Tribunal grants 25% depreciation on Toll Road, allows major maintenance expenses deduction

The Tribunal allowed the assessee's appeal regarding the depreciation on the Toll Road, granting depreciation at 25% as an intangible asset. The Tribunal also allowed the provision for major maintenance expenses, finding it to be a valid deduction. However, the Tribunal dismissed the ground concerning the deduction of the grant received from NHAI as not pressed. The appeals for both assessment years were partly allowed based on these findings.

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Issues Involved
1. Reduction of depreciation on Toll Road from 25% to 10%.
2. Deduction of Grant received from NHAI from the total cost of the project.
3. Disallowance of provision made for major maintenance expenses.

Detailed Analysis

1. Reduction of Depreciation on Toll Road from 25% to 10%
The primary issue was whether the depreciation on the Toll Road developed by the assessee should be allowed at 25% under the head "Intangible Assets" or restricted to 10% as a "Building." The assessee argued that the right to collect toll fees is an intangible asset, citing various judicial pronouncements, including judgments from the Bombay High Court and other Tribunal benches. The Tribunal found that there were conflicting decisions but ultimately sided with the view that the right to collect toll is an intangible asset. It referenced the Special Bench decision in ACIT vs Progressive Construction Ltd. and held that the assessee is entitled to depreciation at 25%. Thus, the Tribunal allowed the assessee's appeal on this ground.

2. Deduction of Grant Received from NHAI from the Total Cost of the Project
The assessee did not press this ground during the hearing. Consequently, the Tribunal dismissed this ground as not pressed.

3. Disallowance of Provision Made for Major Maintenance Expenses
The assessee contended that the provision for major maintenance expenses was a mandatory liability as per the Concession Agreement with NHAI, and should be allowed as a deduction. The assessee cited the Supreme Court's decision in Rotork Controls India Pvt. Ltd. vs. CIT and Bharat Earth Movers vs. CIT to support its claim that the provision met the criteria for recognition of a liability. The Tribunal agreed with the assessee, noting that the obligation to maintain the road was a present obligation arising from past events, and the estimate of the maintenance costs was reliable. Therefore, the Tribunal found that the provision for major maintenance expenses should be allowed and overturned the disallowance made by the authorities below.

Separate Judgments for Different Assessment Years
For the assessment year 2013-14, the issues raised were identical to those for the assessment year 2012-13, with only changes in the figures. Both representatives adopted the same arguments as in the previous year. The Tribunal applied its findings from the assessment year 2012-13 to the assessment year 2013-14, thereby allowing the appeals for both years.

Conclusion
The Tribunal partly allowed the appeals for both assessment years, granting the assessee's claims for higher depreciation at 25% and the provision for major maintenance expenses while dismissing the ground related to the NHAI grant as not pressed.

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