Toll collection rights as intangible assets qualify for depreciation under section 32(1)(ii) when linked to business operations.

The right to collect toll under a build-operate-transfer arrangement was treated as an intangible asset qualifying for depreciation under section 32(1)(ii). The tribunal held that the toll collection right was an independent business or commercial right connected with the assessee's operations and fell within the class of licences, franchises and similar rights covered by the provision. Applying ejusdem generis and noscitur a sociis, it found that the statutory amendment broadened depreciation relief to such intangible assets. The limited duration of the right did not change its character, and depreciation was therefore allowable.

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Issues: Whether the right to collect toll under a build-operate-transfer arrangement constituted an intangible asset, namely a licence or other business or commercial right of similar nature, eligible for depreciation under section 32(1)(ii).

Analysis: The right to collect toll arose from the infrastructure project arrangement and was an independent commercial right connected with the assessee's business. Section 32(1)(ii) extends depreciation to licences, franchises, and other business or commercial rights of similar nature, and the statutory amendment was intended to widen the scope of depreciation to such intangible assets. Applying the interpretative principles of ejusdem generis and noscitur a sociis, the right to collect toll was held to fall within the same class as the specified intangible assets. The fact that the right was for a limited period did not alter its character as an intangible asset.

Conclusion: The toll collection right was an intangible asset within section 32(1)(ii) and depreciation was allowable in favour of the assessee.

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