TaxTMI 
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2025 (11) TMI 1834
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....s and circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 1,49,17,94,856/- without appreciating the fact that claim of the assessee for depreciation of Rs. 1,49,17,94,856/- on 'Right to Collect Toll' was disallowed on following facts: (a) 'Right to Collect Toll' does not fall under any of the categories of 'intangible asset' specified in clause 32(1)(ii) of the Income Tax Act, 1961. (b) The assessee is not a physical owner of the asset i.e. 'Right to Collect Toll' which is a pre-requisite condition for claiming depreciation in view of the CBDT Circular No. 09 of 23.04.2014. (c) The claim of the assessee for allowing depreciation on the ground of 'principal of consistency' and sustained by the CIT(A) is not acceptable as the issue of claim of depreciation was not examined in the case of assessee in earlier years in light of CBDT circular dated 23.04.2014. This view finds support from the following case laws: Union of India & Anr. Vs Radhu." (A.1) Grounds taken by the assessee in its Cross Objection are as under: "1. Because Ld. CIT(A), Lucknow-3 erred on facts and law while dismissing the grounds ....
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....o Rs. 1,49,17,94,856/- and opted out of claiming amortization of the capital expenditure. The Assessing Officer disallowed the assessee's claim for depreciation amounting to aforesaid amount of Rs. 1,49,17,94,856/- and instead allowed amortization of expenses amounting to Rs. 37,98,00,000/-. The assessee filed appeal in the office of learned CIT(A). Vide impugned order dated 18/01/2024, the learned CIT(A) partly allowed the assessee's appeal. The learned CIT(A) took the view that Right to Collect Toll was an intangible asset and the assessee was entitled to claim depreciation on the same. The relevant portion of the order of learned CIT(A) is reproduced as under: 6.3 I have carefully considered the submission made by the appellant. The appellant is Special Purpose Vehicle (SPV) incorporated on 05.12.2011 for the purpose of development of four laning of Varanasi Shakti Nagar RoaduptoHathiNala in the state of Uttar Pradesh. On DesignBuild Finance Operate and Transfer (DBFOT) basis under concession agreement dated 08.12.2011 with Uttar Pradesh State Highways Authority (UPSHA). The Concession agreement is for a period of 20 years from the appointed date i.e. 05.02.2013....
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....ven the ownership right to the appellant. Therefore, the claim of depreciation at the end of the appellant has been authorized/acknowledged by the state government from the date of concessionaire agreement. 6.7 Another ground raised by the appellant is whether the right to collect toll is a capital asset under section 32(1)(ii) of the Act or not. For the sake of clarity section 32(1)(ii) of the Act is reproduced hereunder :- 32. (1) In respect of depreciation of- (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, ^92[not being goodwill of a business or profession,] owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed- ....." 6.8 The appellant has got the right to collect toll for the specified period only after incurring expenditure through its own sources on development, construction and maintenance of infrastructure facili....
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....or collecting the toll. The expression 'license' has well known legal connotation and since the expression has been used in sec. 32(1)(ii) defining "intangible asset", it connotes license which is exploited in the business or profession only and not in any other type of license. In terms of BOT scheme and entrepreneur is required to build an infrastructure facility by arranging its own finances. Thereupon the operation and maintenance is also the responsibility of the entrepreneur. In consideration thereupon such entrepreneur is entitled to collect on from the motor vehicle passing through such road/bridges etc. In view of these facts, we are of the considered opinion that the assessee is entitled to depreciation. Our view is further supported by the decision of the Pune Bench in the case of Ashoka Info (P) Ltd. vs. ACIT (supra). Therefore, this ground of the assessee in both the appeals is allowed" 6.9.2 The appellant has placed its reliance in the case of Assistant Commissioner of Income-tax, Central Circle 1, Nashik v. Ashoka Infraways (P.) Ltd., in [2013] 33 taxmann.com 499 (Pune - Trib.) wherein the Hon'ble ITAT PUNE BENCH 'B' vide order dated APRI....
