AI Drafter 
TaxTMI 
TaxTMI 
2025 (6) TMI 617
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.... the appeal before the Tribunal. Affidavit, supporting and explaining the contention of the assesse is on record. 4. The Ld.DR on the other hand has opposed the contention for the delay and it was submitted that the delay in filing the appeal is not required to be condoned. 5. We have heard both the parties, gone through the affidavit filed and find there is a reasonable cause for the assessee to file the appeal belatedly, hence condone the delay and admit the appeal for hearing in the interest of justice. 6. The Ld.AR has submitted that the assesse is into development and construction of a project filed its return of income for A.Y.2017-18 on 31.10.2017, declaring loss of Rs. 197,63,34,479/-. Later a revised return was filed on 21.01.2019, admitting the loss of Rs. 197,66,10,848/-. The case was selected for scrutiny and the Assessing Officer issued notices u/s 142(1) and 143(2) of the Act, calling for certain details. In response, the assessee filed the details and the Assessing Officer completed the assessment u/s 143(3) of the Act, determining the loss at Rs. 93,28,65,450/-. The Assessing Officer disallowed the depreciation on the intangible asset amounting to Rs. 162,4....
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....s is not as per rule 5 of New Appendix I of the I.T. Rules?" 4. In view of the fact that according to us the decision in North Karnataka Expressway Ltd. (supra) concludes the issue, we proceed to hear the Appeal finally. Mr. Dalal, the learned counsel for the Respondent sought to distinguish the decision of North Karnataka Expressway Ltd. (supra) by pointing out that in the present Appeal, there is a clause which provides that for the purpose of claiming tax depreciation, the property representing the capital investment made by the appellant shall be deemed to be acquired and owned by the Appellant. According to him such a clause was not present in the decision rendered by this Court in North Karnataka Expressway Ltd. (supra). This is not so. Paragraph 8 of the order passed in North Karnataka Expressway Ltd. (supra) specifically records that the appellant relied upon a clause which is identical to that pressed into service by Mr. Dalal. Thus, the aforesaid clause being relied upon by Mr. Dalal to distinguish the decision of this Court in North Karnataka Expressway Ltd. (supra) is not sustainable. This is so as the very clause was very much a subject matter of consideration....
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....leted the assessment u/s 143(3) of the I.T. Act determining the loss to be Rs. 93,28,65,450/-. While doing so, the Assessing officer made the following additions. a) Disallowance of PF on the ground that the same was not remitted within the due date - Rs. 5,33,179/- b) Disallowance of Depreciation claimed by treating the project developed by it as intangible asset. 3. Aggrieved with the order of assessment, the appellant filed an appeal before the learned CIT (Appeals) who dismissed the appeal. The appellant carried the matter further in appeal before the Hon'ble ITAT. 4. In so far as the disallowance of PF of Rs. 5,33,179/- is concerned, the appellant submitted that the amount was remitted to the authorities before the due date for filing the return of income u/s 139(1) of the I.T. Act and, therefore, no disallowance can be made on this account. 5. The next addition made by the Assessing officer is on account of disallowance of depreciation claimed on the BOT project developed by the appellant. The appellant treated the same as intangible asset and claimed depreciation at 25% of the total cost or Rs. 162,48,67,242/- The Assessing of....
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....Appointed Date, and the Concessionaire hereby accepts the Concession and agreed to implement the Project subject to and in accordance with the terms and conditions set forth herein. 3.1.2. Subject to and in accordance with the provisions of this Agreement, the Concession hereby granted shall oblige or entitle (as the case may be) the Concessionaire to: (a) Right of Way, access and licence to the Site for the purpose of and to the extent conferred by the provisions of this Agreement. (b) Finance and construct the Project Highway (c) Manage, Operate and Maintain the Project Highway and regulate the use thereof by third parties. Clause No.4.1. Conditions Precedent 4.1.2. The Conditions Precedent required to be satisfied by the Authority shall be deemed to have been fulfilled when the Authority shall have a) Procured for the Concessionaire the Right of Way to the Site in accordance with the provisions of Clause 10.3.1. Clause No. 10.1. The Site 10.1. The site of the Project Highway shall comprise the real estate described in in Schedule-A and in respect of which the Right of Way shall be provided and grant....
