth flow of production and to avail the benefit of economics in scale. According to the AO, these items most of which are imported and held in customs bond even though not used will be held in the stock for years. He further observed that the realizable value on these items will be very less since these items cannot be used for another type of vessel. In such cases a provision for items which have not moved for years, will be made in the accounts and those items will either be drawn subsequently for consumption if usable or written of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed only at the rates prescribed by the Rules. Since no specific rate was prescribed for loose tools, it comes under the general category and depreciation @ 15% alone can be allowed. Accordingly, the excess claim being Rs. 47,82,693/- was disallowed. 3.1 On appeal, the CIT(A) after considering the submissions of the assessee and the relevant material on record observed that the assessee has claimed loss on revaluation of non usable loose tools at 30% of book value which were treated as inventories under the current assets. According to the CIT(A), it was a case of revaluation of stock; but the AO by treating the same as part of plant & machinery took another view and only allowed 15% depreciation on the same. Before the CIT(A), it was submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reported in 182 ITR 493. He also relied on the order of the Tribunal in the case of Bharat Heavy Electricals Ltd vs DCIT reported I 98 TTJ 565 (Del). 5 We have heard the parties and perused the material on record. The assessee company having followed consistent policy of claiming of depreciation on loose tools every year below Rs. 10,000/- by charging to P&L account and the same is allowable as deduction. In the assessment year under consideration the assessee quantified the total loose tools at Rs. 3,30,09,993/-. Out of this, the tools which cannot be traceable or lost, which works out to Rs. 95,65,385/- and the same was charged to P&L account. Accordingly, the ld AR pleaded before us that this method has been following consistently and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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