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....- Assessing Officer held that as assessee had no right on road, except, for maintaining road and receiving toll collections during concession period as per rates specified by Government and since asset on which assessee had claimed depreciation was neither a building nor a plant and machinery, assessee would not be entitled to depreciation - However it was found that by virtue of C.A., assessee had acquired an intangible asset by acquiring right to operate toll road/bridge and collect toll charges in lieu of investment made by it in implementing project - Right to operate toll road/bridge and collect toll charges was a business commercial right as envisaged under section 32(1)(ii) read with Explanation 3(b) - Whether thus assessee would be eligible to claim depreciation on such asset at specified rate - Held, yes [Paras 11, 16 and 17] [In favour of assessee]" 6.9.4 The appellant has placed its reliance in the case of Deputy Commissioner of Income-tax v. Ashoka DhankuniKharagpurTollway Ltd., in [2022] 145 taxmann.com 97 (Pune - Trib.) whereby the Hon'ble ITAT PUNE BENCH 'A' vide order dated JULY 19, 2022 has held :- "Section 32 of the Income-tax Act, 19....
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.... on construction of toll road would stand reversed. Accordingly, the Assessing Officer would compute the income in the hands of assessee, in line with guideline of the order of Tribunal above. 12. The issue arising in ITA No. 380/PUN/2016 is identical to the issue raised in mutatis-mutandis to ITA No. 380/PUN/2016. 13. In the result, both the appeals of the Revenue are dismissed." 6.9.6 The appellant has placed its reliance in the case of Godavari Toll Bridge (P) Ltd. v. ACIT, in (2018) 163 DTR 17 / 191 TTJ 568 (Visakha)(Trib.) wherein the Hon'ble ITAT Vishakhapatnam vide order dated November 29, 2017 has held as under :- "S. 32: Depreciation-Toll bridge -BOT basis- Intangible asset, depreciation is allowable . As per Circular No. 9 of 2014 issued by the Board, the assessee can claim amortisation of the expenditure also shows that the expenditure incurred by the assessee has to be treated as a capital expenditure by treating it as intangible asset. The expenditure has to be allowed as deduction in each year, so as to arrive at real profit. The provisions of depreciation or amortisation are only aimed at arriving at the true profit, t....
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....he bridge on the parity of reasoning that the assessee was not the owner inspite of the fact that the collection was treated as income of the assessee company and was also approved by the State Government." 6.9.8 The appellant has placed its reliance in the case of Thiruvananthapuram Road Development Company Ltd v/s DCIT- 14(3)(1), in ITA NO. 622/Mum/2015 whereby the Hon'ble ITAT Mumbai Bench 'E', Mumbai vide order dated 23.05.2018 has held as under :- "Assessing Officer on the plea that the assessee is not the owner of the toll road, hence not eligible for depreciation. To this extent, that the assessee is not the owner of the asset/road, we agree with the contention of the Ld. Assessing Officer as well as the Id. CIT-DR/DR. However, the issue before us falls within the category of intangible asset. The Ld. Commissioner of Income Tax (Appeal) also allowed depreciation as a building instead of plant and machinery. We feel this is neither building nor a plant and machinery rather the claim of depreciation to the assessee is allowable to the extent of Rs. 9,28,86,339/- in the category of commercial rights of similar nature being intangible asset....
