Clarification regarding treatment of expenditure incurred for development of roads/highways in BOT agreements under Income-tax Act, 1961 –regarding.

Amortization of BOT project costs permitted; construction costs may be spread evenly over concession period as business expenditure.

The Board clarifies that capitalized costs of constructing roads/highways under BOT concession agreements where ownership is not vested in the assessee may be amortized as allowable business expenditure. Amortization must exclude the construction period and be computed so the entire reduced initial cost is spread evenly over the remaining concession term; any earlier deductions claimed are to be deducted from the initial cost before equal amortization over the remaining period.