Depreciation on project road as building accepted at 10% under section 32, following the Supreme Court approach.

Depreciation on a project road under section 32 was the central issue, with the assessee claiming the asset should qualify for depreciation rather than amortisation over the concession period. The Tribunal noted that in later years the Revenue had accepted depreciation at 10% by treating the road as a building and, following PCIT v. GVK Jaipur Expressway, accepted the assessee's alternative classification. It held that the project road was entitled to depreciation at 10% as a building, not as plant and machinery or an intangible asset, and the appeals were partly allowed.

---

---

Issues: Whether the assessee was entitled to depreciation on the project road, and if so, at what rate and under which classification under section 32 of the Income-tax Act, 1961.

Analysis: The assessee's claim for depreciation on the project road had been denied by treating the asset as not owned by the assessee and by directing amortization over the concession period. The Tribunal noted that in subsequent assessment years the Revenue had accepted depreciation at 10% by treating the road as a building. Relying on the Supreme Court decision in PCIT v. GVK Jaipur Expressway, the Tribunal accepted the assessee's alternative claim and applied the rate of depreciation applicable to a building rather than plant and machinery or an intangible asset.

Conclusion: The assessee was held entitled to depreciation at 10% on the project road as a building under section 32 of the Income-tax Act, 1961, and the appeals were partly allowed.

---