TaxTMI 
TaxTMI 
2019 (12) TMI 827
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....se in assessment year 2003-04 to 2005-06. 2. Ld. CIT(A) erred on facts and in law in confirming the disallowance of Rs. 9,55,200/- on account of depreciation on intangible assets being value of License acquired from the Indian Railways for running container trains on Indian Railways. 3. Ld. CIT(A) erred, on facts and in law, in confirming the disallowance of Rs. 2,62,74,970/- being the claim of deduction on account of advance lease rent paid for the land taken on long term lease for business purposes on pro rata basis, ignoring the fact that similar claim had been allowed in earlier years. 4. The appellant craves leave to add, amend or alter any or all the grounds of appeal. 3. The grounds raised by the Revenue in its Cross Appeal read as under:- 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 415,71,30,892/- made on account of disallowance of deduction u/s. 80IA on Rail System (Rolling Stock). 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 3,30,015/- made on account of disall....
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....d reduce inconvenience to the person who wishes to export or import but place of his business is situated in a land locked area i.e., away from the sea. These depots reduce the inconvenience in import and export in the sense that it reduces the bottlenecks that are arising out of handling and customs formalities that are required to be done at the sea ports by allowing the same to be done at these depots only that are situated near to them. The term ICDs was inserted in 1983 under Section 2(12) of the Customs Act, 1962 which defines 'customs port' and by the provisions of Section 7(1)(aa) of the Customs Act,1962 power has been given to the Central Board of Excise and Custom(CBEC) to notify which place alone to be considered as Inland Container Depots for the unloading of imported goods and the loading of export goods by Notification in the official Gazette. 11. With the purpose of boosting country's infrastructure and specially the transport infrastructure, the Finance Act, 1995 which came into effect from 01.04.1996 brought an amendment to the provisions of Section 80-IA ofthe IT Act. Section 80-IA of the IT Act talks about deduction in respect of profits and ....
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.... "Infrastructure Facility means road, bridge, airport, port, inland waterways and inland ports, rail system by any other public facility of similar nature as may be notified by the Board in this behalf in official Gazette." 16. A noticeable change was further brought by the Finance Act, 2001, which came into effect from 01.04.2002, in the terms that the power of the Board to extend the benefit of the said provisions to any infrastructure facility of similar nature by issuing a Notification was taken away. The new explanation to Section 80-IAC 4) of the IT Act as is substituted by the Finance Act, 2001 reads as under: For the purpose of this clause "infrastructure facility" means- (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterways or inland port; 17. It was contended on behalf of the appellant that the High Court erred in relying....
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....0IA of the IT Act much before the Finance Act, 2001 which came into force on 01.04.2002 and exemption for the period of 10 years cannot be curtailed or denied by any subsequent amendment regarding the eligibility conditions under the period is modified or specific provision is made that the benefit from 01.04.2002 onwards shall only be claimed by the existing eligible units if they fulfill the new conditions. 21. Moving further to the issue whether the ICDs can be termed as Inland Ports so as to entitle deduction under Section 80-IA of the IT Act. The term port, in commercial terms, is a place where vessels are in a habit of loading and unloading goods. The term 'Port' as is used in the Explanation attached to Section 80-IA(4) seems to have maritime connotation perhaps that is the reason why the word airport is found separately in the Explanation. Considering the nature of work that is performed at ICDs, they cannot be termed as Ports. However, taking into consideration the fact that a part of activities that are carried out at ports such as custom clearance are also carried out at these ICDs, the claim of the respondent herein can be considered within the....
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....Delhi High Court decision are reproduced hereunder:- "4. The third question relates to the exemption under Section 80IA. The exemption claimed for the Inland Container Depot (ICD), Container Freight Stations (CFS) and rolling stock. Here again the Revenue's contentions were rejected for previous years in Container Corporation of India Ltd. v. ACIT, 346 ITR 140. So far as the rolling stock is concerned, ITAT has relied upon its previous ruling." 6.1.2 Respectfully following the above precedents, the addition confirmed by the Ld. CIT(A) is hereby deleted and accordingly ground no. 1 raised by the Assessee is allowed. 6.2 As regards ground no. 2 raised in assessee's appeal is concerned, we note that this issue is squarely covered by the decision of the ITAT for the assessment year 2010-11 in assessee's own case decided in ITA No. 186/Del/15 & 77/Del/15 vide para no. 10 to 11.2, which are reproduced as under:- "10. Ground no. 3 raised by assessee is in respect of disallowance of depreciation on intangible assets being license acquired from Indian Railway for running container trains on Indian Railways. 10.1 It was submitted that an identical issue arose....
