Tribunal affirms toll collection right as depreciable asset under Income Tax Act

The Tribunal upheld the Commissioner of Income Tax (Appeals)'s decision allowing depreciation on the "license to collect toll" as an intangible asset under section 32(1)(ii) of the Income Tax Act, 1961. The Revenue's appeal was dismissed, affirming that the right to collect toll qualifies as a depreciable intangible asset, based on consistent precedent and previous Tribunal rulings.

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Issues:
Whether the assessee is eligible to claim depreciation on "license to collect toll" as an intangible asset under section 32(1)(ii) of the Income Tax Act, 1961.

Analysis:
The judgment pertains to an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2011-12. The key issue in the appeal was whether the assessee could claim depreciation on the "license to collect toll" as an intangible asset under section 32(1)(ii) of the Income Tax Act, 1961. The assessee was engaged in the development and construction of a road on a Build, Operate, and Transfer (BOT) basis. The Assessing Officer initially disallowed the claim for depreciation, stating that no intangible asset had been acquired by the assessee. However, the Commissioner of Income Tax (Appeals) allowed the depreciation, citing a Tribunal order that the right to collect toll was a depreciable intangible asset.

The appellant, represented by Shri K. Venkata Chalam, defended the order of the Commissioner of Income Tax (Appeals) and relied on previous Tribunal decisions to support their case. On the other hand, Shri S.B. Prasad, representing the Department, supported the Assessing Officer's decision. The Tribunal considered the issue and referred to its previous decisions where it was held that the "right to collect toll" is an intangible asset eligible for depreciation. The Tribunal also mentioned a Hyderabad Special Bench decision that supported the same view, stating that a National Highway constructed on a BOT basis gives rise to a right to collect toll charges as an intangible asset under section 32(1)(ii).

Ultimately, the Tribunal upheld the order of the Commissioner of Income Tax (Appeals) and dismissed the Revenue's appeal, citing consistency in previous decisions where depreciation was allowed on the "right to collect toll" as an intangible asset. The judgment concluded by dismissing the appeal of the Revenue, upholding the order in favor of the assessee.

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