TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 797
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..... Commissioner of Income (Appeals) has erred while not directing the Ld. AO to reduce the taxable income / increase the loss to the tune of Rs.15,33,92,8871- being difference between the proportionate write-off of cost incurred on Toll Road (as the appellant in the original return of income had changed from claim of depreciation to write off of balance cost over the remaining period claimed by the appellant in the original return of income at Rs.16,84,61,068/- and depreciation allowed in the assessment order @, 10% i.e. at Rs.32,18,53,955/-. 4. That on the facts and circumstances of the case, Ld. Commissioner of Income-tax (Appeals) has erred while confirming the reduction of grant received from NHAI of Rs.43.92 Crores from the total cost of Rs.441.27 Crores incurred on development of the Toll Road and did not treat the same as a part of the Equity Support as directed by NHAI. 5. That on the facts and circumstances of the case, Ld. Commissioner of Income-tax (Appeals) has erred while confirming disallowance of Provision made for Major Maintenance amounting to Rs.12,05,00,000/- on the ground that the said provision is contingent in nature and the assessee has not made any expe....
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....Vs. ACIT' in ITA No.185 & 186/PN/2012 dated 29.04.2013, has held in clear terms that the claim of the assessee for depreciation on "licence to collect toll" being an 'intangible asset' falling within the scope of section 32(1)(ii) of the Act is liable to be upheld. The relevant part of findings of the Tribunal for the sake of convenience is reproduced as under: 6. At the time of hearing, it was a common point between the parties that an identical issue has been considered by the Pune Bench of the Tribunal in the case of Ashoka Infraways Pvt. Ltd. vs. ACIT vide ITA Nos. 185 & 186/PN/2012 dated 29.04.2013. As per the Tribunal following the precedents by way of various decisions of different Benches of the Tribunal mentioned therein, the claim of the assessee for treating the 'License to collect Toll' as an intangible asset eligible for the claim of depreciation @ 25% as per Section 32(1)(ii) of the Act was justified. The following discussion in the order of the Tribunal dated 29.04.2013 (supra) is relevant :- "7. Before us, it was a common point between the parties that the impugned issue has been adjudicated in favour of the assessee in the following decisi....
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....ructure facility to the Government of Madhya Pradesh free of charge. In consideration of developing, constructing, maintaining the facility for a specified period and thereafter transferring it to the Government of Madhya Pradesh free of charge, assessee was granted a Right to collect Toll' from the motorists using the said infrastructure facility during the specified period. The said Right to collect the Toll' is emerging as a result of the costs incurred by the assessee on development, construction and maintenance of the infrastructure facility. Such a right has been adjudicated by the Tribunal in the aforesaid precedents to be in the nature of 'intangible asset' falling within the purview of section 32(1)(i/) of the Act and has been found eligible for claim of depreciation. No decision to the contrary has been cited by the Ld. DR before us and, therefore, we find no reasons to depart from the accepted position based on the aforesaid decisions. 11. So however, the plea of the Ld. DR before us is to the effect that the impugned right is not of the nature referred to in section 32(1)(ii) of the Act for the reason that the agreement with the Government of Madhya P....
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.... alternative contention of the assessee that the project be treated as plant & machinery and the depreciation be accordingly allowed to it, we do not find that the said license of right to collect toll in any way falls in the definition of plant & machinery. As held by the Hon'ble Bombay High Court, even the assessee is not the owner of the toll road. The assessee has been given only the right to develop, maintain and operate the toll road and further to collect the toll for the specified period. This right as discussed above is an intangible asset falling under section 32(1)(ii) of the Act." 11. The Special Bench of this Tribunal in ITA No.1845/Hyd/2014 in the case of ACIT vs Progressive Construction Ltd. order dated 14.02.2017 under the identical facts has held as under:- 17. "In the case of Techno Shares and Stocks Ltd. v/s CIT, [2010] 327 ITR 323 (SC), the Hon'ble Supreme Court while examining the assessee's claim of depreciation on BSE Membership Card, after interpreting the provisions of section 32(1)(ii), held that as the membership card allows a member to participate in a trading session on the floor of the exchange, such membership is a business or commercial....
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.... the prime conditions for any deduction on account of business expenditure is that that same should have been incurred during the previous year.' In the present case, the Toll road became operational in August, 2011. No expenditure was actually incurred for any repair or maintenance in the given previous year. (The appellant has not filed any proof if any of the same.) The liability created by the agreement has not crystallized and the quantified in the previous year. A provision for a contingent liability is not allowable as a deduction (Indian Molasses Co. Pvt. Ltd. vs. CIT (1959) 37 ITR 66 (SC). I find that the appellant has quoted the decision of Hon'ble SC in the case of M/s. Rotork Controls in support of its contention. However, the facts of the case is not similar to that of the appellant hence I find the reliance of the above decision as ill founded. The appellant has tried to justify its argument by stating that it has obligation of maintenance for which it has made an estimate of expenses from current years income. I observe that such a maintenance envisaged in the common Rupee Loan Agreement at best is merely an estimate, indefinite, likely to take place at som....