ITAT upholds firm's deduction eligibility under Section 80IA(4) as consortium, rejects Revenue's appeal.

The ITAT dismissed the Revenue's appeals for both assessment years, affirming the firm's eligibility for deduction under Section 80IA(4) as a consortium of companies and ruling the assessment reopening invalid due to a mere change of opinion. The assessee's claim for depreciation on intangible assets, specifically the right to collect toll, was upheld, following consistent judicial precedents. The order was pronounced on 13th June 2022.

---

---

Issues Involved:
1. Deduction under Section 80IA(4) of the Income Tax Act for a partnership firm.
2. Validity of reopening of assessment under Section 148.
3. Depreciation claim on intangible assets.

Issue-wise Detailed Analysis:

1. Deduction under Section 80IA(4) of the Income Tax Act for a partnership firm:

The primary issue was whether a partnership firm qualifies for deduction under Section 80IA(4) of the Income Tax Act. The Revenue contended that Section 80IA(4) does not provide deductions to firms, only to companies or consortiums of companies. The CIT(A) allowed the deduction, referencing a prior ITAT ruling in the assessee's favor for AY 2012-13, where it was determined that the firm, consisting of three corporate partners, qualifies as a "consortium" under the Act. The ITAT reaffirmed this interpretation, emphasizing that the firm had been consistently granted the deduction in previous years, and no new facts justified a different outcome for the current assessment years (2010-11 and 2014-15). Consequently, the Revenue's appeals were dismissed.

2. Validity of reopening of assessment under Section 148:

The assessee challenged the reopening of the assessment under Section 148, arguing it was based on a mere change of opinion and an audit objection. The ITAT observed that during the original assessment under Section 143(3), the AO was aware of the firm's structure and still allowed the deduction for one project. The reopening did not introduce any new material facts but was prompted by an audit objection, which constitutes a change of opinion. Hence, the ITAT deemed the reopening invalid and allowed the assessee's cross-objection appeal.

3. Depreciation claim on intangible assets:

For AY 2014-15, the AO denied the assessee's claim of depreciation on the right to collect toll, treating it as an intangible asset, based on CBDT Circular No.9/2014. The CIT(A) allowed the claim, following a prior ITAT ruling in the assessee's favor, which held that the right to collect toll is a capital expenditure eligible for depreciation under Section 32(1)(ii). The ITAT upheld this view, referencing consistent judicial precedents, including the Bombay High Court's decision in North Karnataka Expressway Ltd. Thus, the Revenue's appeal on this ground was dismissed.

Conclusion:

The ITAT dismissed the Revenue's appeals for both assessment years and allowed the assessee's cross-objection appeal, affirming the firm's eligibility for deduction under Section 80IA(4) and the invalidity of the assessment reopening. The assessee's claim for depreciation on intangible assets was also upheld. The order was pronounced in the open court on 13th June 2022.

---