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....ent appeal was considered by the Co-ordinate Bench of the Tribunal in the case of M/s. Ashoka Infrastructure Limited Vs. ACIT (supra). The Tribunal held that "right to collect toll" is an intangible asset and the assessee is entitled to claim depreciation on same. We find that consistent view has been taken by the Tribunal in various other cases where depreciation has been claimed on "right to collect toll", considering it to be an intangible asset. The Hyderabad Special Bench of the Tribunal in the case of ACIT Vs. M/s. Progressive Construction Limited reported as 191 TTJ 549 has held that National Highway constructed on BOT basis gives rise to an intangible asset in the form of right to collect toll charges u/s. 32(1)(ii) and the assessee is eligible to claim depreciation on such asset. Thus, in view of the above decisions of the Tribunal we find no infirmity in the impugned order. Accordingly, the same is upheld and the appeal of Revenue is dismissed being devoid of any merit. In the result, the appeal of Revenue is dismissed." 6.9.11 The appellant has placed its reliance in the case of Mokama Munger Highway Ltd, in ITA No. 1729,2145 & 2146 whereby the Hon'....
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....t Gujarat Expressway Ltd, we find this distinction was not brought to the notice of the Hon'ble High Court and therefore, the Hon'ble High Court was pleased to apply the ratio laid down by it in the case of North Karnataka Expressway Ltd. Therefore, the decision of the Hon'ble Bombay High Court cannot be applied to the case of the assessee straightway. The Special Bench of the Tribunal in the case of Progressive Constructions Ltd, has held 'the license to operate and collect the toll fee' as a commercial right falling within the definition of "intangible asset", whereas the Hon'ble Bombay High Court was considering whether the assessee be granted depreciation on tollway which are not owned by it. Since the distinction between both the cases before the Bombay High Court has been clearly brought out by the Coordinate Bench of the Tribunal at Pune in the case of Ashoka Infrastructure Ltd, we are of the opinion that the decision of the Coordinate Bench is applicable to the facts of the case before us. There is no decision by the Hon'ble Bombay High Court that the right 'to collect toll fee over the roads built and operated by the assessee' is not an ....
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....treating the toll way rights as an intangible asset under section 32(1)(ii) of the Act. Thus, we find no reason to interfere with the order passed by the Id.CIT(A). Thus, the ground raised by the Revenue stands dismissed." 6.9.13 The appellant has placed its reliance in the case of ACIT vs Essel Sagar Damoh Toll Roads, in ITA No. 7114/Mum/2016 whereby the Hon'ble ITAT, Mumbai vide order dated 20.09.2019 has held as under :- "We find that the aforesaid order of the "Special bench" of the Tribunal, had thereafter been followed by the ITAT "J" bench, Mumbai, in the case of DCIT, Circle-9(1)(2), Mumbai Vs. M/s Atlanta Ltd. Mumbai (ITA No. 3415/Mum/2015, dated 24.01.2018). Also, a similar view had been taken by the ITAT, Chennai in the case of ACIT, cooperative circle 5(2), Chennai Vs. M/s PNG Toll Way Ltd (ITA No. 238/CHNNY/2019, dated 26.07.2019. In the backdrop of the aforesaid judicial pronouncements, we are of the considered view that the issue as to whether an Infrastructure Development company which had constructed a road on build, operate and transfer (BOT) basis on the land owned by the Central Government would be eligible for claim of depreciation in resp....
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....is accepted, the deduction allowed by the AO towards allocated cost of project, naturally needs to be withdrawn. The AO is directed to recalculate the depreciation in terms indicated above and add back the allocated cost of project as allowed by him as deduction in the assessment order. Thus, the ground Nos. 1 to 3 raised by the Revenue fails and are dismissed. 14. In the result, the appeal of Revenue in ITA No. 53/PUN/2018 is dismissed." 6.9.15 The appellant has placed its reliance in the case of BSC C&C Kurali Toll Road Ltd. v/s ACIT, Circle-5(1), New Delhi, ITA Nos. 1592&1593/Del/2017, in ITA Nos. 1592&1593/Del/2017 wherein the Hon'ble ITAT, Delhi 'A' Bench, New Delhi vide order dated 18.05.2021 has held as under :- "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]327ITR323(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(....
