Tribunal upholds reopened assessments, disallows depreciation & deductions, and upholds expense disallowance. Order pronounced Jan 5, 2022.

The Tribunal upheld the validity of the reopened assessments, disallowed depreciation claims, denied the section 80IA deduction, and upheld the disallowance of expenses due to the cessation of business activities. The order was pronounced on January 5, 2022, in Chennai.

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Issues Involved:
1. Reopening of assessment.
2. Allowability of depreciation on the right to collect toll.
3. Claim of deduction under section 80IA of the Act.
4. Disallowance of other expenses due to cessation of business.

Issue-wise Detailed Analysis:

1. Reopening of Assessment:
The assessee challenged the reopening of assessments for various years, arguing that it was based on a change of opinion and lacked tangible material. The original assessments had been completed under section 143(1) and 143(3) of the Income Tax Act, 1961. The Assessing Officer (AO) reopened the assessments under section 147, citing the assessee's failure to fully and truly disclose material facts, particularly regarding the ownership and status of the bridge. The Tribunal upheld the reopening, stating that the AO had valid reasons, including new information from the assessee's holding company, which indicated that the assessee was not the owner of the bridge. Thus, the reopening of assessments was deemed valid and in accordance with the law.

2. Allowability of Depreciation on the Right to Collect Toll:
The assessee claimed depreciation on the bridge by treating it as Plant and Machinery. The AO restricted the depreciation to 10%, treating the bridge as a building. The CIT(A) and the Tribunal held that the assessee, being only a contractor and not the owner of the bridge, was not entitled to claim depreciation. The Tribunal referred to CBDT Circular No. 09/2014, which clarified that in BOT projects, the assessee does not hold ownership rights but only the right to recover toll. Therefore, the expenditure incurred should be amortized over the tenure of the agreement, not depreciated under section 32(1)(ii) of the Act. The Tribunal upheld the CIT(A)'s direction to allow amortization of the expenditure.

3. Claim of Deduction under Section 80IA:
For the assessment year 2005-06, the assessee raised a ground relating to the deduction under section 80IA of the Act but did not press this issue during the hearing. Consequently, the Tribunal dismissed this ground as not pressed.

4. Disallowance of Other Expenses Due to Cessation of Business:
For the assessment year 2008-09, the AO disallowed other expenses claimed by the assessee, arguing that the assessee had not carried out any business after the Tamil Nadu Government canceled the BOT agreement in 2005. The CIT(A) upheld this disallowance. The Tribunal agreed, noting the absence of evidence showing that the assessee conducted any business during the year in question. The Tribunal found no merit in the assessee's argument of a temporary lull in business and upheld the disallowance of expenses.

Conclusion:
The Tribunal dismissed all appeals filed by the assessee, affirming the validity of the reopened assessments, the disallowance of depreciation claims, the non-entitlement to the section 80IA deduction, and the disallowance of other expenses due to the cessation of business activities. The order was pronounced on January 5, 2022, in Chennai.

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