The income tax department has asked Reliance Port and Terminal, a Reliance Industries group company, to pay tax of about Rs 400 crore (Rs 4 billion) for assessment years beginning 2000-01, contesting the depreciation claimed over the years.
According to I-T sources, RPTL has claimed depreciation on the port infrastructure developed by it at Jamnagar near its petroleum refining complex. The department has contested the depreciation claims saying the land on which the infrastructure has been developed is owned by the Gujarat Maritime Board.
The source further said that under an agreement signed with GMB, the Reliance group company charged commercial fees for various operations conducted at the port, and the fees were treated as repayment from GMB for the infrastructure developed.
Moreover, RPTL accounts for commercial charges received from the port operations as recovery of the cost of investment. The infrastructure built at the port will be handed over to GMB after RPTL fully recovers the cost it has incurred.
The sources said, the IT department, therefore, had contended that since the company is recovering the cost of investment, it cannot claim depreciation as well.
Reliance Industries did not respond to a query sent by Business Standard on the claim by the income tax department.
According to Reliance Petroleum Ltd's initial public offer prospectus, RPTL is the proposed co-developer of the neighbouring special economic zone where a petroleum refinery is being set up.
RPTL will provide to RPL port and terminal facilities for import of feedstock and export of petroleum products. At present, the port facilities are used for RIL's existing refinery and polypropylene plant.
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