Tribunal allows depreciation on 'Right to Collect Toll' asset, affirming intangible asset classification

The Tribunal ruled in favor of the respondent-assessee, allowing depreciation on the "Right to Collect Toll" asset, despite not owning the road. The decision classified this right as an intangible asset eligible for depreciation under section 32(1)(ii) of the Income Tax Act, 1961. The Tribunal's analysis, supported by legal precedents, affirmed the appellant's eligibility for claiming depreciation on the commercial right acquired through the NHAI contract.

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Issues:
- Whether depreciation claimed on the asset "Right to Collect Toll" qualifies as an intangible asset under section 32(1)(ii) of the Income Tax Act, 1961Rs.
- Whether the respondent-assessee is eligible for depreciation on the asset "Right to Collect Toll" when not the owner of the underlying asset, i.e., road used for business purposesRs.

Analysis:
1. Issue 1 - Qualification of "Right to Collect Toll" as an Intangible Asset:
The appellant, a company undertaking an infrastructure project, claimed depreciation on the "Licence to Collect Toll" treated as an intangible asset. The Assessing Officer disallowed the claim due to the appellant not being the owner of any asset. However, the ld. CIT(A) allowed the claim based on precedents, considering "Right to Collect Toll" as an intangible asset eligible for depreciation at 25%. The Tribunal upheld this decision, emphasizing that the right acquired falls under the definition of commercial right or intangible asset as per section 32(1)(ii) of the Act. Various court decisions were cited to support this interpretation, concluding that the appellant's claim was valid.

2. Issue 2 - Eligibility for Depreciation Without Ownership of Underlying Asset:
The key contention was whether the appellant, not owning the road but having the right to collect toll, could claim depreciation on the associated asset. The Tribunal determined that the right to collect toll acquired through the NHAI contract constitutes a commercial right or intangible asset, qualifying for depreciation. Citing relevant court judgments, including the Hon'ble Rajasthan High Court's decision, the Tribunal established that the appellant's claim was in line with the provisions of the Act. The Tribunal dismissed the Revenue's appeal, affirming the eligibility of the respondent-assessee for depreciation on the "Right to Collect Toll" asset.

3. Conclusion:
The Tribunal's decision favored the respondent-assessee, allowing depreciation on the "Right to Collect Toll" asset despite not owning the road. The judgment upheld the classification of this right as an intangible asset, eligible for depreciation under section 32(1)(ii) of the Act. The Tribunal's analysis, supported by legal precedents, concluded that the appellant met the criteria for claiming depreciation on the commercial right acquired through the NHAI contract.

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