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of <h1>Depreciation on Intangible Assets in BOT Projects Affirmed; Tribunal Dismisses Revenue's Appeals on Amritsar Terminal.</h1> <h3>The Jt. Commissioner of Income Tax (OSD), Circle – 5, Pune Versus Rohan and Rajdeep Infrastructure Pvt. Ltd.</h3> The Jt. Commissioner of Income Tax (OSD), Circle – 5, Pune Versus Rohan and Rajdeep Infrastructure Pvt. Ltd. - TMI Issues Involved:1. Whether the CIT(A) is justified in allowing depreciation on the expenditure incurred by the assessee for the construction of the Amritsar Bus Terminal project on a build, operate, and transfer (BOT) basis.Issue-wise Detailed Analysis:1. Depreciation on Expenditure for BOT Project:The primary issue in these appeals is whether the CIT(A) was correct in allowing depreciation on the expenditure incurred by the assessee for constructing the Amritsar Bus Terminal on a BOT basis. The assessee, a company engaged in infrastructure projects, formed a special purpose vehicle (SPV) for executing the project and entered into a concession agreement with the Government of Punjab. The agreement allowed the assessee to collect adda fees from buses and vehicles using the terminal to recoup the construction costs.The Assessing Officer (AO) allowed amortization of the expenses over the asset's life and restricted the depreciation to Rs. 2,50,16,203/-, whereas the assessee claimed depreciation at 25%, amounting to Rs. 4,66,91,811/-. The CIT(A) disagreed with the AO, relying on the Tribunal's decision in Ashoka Infrastructure Pvt. Ltd., which treated the right to collect toll as a depreciable intangible asset under section 32(1)(ii) of the Act.The Departmental Representative (DR) argued that the Bombay High Court admitted a substantial question of law in a similar case (Ashoka Infraways Pvt. Ltd.), suggesting that the right to collect toll should not be considered a depreciable intangible asset. However, the Assessee's Representative (AR) countered by citing the Tribunal's consistent view that such rights create intangible assets eligible for depreciation.The Tribunal noted its previous decisions, including Ashoka Infrastructure Ltd. and Progressive Constructions Ltd., where it was held that the right to collect toll creates an intangible asset under section 32(1)(ii). This view was supported by various other Tribunal decisions, including those of the Special Bench of Hyderabad and the Mumbai Bench, which consistently treated such rights as depreciable intangible assets.The Tribunal concluded that the assessee's right to collect adda fees from the bus terminal users is a business or commercial right, qualifying as an intangible asset under section 32(1)(ii). Therefore, the assessee is entitled to claim depreciation at the specified rate of 25%. The Tribunal directed the AO to recalculate the depreciation accordingly and add back the allocated project cost allowed as a deduction in the assessment order.Conclusion:The appeals by the Revenue were dismissed, affirming the CIT(A)'s decision to allow depreciation on the expenditure incurred for the Amritsar Bus Terminal project on a BOT basis. The Tribunal upheld that such rights constitute intangible assets eligible for depreciation under section 32(1)(ii) of the Act. The findings in ITA No. 53/PUN/2018 were applied mutatis mutandis to ITA Nos. 54 & 55/PUN/2018, resulting in the dismissal of all appeals.
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