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TMI Blog2020 (5) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... r one year and un-usable thereafter - the assessee has capitalized the expenditure on the special Dunnage in their accounts and has been claiming depreciation @ 16% per annum over the useful period and on the same analogy in respect of ordinary Dunnage, they are treating the expenditure for one year and debiting the same to the profit and loss account to claim it as revenue expenditure. It is also not in dispute that the Revenue has been accepting the capitalization of special Dunnage and allowing depreciation @ 16% per annum over the period of life expectancy of such Dunnage. As life expectancy is taken as the determining factor for the separate treatment to the Dunnage, we do not find any illegality or irregularity in the view taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER K. NARASIMHA CHARY, J.M. Challenging the order dated 21/03/2017 in appeal No. 40/15-16 passed by the learned Commissioner of Income Tax (Appeals)-2, New Delhi ( Ld. CIT(A) ), for assessment year 2012-13, in the case of M/s. Central Warehousing Corporation( the assessee ), Revenue preferred this appeal. The assessee has also filed cross-objections on the ground that provisions of section 115JB are not attracted in the case of assessee, as the assessee is not covered by Companies Act. 2. Brief facts of the case are that the assessee Corporation is an Authority constituted under the law for marketing of agricultural produce and derives bulk of its income from the letting out of godowns or warehouse for storage and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and loss account and claimed it as revenue expenditure. 4. The ld. CIT(A) considered the fact that the said contention of the assessee found favour with by the CIT(A) in the earlier years 2006-07 and 2009-10 and a finding was returned that the expenditure on the ordinary Dunnage is in the nature of revenue expenditure and should be allowed accordingly u/s. 37(1) of the Act, considering the life expectancy, the level of efficiency and use of material for such Dunnage. The ld. CIT(A), therefore, accepted the contention of the assessee and deleted the addition of ₹ 1,95,32,194/-. 5. In respect of disallowance of ₹ 92,76,786/-, the claim for depreciation on the license/registration fee paid to Indian Railways, it is the findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee preferred the cross objections. 7. The ld. DR submitted that on perusal of the records submitted by the assessee, the Assessing Officer felt that the assessee had adopted their own method of accounting and such method is arbitrary and without any basis. As rightly held by the Assessing Officer, both the Dunnage are capital assets and expenditure debited by the assessee in the profit and loss account on investment in ordinary Dunnage are of capital nature and therefore, cannot be allowed as Revenue expenditure. 8. So also, it is the submission of the ld. DR that even though the amount of ₹ 50 crores was paid towards license/registration fee, such benefits under the license/registration fee are likely to be accrued during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is settled principle of law that license/registration fee paid to acquire the right to run the business is a commercial right to carry on the business of the assessee and therefore, it falls within the meaning of asset u/s. 32(1)(ii) of the Act whereon the assessee is entitled to claim depreciation. Since the ld. CIT(A) followed the decision of the Tribunal on these two aspects, the ld. AR submits that there is no perversity in the findings of the ld. CIT(A) and the same cannot be disturbed. 11. We have perused the record in the light of submissions made on either side. At the outset, there is no dispute that the assessee has been using two types of Dunnage, though for the same purpose, but with two different life times, namely, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) wherein it was held that the right granted to the assessee by way of license whereunder the assessee had become owner of such right, such license enables the assessee to have an access to carry on their business and therefore, it falls within the category of an asset u/s. 32(1)(ii) of the Act. No decision is brought to our notice to the contrary to take a different view. We, therefore, while agreeing with the ld. CIT(A), find that the claim of depreciation in respect of license/registration fee paid by the assessee to the Indian Railways is an asset whereon depreciation u/s. 32(1) is allowable. We, therefore, dismiss ground No. 2. 14. Now coming to the cross objections of the assessee, it was the submission of the ld. Counsel that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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