BOT annuity recovery rights are not depreciable intangible assets, but provisional completion certificates can support project-cost amortisation.

A BOT concessionaire's right to recover road-project costs through annuity payments is not a depreciable intangible asset. Although analogous to a toll-collection mechanism in compensating project costs, it does not qualify as a business or commercial right of similar nature under the restrictive interpretation applied to specified intellectual-property rights; depreciation is therefore unavailable. Where the concession agreement treats a provisional completion certificate and a completion certificate alike for project completion and opening to traffic, the provisional certificate satisfies CBDT Circular No. 9/2014. Amortisation of the capitalised road-project cost remains available.

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Issues: (i) Whether the right to receive annuity under a BOT road-project concession constitutes an intangible asset eligible for depreciation; (ii) Whether a provisional completion certificate suffices to grant amortization under CBDT Circular No. 9/2014.

Issue (i): Whether the right to receive annuity under a BOT road-project concession constitutes an intangible asset eligible for depreciation.

Analysis: The concessionaire was required to construct, operate and ultimately transfer the road infrastructure, while recovering project costs through annuity payments. The right to receive annuity was materially similar to a right to collect toll, since both were mechanisms for compensating the concessionaire's project cost. Applying the restrictive construction of business or commercial rights of similar nature alongside the specified intellectual-property rights, the concession right did not amount to an intangible asset.

Conclusion: The right to receive annuity is not an intangible asset eligible for depreciation. This issue is against the assessee.

Issue (ii): Whether a provisional completion certificate suffices to grant amortization under CBDT Circular No. 9/2014.

Analysis: The concession agreement treated issuance of either a completion certificate or a provisional completion certificate as establishing project completion and opening of the project to traffic. The provisional certificate was therefore sufficient for the circular's requirement, and the appellate authority had power to allow amortization.

Conclusion: A provisional completion certificate suffices for allowing amortization under CBDT Circular No. 9/2014. This issue is in favour of the assessee.

Final Conclusion: Depreciation on the annuity right is unavailable, while amortization of the capitalised road-project cost remains available.

Ratio Decidendi: A BOT concessionaire's contractual right to recover project cost through annuity payments is analogous to a toll-collection right and is not a depreciable intangible asset; where the concession agreement equates provisional and final completion certificates, the provisional certificate establishes entitlement to amortization.

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