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....008 read with National Highways Fee (Determination of Rates and Collection) Rules, 2008 (the "Fee Rules") provided that for ease of payment and collection, such Fee shall be rounded off to the nearest 5 (five) rupees in accordance with the Fee Rules; provided further that the Concessionaire may determine and collect Fee at such lower rates as it may, by public notice to the Users, specify in respect of all or any category of Users or vehicles. Clause No.32.1. Insurance during Concession Period 32.1. The Concessionaire shall effect and maintain at its own cost, during the Construction Period and the Operation Period, such insurances for such maximum sums as may be required under the Financing Agreements, and the Applicable Laws, and such insurances as may be necessary or prudent in accordance with Good Industry Practice. The Concessionaire shall also effect and maintain such insurances as may be necessary for mitigating the risks that may devolve on the Authority as a consequence of any act or omission of the Concessionaire during the Construction Period. The Concessionaire shall procure that in each insurance policy, the Authority shall be a co-insured and that th....
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....f all rights, title and interest of the Concessionaire in the Project Highway, free from all Encumbrances, absolutely unto the Authority or to its nominee. Clause No.38.6. Divestment Costs, etc 38.6.1. The Concessionaire shall bear and pay all costs incidental to divestment of all of the rights, title and interest of the Concessionaire in the Project Highway in favour of the Authority upon Termination, save and except that all stamp duties payable on any deeds or Documents executed by the Concessionaire in connection with such divestment shall be borne by the Authority. 10. It can be seen from the above-extracted clauses of the Concession Agreement, there is a clear distinction between the Site of Project Highway and the Infrastructure Facility of the Project Highway in as much as the ownership of the Site of Project Highway was always with the Authority (NHAI) and the Concessionaire (the Assessee Company) was provided with the Right of Way to the Site only and it was never transferred by the Authority to the Concessionaire. Since the ownership of the Site was always with the Authority (NHAI), upon Termination, the Authority shall be deemed to have taken ....
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....Ltd v. DCIT, held that the appellant/assessee is entitled to claim depreciation @ 25% on road construction as admissible on intangible assets. The Hon'ble Tribunal has considered the applicability of CBDT Circular No.9/2014 and various decisions viz., Techno Shares & Stocks Ltd v. CIT [2010] 327 ITR 323 (SC), CIT v. Smifs Securities Ltd [2012] 348 ITR 302 (SC), ACIT v. Progressive Constructions Ltd [2018] 63 ITR (T) 516 (Hyd) (Special Bench), UCO Bank v. CIT 237 ITR 889 (SC), Keshavi Ravji and Company v. CIT 183 ITR 1 (SC), CIT v. Indra Industries 248 ITR 338 (SC), CIT v. Honda Cycles Pvt Ltd & Ors 228 ITR 463 (SC), CCE v. Ratan Melting & Wire Industries [2008] 13 SCC 1 (SC) and CIT vs. West Gujarat Expressway Ltd. The Hon'ble Tribunal also considered coordinate benches (Delhi) decision in ITA.No.3801/Del/2018 in the case of DCIT v. M/s Telecommunication Consultants India Ltd decided on 26.07.2023 and ITA.No.5555/Del/2018 M/s Gwalior-Bypass Project Ltd v. DCIT. 16. In view of the above, the assessee prays the Hon'ble ITAT to kindly direct the Assessing officer to treat the amount spent on development of the BOT project as intangible asset and allow depreciation....
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....l the contract and take back the asset to its benefit to the exclusion of the assessee. The Ld.DR had drawn our attention to the termination clause in the agreement which states as under : ARTICLE 37 TERMINATION 37.1 Termination for Concessionaire Default 37.1.1 Save as otherwise provided in this Agreement, in the event that any of the defaults specified below shall have occurred, and the Concessionaire fails to cure the default within the Cure Period set forth below, or where no Cure Period is specified, then within a Cure Period of 60 (sixty) days, the Concessionaire shall be deemed to be in default of this Agreement (the "Concessionaire Default"), unless the default has occurred solely as a result of any breach of this Agreement by the Authority or due to Force Majeure. The defaults referred to herein shall include: (a) the Performance Security has been encashed and appropriated in accordance with Clause 9.2 and the Concessionaire fails to replenish or provide fresh Performance Security within a Cure Period of 30 (thirty) days; (b) subsequent to the replenishment or furnishing of fresh Performance Security in accordance with Clause 9.2, ....
