Tribunal Upholds Project Development Expense Amortization

The Tribunal upheld the amortisation of project development expenses for assessment years 2007-08 and 2008-09 under section 35D of the Income-tax Act. The Revenue's appeals were dismissed as the expenses were deemed revenue in nature, recoverable over the toll period, and not capital, given the government-owned assets. The Tribunal supported the consistent method employed by the assessee and relied on past decisions favoring the claim, ultimately affirming the Commissioner's orders in both cases.

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Issues:
Appeal against allowing amortisation of project development expenses under section 35D of the Income-tax Act for assessment years 2007-08 and 2008-09.

Analysis:
1. Assessment Year 2007-08:
The Revenue appealed against the amortisation of project development expenses for the Pali project and Bata Chowk project. The Assessing Officer disallowed the expenses, stating they were not covered under section 35D of the Act. The learned Commissioner of Income-tax (Appeals) upheld the assessee's claim based on judicial discipline and past tribunal decisions. The Revenue contended that expenses should be allowed proportionately over the contract period, but the assessee's consistent method was supported by the authorized representative. The Tribunal found the expenses were revenue in nature, to be recovered over the toll period, not capital, as the assets were government-owned. Citing a previous decision in the assessee's favor, the Tribunal upheld the Commissioner's order, dismissing the Revenue's appeal.

2. Assessment Year 2008-09:
Similar to the previous year, the Revenue challenged the amortisation of project development expenses for the Pali project and Bata Chowk project. The Assessing Officer disallowed the expenses under section 35D, but the Commissioner of Income-tax (Appeals) allowed the claim based on past tribunal decisions. The Revenue argued for consistency in claiming expenses over the contract period, while the assessee's representative defended the method based on toll receipts and revenue generation. The Tribunal reiterated that the expenses were revenue in nature, to be recovered over the toll period, not capital, as the assets were government-owned. Relying on a previous decision in the assessee's favor, the Tribunal upheld the Commissioner's order, dismissing the Revenue's appeal for this assessment year as well.

In conclusion, the Tribunal dismissed both appeals of the Revenue, upholding the amortisation of project development expenses for the assessment years 2007-08 and 2008-09 under section 35D of the Income-tax Act. The Tribunal's decision was based on the nature of the expenses, the consistent method followed by the assessee, and past tribunal decisions supporting the claim.

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