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....and receiving toll collections during concession period as per rates specified by Government and since asset on which assessee had claimed depreciation was neither a building nor a plant and machinery, assessee would not be entitled to depreciation - However it was found that by virtue of C.A., assessee had acquired an intangible asset by acquiring right to operate toll road/bridge and collect toll charges in lieu of investment made by it in implementing project - Right to operate toll road/bridge and collect toll charges was a business commercial right as envisaged under section 32(1)(ii) read with Explanation 3(b) - Whether thus assessee would be eligible to claim depreciation on such asset at specified rate - Held, yes [Paras 11, 16 and 17] [In favour of assessee] 6.10 In view of the above case laws wherein the right to collect toll has been treated as intangible asset within the meaning of section 32(1)(ii) of the Act, It is not disputed that the appellantcompany has been given license/commercial right over the project to receive the toll. The appellant company may be not be the owner of the toll road, but it, certainly is owner in possession of the right to collect th....
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....e requirements of laws such as Transfer of Property Act and Registration Act etc. but nevertheless is entitled to hold the property to the exclusion of all others. The Hon'ble Apex Court in the above mentioned judgement has further held that the very concept of depreciation suggests that the tax benefit on account of depreciation legitimately belongs to one who has invested in the capital asset, is utilizing the capital asset and thereby loosing gradually investment caused by wear and tear, and would need to replace the same by having lost its value fully over a period of time. 6.11 In view of above case laws wherein the Hon'ble Courts have held that "right to collect toll" is an intangible asset and the assessee is entitled to claim depreciation on same. I am of the considered view, that consistent view has been taken by the Hon'ble Tribunals in various cases where depreciation has been claimed on "right to collect toll" considering it to be an intangible asset. Therefore, in view of aforementioned discussion, it is clear that the right to claim the depreciation vests with the appellant since the appellant is the owner as per the concessionaire agreement and a....
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....selected for scrutiny and accordingly notice u/s 143(2) of the Act was issued on 28.06.2022 in terms of Board's guideline dated 03.06.2022. Since the case was already selected for scrutiny prior to the search & seizure operation, the contention of the appellant that notice u/s 143(2) of the Act was issued misinterpreting the Board's Circular dated 03.06.2022 has no force. In fact, the case was selected for scrutiny as per Board's guidelines. On perusal of the assessment order, it is noted that the appellant has duly complied with the notices issued from time to time by filing submissions. Moreover, no such objection was raised during assessment proceeding. In view of these facts, I am of the view that the assessment has been completed as per the due procedure of law without any lacuna. Therefore, this ground of appeal is hereby dismissed. (C) The present appeal and the Cross Objection before us have been filed by Revenue and by the assessee respectively in relation to the aforesaid appellate order dated 18/01/2024 of the learned CIT(A). In the course of appellate proceedings in Income Tax Appellate Tribunal, written submissions were filed by the office of the learned....
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....rnataka Expressway Ltd. v. Commissioner of Income-tax -10[2014] 51 taxmann.com 214 (Bombay) that - Where assessee, engaged in business of infrastructure development, in execution of an agreement with National Highway Authority, constructed a road on Build, Operate and Transfer (BOT) basis on land owned by Government, could not claim depreciation on toll road so constructed and operated The Hon'ble Madras High Court in the case of L&T Infrastructure Development Projects Ltd. [TS-1043-HC-2022 (Mad)] has held that in case of BOT (Build, Operate& Transfer) arrangement, the ownership of infrastructure facility always remains with the Government and is never transferred to the concessioner and further the Hon'ble Court has also rejected the alternative claim of depreciation as intangible asset. Besides the above, the Appellant has no 'Right to Collect Toll' as claimed by it and allowed by the Ld. CIT(A) without proper application of mind and without proper appreciation of relevant documents. The 'Right to Collect Toll' is vested with the UPSHA as evident from the UPSHA Act and Rules (relevant pages are submitted). The Appellant is merely....
