TaxTMI 
TaxTMI 
2014 (11) TMI 401
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....ssee had incurred an expenditure of Rs. 214.12 crores on construction of road project. After claiming part depreciation in earlier year, assessee has claimed 25% depreciation on the WDV of Rs. 208.66 crores and 12.5% of expenditure incurred of Rs. 5.47 crores after 30.09.2009. Assessee claimed depreciation on the reason that right to collect toll in construction agreement is an intangible asset under section 32(1)(ii). 3. Assessing Officer disallowed the depreciation claimed on the reason that depreciation cannot be allowed on roads as the ownership on the road is not with the assessee. Moreover, right to collect toll is not an intangible asset as defined under section 32(1)(ii), so assessee is not entitled for depreciation. A.O. also took objection that in earlier A.Y. 2009- 10 assessee claimed depreciation at 10% towards building and this year it has claimed 25% towards plant and machinery. Since there is no consistency in the claim, A.O. disallowed the entire depreciation and relied on various case laws as stated in assessment order. He also referred to various terms of agreement to state that assessee is not owner of the asset and therefore, not entitled to depreciation. ....
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....opy right etc., The asset is "clearly tangible". ii. Its ownership is not with the assessee iii. Till last year the assessee was claiming 10% depreciation and suddenly for this year has taken a stand that the same is plant and machinery. iv. There is no consistency in the claim. 12. . . . . . . . . . . . . . .. . . 13. It is brought to my notice that in this year, the assessee has categorized the "Road (BOT)" of the earlier year as "intangible asset carriage ways". The Annual Report refers to the changed categorization and it is stated therein under the caption Fixed Assets as under: "The company has executed a Road project namely "Four laning of Pune - Hyderabad section of NH-9 from Km 493 to Km 524 on Build, Operate and Transfer (BOT) basis. Revenue from the project is being generated through toll collection. Further entire expenditure on this project up to the balance sheet date amounting to Rs. 224.36 Crores (previous year Rs. 217.88 Crores) was capitalized as carriage way intangible asset and amortized over the period of the toll collection right on increasing charge method (in proportion to the expected economic benefit from the said intangible asset over th....
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.... ITR 77). The Case Law relied on by the Income Tax Officer related to the period when the intangible asset was not in the IT Act. The provisions of Sec 32(1)(ii) have come into existence only from 01.04.1999. The same observation applies to the case law cited by the assessee because they were rendered for a period before the concept of intangible assets was put into the statute. They are relevant no doubt for the principle that for being the owner, one must exercise control over the property and have dominion over it in one's own right. If we construe the right of exploitation as the property, then these decisions may have relevance. But there is no need to go into these decisions either for or against because the concept of Sec 32(1)(ii) has been put on statute book later and it can be considered independently. The learned counsel has placed reliance on four decisions of the Benches of the ITAT Pune and Indore as above. The copies of the orders have been filed. The facts in all these cases are very similar to the facts of the assessee's case. In the case of Ashoka Info (P) Limited Vs ACIT (supra), the question was whether the licence granted by the Maharashtra Government f....
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....ontinuously claiming depreciation u/s. 32(1)(i) of the I.T.Act. The depreciation was claimed in the previous year, that too for the period of user for a period of less than six months. Therefore it is not correct or fair to pin the assessee down to the principle of consistency when the facts and case law support the stand of the assessee in this year. Accordingly Ground Nos. 2a, 2b and 2c are allowed in favour of the assessee and I direct the AO to allow the depreciation claim of Rs. 52,84,84,830/-." 5. After considering the rival contentions, we do not see any merit in Revenue grounds. Learned D.R. vehemently supported that depreciation cannot be allowed and relied on the Board circular No.9 of 2014 dated 23.04.2014. As seen from the above circular issued recently, the Board is aware that there were disputes as to whether the expenditure incurred on development and construction of infrastructural facilities like roads/high ways on BOT basis with right to collect toll, is entitled for deduction under section 32(1)(ii) or the same can be amortized by treating it as an allowable business expenditure under relevant provisions of the I.T. Act. The Circular went on to clarify that th....