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....ustee or receiver is appointed for the Concessionaire or for the whole or material part of its assets that has a material bearing on the Project; (r) the Concessionaire has been, or is in the process of being liquidated, dissolved, wound-up, amalgamated or reconstituted in a manner that would cause, in the reasonable opinion of the Authority, a Material Adverse Effect; (i) the amalgamated or reconstructed entity has the capability and operating experience necessary for the performance of its obligations under this Agreement and the Project Agreements; (ii) the amalgamated or reconstructed entity has the financial standing to perform its obligations under this Agreement and the Project Agreements and has a credit worthiness at least as good as that of the Concessionaire as at the Appointed Date; and (iii) each of the Project Agreements remains in full force and effect; (t) any representation or warranty of the Concessionaire herein contained which is, as of the date hereof, found to be materially false or the Concessionaire is at any time hereafter found to be in breach thereof; (u) the Concessionaire submits to the Authority any....
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....s notice referred to above and restore all the rights of the Concessionaire: Provided further that upon written request from the Lenders' Representative and the Concessionaire, the Authority shall extend the aforesaid period of 180 (one hundred and eighty) days by such further period not exceeding 90 (ninety) days, as the Authority may deem appropriate. 37.2 Termination for Authority Default 37.2.1 In the event that any of the defaults specified below shall have occurred, and the Authority fails to cure such default within a Cure Period of 90 (ninety) days or such longer period as has been expressly provided in this Agreement, the Authority shall be deemed to be in default of this Agreement (the "Authority Default") unless the default has occurred as a result of any breach of this Agreement by the Concessionaire or due to Force Majeure. The defaults referred to herein shall include: (a) The Authority commits a material default in complying with any of the provisions of this Agreement and such default has a Material Adverse Effect on the Concessionaire; (b) the Authority has failed to make any payment to the Concessionaire within the ....
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....ent of any delay, the Authority shall pay interest at a rate equal to 3% (three per cent) above the Bank Rate on the amount of Termination Payment remaining unpaid; provided that such delay shall not exceed 90 (ninety) days. For the avoidance of doubt, it is expressly agreed that Termination Payment shall constitute full discharge by the Authority of its payment obligations in respect thereof hereunder. 37.3.4 The Concessionaire expressly agrees that Termination Payment under this Article 37 shall constitute a full and final settlement of all claims of the Concessionaire on account of Termination of this Agreement for any reason whatsoever and that the Concessionaire or any shareholder thereof shall not have any further right or claim under any law, treaty, convention, contract or otherwise. 37.4 Other rights and obligations of the Authority Upon Termination for any reason whatsoever, the Authority shall: (a) be deemed to have taken possession and control of the Project Highway forthwith; (b) take possession and control of all materials, stores, implements, construction plants and equipment on or about the Site; (c) be entitled ....
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....er more, it was the contention of the Ld.DR that the Article 47 at page 125 and 47.4.1 is required to be read in light of the fact that the NHAI cannot decide the taxability or ownership in derogation of the other applicable laws. In other words, the Ld.DR submitted that two individuals cannot decide that assessee will be for the purpose of depreciation only and for the purpose of other purposes, ownership will not be passed on to the assessee and will vest with NHAI. It was submitted that there cannot be piecemeal transfer or assignment of road by the NHAI to the assessee. It was submitted that what has been invested by the assessee was in the form of material and labour, because the right over the land was all alone with the NHAI and at no point of time, either the land or the right over the land has been transferred by NHAI to the assessee. Further it was submitted that the NHAI is a Body which is required to develop infrastructure throughout India and it has a limited right and authority. NHAI cannot adjudicate or decide the fact of ownership. The land or infrastructure can only be transferred in the manner contemplated under the Transfer of Property Act. The Transfer of Proper....
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....ee as may be prescribed; (ii) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed: Provided that no deduction shall be allowed under this clause in respect of- (a) any motor car manufactured outside India, where such motor car is acquired by the assessee after the 28th day of February, 1975 but before the 1st day of April, 2001, unless it is used- (i) in a business of running it on hire for tourists ; or (ii) outside India in his business or profession in another country ; and (b) any machinery or plant if the actual cost thereof is allowed as a deduction in one or more years under an agreement entered into by the Central Government under section 42 : Provided further that where an asset referred to in clause (i) or clause (ii) or clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restrict....
