Tribunal rulings: delay condonation, depreciation allowance, foreign exchange loss, expense exclusion

The Tribunal allowed the condonation of delay in filing the cross-objection, permitted depreciation on BOT rights for the Mumbra Bypass Road, upheld the allowance of foreign exchange loss for genuine business purposes, and directed exclusion of certain expenses under section 14A. The Tribunal restored the issue of section 14A's applicability to book profit computation for fresh adjudication. The judgments were collectively delivered without individual opinions, based on consistent legal principles and precedents.

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Issues Involved:
1. Condonation of delay in filing cross-objection.
2. Deduction claimed on expenditure incurred on construction of Mumbra Bypass Road on BOT basis.
3. Allowance of foreign exchange loss.
4. Disallowance under section 14A.
5. Applicability of section 14A to the computation of book profit under section 115JB.
6. Depreciation on BOT rights as intangible assets.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing Cross-Objection:
The assessee filed an application seeking condonation of an 85-day delay in filing the cross-objection, attributing the delay to a mistake by the counsel. The Tribunal, after considering the submissions and relying on the decision in Vijay Vishin Meghani v/s DCIT, [2017] 86 taxmann.com 98 (Bom.), condoned the delay, recognizing it as a bona fide mistake.

2. Deduction Claimed on Expenditure Incurred on Construction of Mumbra Bypass Road on BOT Basis:
The assessee, engaged in civil construction, claimed depreciation on BOT rights for the Mumbra Bypass Road, treating it as an intangible asset under section 32(1)(ii). The Assessing Officer disallowed the claim, treating the expenditure as deferred revenue expenditure. The Commissioner (Appeals) allowed the revised claim of deferred revenue expenditure but denied depreciation. The Tribunal, relying on the Special Bench decision in Progressive Construction Ltd., held that the right to collect toll is a valuable commercial right and thus an intangible asset eligible for depreciation under section 32(1)(ii). The Tribunal reversed the Commissioner (Appeals)' decision and allowed the depreciation claim.

3. Allowance of Foreign Exchange Loss:
The assessee entered into a currency swap derivative option agreement to hedge against high interest outcomes on a debt incurred for the Mumbra project. The Assessing Officer treated the loss as speculative, but the Commissioner (Appeals) found the transaction to be for genuine business purposes. The Tribunal upheld the Commissioner (Appeals)' decision, noting that the hedging transaction was for the business requirement and consistent with the assessee's method of accounting in previous years.

4. Disallowance under Section 14A:
The Assessing Officer disallowed expenses under section 14A r/w rule 8D related to investments yielding exempt income. The Commissioner (Appeals) deleted the disallowance of interest expenditure, finding that the assessee had sufficient interest-free surplus funds. The Tribunal upheld this decision, referencing the Bombay High Court decision in CIT v/s HDFC Bank Ltd., 366 ITR 505 (Bom.), and directed exclusion of strategic investments and those not yielding exempt income for administrative expenditure disallowance.

5. Applicability of Section 14A to the Computation of Book Profit under Section 115JB:
The Commissioner (Appeals) rejected the assessee's claim that section 14A should not apply to book profit computation under section 115JB. The Tribunal restored this issue to the Assessing Officer for fresh adjudication, considering the Special Bench decision in ACIT v/s Vireet Investment, 162 ITD 25.

6. Depreciation on BOT Rights as Intangible Assets:
The assessee claimed depreciation on BOT rights for Mumbra Bypass Road as an intangible asset. The Tribunal, following its decision in the cross-objection, allowed the depreciation claim, recognizing the BOT rights as a valuable commercial right under section 32(1)(ii).

Separate Judgments Delivered:
The judgments were delivered collectively, without separate opinions from individual judges. The Tribunal's conclusions were based on consistent legal principles and precedents applicable to the issues at hand.

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