Tribunal annuls assessments, allows depreciation claim on intangible asset, restricts addition for suppression of toll receipts

The tribunal annulled assessments for 2006-07 and 2007-08 due to lack of incriminating material. It allowed depreciation claim on 'Licence/Right to Collect Toll' as an intangible asset for 2008-09 to 2011-12. The addition for suppression of toll receipts was restricted to the year with evidence, rejecting extrapolation for other years. Appeals for 2008-09 to 2011-12 were partly allowed.

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Issues Involved:
1. Legality of assessment under section 153A r.w.s. 143(3) without incriminating material.
2. Depreciation on 'Licence/Right to Collect Toll' as an intangible asset.
3. Addition on grounds of suppression of toll collection.

Detailed Analysis:

1. Legality of Assessment under Section 153A r.w.s. 143(3) without Incriminating Material:
The assessee contended that the assessments made under section 153A r.w.s. 143(3) were illegal as no incriminating material was found for the assessment year 2006-07. The tribunal agreed with the assessee, citing the Hon’ble Bombay High Court's decision in CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd., which held that in the absence of incriminating material, completed assessments cannot be disturbed. Consequently, the tribunal annulled the assessments for the years 2006-07 and 2007-08.

2. Depreciation on 'Licence/Right to Collect Toll' as an Intangible Asset:
The tribunal analyzed the claim of depreciation on the 'Licence/Right to Collect Toll' under section 32(1)(ii) of the Income-tax Act. The assessee argued that the right to collect toll was an intangible asset and should be eligible for depreciation. The tribunal referred to previous decisions, including the Mumbai Bench of Tribunal in ACIT Vs. West Gujarat Expressway Ltd., which supported the claim that such rights are intangible assets eligible for depreciation. The tribunal rejected the CIT(A)’s reliance on CBDT Circular No.9/2014, which suggested amortization instead of depreciation. The tribunal held that the right to collect toll is a capital expenditure and the assessee is entitled to claim depreciation on it as an intangible asset under section 32(1)(ii).

3. Addition on Grounds of Suppression of Toll Collection:
The tribunal examined the addition made on account of alleged suppression of toll collection. During the search, a diary was found indicating unaccounted toll receipts for a specific period. The Assessing Officer extrapolated this to estimate suppression at 5% of total toll collections for all years under section 153A. The tribunal noted that the evidence was limited to a specific period and could not be used to estimate income for other years without incriminating material. The tribunal cited the Pune Bench decision in ITO Vs. Vikrant Happy Homes Pvt. Ltd., which held that evidence for one year cannot be used to estimate income for other years. The tribunal upheld the addition for the year 2010-11 where evidence was found but rejected the extrapolation for other years.

Conclusion:
The tribunal allowed the appeals for the years 2006-07 and 2007-08, annulling the assessments due to the absence of incriminating material. For the years 2008-09 to 2011-12, the tribunal allowed the claim of depreciation on the right to collect toll as an intangible asset but restricted the addition for suppression of toll receipts to the year where evidence was found. The appeals for these years were partly allowed.

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