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....t of the Taxation Laws (Amendment) Act, 1991: Provided also that the aggregate deduction, in respect of depre-ciation of buildings, machinery, plant or furniture, being tangible assets or know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets allowable to the predecessor and the successor in the case of succession referred to in clause (xiii), clause (xiiib) and clause (xiv)of section 47 or section 170 or to the amalgamating company and the amalgamated company in the case of amalgamation, or to the demerged company and the resulting company in the case of demerger, as the case may be, shall not exceed in any previous year the deduction calculated at the prescribed rates as if the succession or the amalgamation or the demerger, as the case may be, had not taken place, and such deduction shall be apportioned between the predecessor and the successor, or the amalgamating company and the amalgamated company, or the demerged company and the resulting company, as the case may be, in the ratio of the number of days for which the assets were used by them. Explanation 1.-Where th....
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....ment in this behalf, in the State of Andhra Pradesh or in the State of Bihar or in the State of Telangana or in the State of West Bengal, and acquires and installs any new machinery or plant (other than ships and aircraft) for the purposes of the said undertaking or enterprise during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020 in the said backward area, then, the provisions of clause (iia)shall have effect, as if for the words "twenty per cent", the words "thirty-five per cent" had been substituted : Provided further that no deduction shall be allowed in respect of- (A) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or (B) any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house; or (C) any office appliances or road transport vehicles; or (D) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under th....
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....(v) [***] (vi) [***] (1A) [***] (2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years. 15. From the bare perusal of the section 32 of the Act for the purpose of claiming depreciation over the immovable asset, it is necessary that the immovable asset tangible or intangible have to be owned by the assessee. In the present case as is clear from the terms of the concessional agreement, the immovable asset belongs to the NHAI and the assessee was me....
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.... managed and operated by private entities does not mean that the vesting of the National Highway in the Union is effected. That does not dilute the right conferred by section 4 or take away the ownership of this Highway, meaning thereby, its vesting in the union. It is thus, the union in which the National Highway vests and that is all pervasive. 39. It would not be proper, therefore, to read into section 32 of the Income Tax Act, 1961 something which is defeating and frustrating the mandate of these laws. It can never be intended by the legislature that the broad and wide definition of the term "owner" as appearing in the Income Tax Act, 1961 would interfere with or take away the absolute rights of the above nature conferred in the union of the National Highways. This is too well settled and to require a reference to any judgment. That a provision in one statute or a definition in one statute cannot be interpreted so as to defeat and frustrate another law or statute or any definition therein and when that another statute is a special legislation. The words and definitions in a general enactment can never be held to be contradicting, overriding the stipulations and provisi....
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....tory of M/s Patna Bakhtiyarpur Tollway Ltd (PAN: AAFCP9577K), Hyderabad, do hereby solemnly affirm and declare that: 1. I have filed an appeal for the relevant Financial Year 2016-17 against the order of CIT(A) -National Faceless Appeal Centre (NFAC) in CIT (A), Hyderabad- 4/10669/2019-20 for the AY 2017-18 on 04/11/2023 whereas the due date for filing the appeal was 16/08/2022 i.e., 60 days from the date of receipt U/s 253(3) of the Income Tax Act. 1961. 2. The delay in filing of appeal is purely on account of the reason that I have entrusted the task of appeal and hearings therein to my counsel which is evident from Page No.2 of Form No. 35 filed before CIT(A). However, while going through the e-proceedings tab in the Income Tax Portal for submission of reply to other notices, I observed that an order was already by the CIT(Appeals) on 17/06/2022. Thereafter upon enquiry into the factual matrix, I was given to understand that the appeal was disposed off on account of non-appearance of the counsel and also on merits without proper appreciation of facts of the case. 3. Immediately upon realizing that my counsel has not appeared and has not communicated any correspondence r....
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....ction 32, the percentage to be applied will be the percentage specified against suh item (1) or (2) of item 1 as may be appropriate to the class of building in or in relationik to which the renovation or improvement is effected. Where the structure is constructed or the work is done by way of extension of any such building, the percentage to ho applied would be such percentage as would be appropriate, as if the structure or work constituted a separate building". (Contd. from p. 1.637) be treated as an intangible asset (being a business or commercial right akin to a licence) which is eligible for claim of depreciation-Circular No. 20/2019, dated 19-8-2019. For details, we Taxmann's Master Guide to Income-tax Rules. 43. The roads laid within the factory premises as links or which provide approach to the buildings are necessary adjuncts to the factory buildings to carry on the business activities of the assessee and would be 'building'-CIT v. Gwalior Rayon Silk Mfg. Co. Ltd. [1992] 62 Taxman 471 (SC). "Buildings" are not restricted only to those roads which are adjacent to building CIT v. VGP Housing (P.) Ltd. [2016] 66 taxmann.com 354 (Mad.). Where the asseywe constructed ro....