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....h was retained by the transferor, for lump sum consideration of Rs. 44.7 crores. It is further seen that the book value of the net tangible assets (assets minus liabilities) acquired was recorded in the balance-sheet of the transferor as on the date of transfer as Rs. 28.11 crores. The saidassets and liabilities were recorded in the books of transferee at the same value as appeared in the books of the transferor. The balance payment of Rs. 16,58,76,000 over and above the book value of net tangible assets, was allocated by the transferee towards acquisition of bundle of business and commercial rights, clearly defined in the slump sale agreement, compendiously termed as "goodwill" in the books of account, which comprised, inter alia, the following : (i) business claims, (ii) business information, (iii) business records, (iv) contracts, (v) skilled employees, (vi) know-how. It is also observed that the Assessing Officer accepted the allocation of the slump consideration of Rs. 44.7 crores paid by the transferee, between tangible assets and intangible assets (described as goodwill) acquired as part of the running business. The Assessing Officer, however, held that depreciation....
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....exhaustively enumerate. In the circumstances, the nature of "business or commercial rights" cannot be restricted to only the aforesaid six categories of assets, viz., know-how, patents, trade marks, copyrights, licences or franchises. The nature of "business or commercial rights" can be ofthe same genus in which all the aforesaid six assets fall. All the above fall in the genus of intangible assets that form part of the tool of trade of an assessee facilitating smooth carrying on of the business. In the circumstances, it is observed that in the case of the assessee, intangible assets, viz., business claims ; business information ; business records ; contracts ; employees ; and know-how, are all assets, which are invaluable and result in carrying on the transmission and distribution businessby the assessee, which was hitherto being carried out by the transferor, without any interruption. The aforesaid intangible assets are, therefore, comparable to a licence to carry out the existing transmission and distribution business of the transferor. In the absence of the aforesaid intangible assets, the assessee would have had to commence business from scratch and go through the gestation pe....
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....es in the light of the records placed before us.This Tribunal for A.Y. 2008-09 in assessee's own case vide order dated 18/01/2017 held that, commercial right acquired by assessee by way of this license for earningenduring benefit for a period of 20 years would amount to capital asset. It is also observed that this view of Tribunal derives support from decision of Hon'ble Delhi High Court in the case of Areva T&D India Ltd. vs. DCIT reported in 345 ITR 421. 11.1.Under such circumstances respectfully following the same view, we hold intangible asset acquired by assessee is eligible for depreciation @ 25% u/s 32(1)(ii) of the Act. 11.2.Accordingly ground raised by assessee stand allowed." 6.2.1 Respectfully following the above precedent, we hold that assessee is eligible for depreciation @ 25% on the intangible asset acquired by it, hence, the same is allowed and accordingly, the ground no. 2 raised by the assessee is allowed. 6.3 As regards ground no. 3 raised in assessee's appeal is concerned, we note that this issue is squarely covered by the decision of the ITAT for the assessment year 2010-11 in assessee's own case decided in ITA No. 186/Del/15 & 77/Del/15....
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.... and 2009-10, we set aside this issue to the file of Ld. AO with the direction to assessee to furnish all requisite details in respect of the claim of depreciation. Ld. AO shall then verify the details to determine whether the claim of assessee is allowable or not as per law. 13.1.Accordingly this ground raised by assessee stands allowed for statistical purposes." 6.3.1 Respectfully following the above precedent, the issue in dispute is set aside to the file of the AO with the direction to assessee to furnish all requisite details in respect of the claim of depreciation. The AO shall then verify the details to determine whether the claim of the assessee is allowable or not as per law. 6.4 In the result, the Assessee's appeal is allowed for statistical purposes. REVENUE'S APPEAL 7. As regards ground no. 1, 2 & 3 raised in Revenue's appeal are concerned. We note that these issues are squarely covered by the decision of the Hon'ble Delhi High Court in assesse's own case passed in ITA No. 917-918/2017, CM Appl. 39179-39180/2017 & 3916-39107/2017 vide order dated 31.10.2017 and the decision dated 07.05.2018 of the Hon'ble Supreme Court of India in the case of Pr. CI....