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....n to the assessee. Further, as regards the issues related to validity of the assessment proceedings and jurisdiction of the Assessing Officer, which were decided against the assessee by the learned CIT(A) in her aforesaid impugned order, the learned A.R. for the assessee placed reliance on submissions made in the course of appellate proceedings in the office of the learned CIT(A). These submissions are part of the paper book filed from the assessee's side, and are reproduced below for the ease of reference: 1. Submission as per grounds of appeal No. 1 to 4 That return for the relevant year was e-filed on 12.03.2022 at total income of Rs. (1,20,20,10,587/-) vide ack. No. 330159990120322. Meanwhile after end of relevant year search and seizure operation was conducted on APCO group on 15.09.2021, therefore, as per the new regime of section 148 relating to search assessment was required to be followed by Id. AO. Instead of following specific provisions of section 148, Ld. AO has issued notice u/s 143(2) on 28.06.2022 misinterpreting the Board Circular dated 03.06.2022 which was relevant to for those cases which were not centralized as per date of issuing of such c....
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....ent case before us, the assessee is in DBFOT contract and not BOT contract. A BOT contract encompasses Build, Operate and Transfer. However, the DBFOT contract is of a much wider scope as it also covers Design and Finance in addition to Build, Operate and Transfer. Since the assessee takes up additional responsibility towards design and finance in DBFOT contract, the aforesaid CBDT circular No. 9/2024 dated 23/04/2014, which was issued for BOT contract is not applicable to the present case before us. Even otherwise, it is well settled and CBDT Circulars and Instructions are binding only to the extent they are beneficial for the assessee. If and when a CBDT Circular/Instruction is adverse to the assessee, it is not binding. (E.1) Further, it is not in dispute that under DBFOT contract, the assessee entered into contract with UPSHA, the assessee was the deemed to have acquired and owned the project. Therefore, deemed ownership and acquisition of the project by the assessee is not in dispute. Moreover, the assessee was also in possession for the purpose of developing and maintaining the project and for exercising the right to collect toll. Therefore, the possession of the project b....
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....by arranging its own finances. There upon the operation and maintenance is also the responsibility of the entrepreneur. In consideration there upon such entrepreneur is entitled to collect on from the motor vehicle passing through such road/bridges etc. In view of these facts, we are of the considered opinion that the assessee is entitled to depreciation. Our view is further supported by the decision of the Pune Bench in the case of Ashoka Info (P) Ltd. vs. ACIT (supra). 1. ACIT vs Ashoka Infraways (P.) Ltd. [2013] 33 taxmann.com 499 (Pune - Trib.) Assessment Year 2006-07 & 2007- 08 (dt.29.04.2013.) 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 Pradesh only allowed the assessee to recover the costs incurred for constructing the road facility whereas section 32(1) (ii) of the Act required that the assets mentioned. therein should be acquired by the assessee after spending money. The said argument in our view is factually and legally misplaced. Factually speaking, it is wrong to say that impugned right ....
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....he order of Assessing Officer in amortizing the expenditure over the period of facility and allowing the same stands reversed. The Assessing Officer is directed to allow the claim of assessee of depreciation on such intangible asset under section 32(1)(ii) of the Act. 9. Following the same parity of reasoning, we hold that the assessee is entitled to claim the depreciation on intangible assets as provided under section 32(1)(ii) of the Act. The second part of the order of Assessing Officer in amortizing the expenditure over the period of facility and allowing the same stands reversed. The Assessing Officer is thus, directed to allow the claim of assessee vis-vis depreciation on intangible asset under section 32(1)(ii) of the Act. Following the same parity of reasoning. we hold that the assessee is entitled to depreciation @25% on the Right to Collect Toll being an intangible asset. Accordingly, the grounds raised by the Revenue are dismissed. 1. ACIT vs M/S. Jaora Nayagaon Toll Road Co. ITA Nos. 379&380/PUN/2016AY:2010- 11&2011-12 (Dt. 29.11.2017) The issue arising in the present appeal i.e. against claim of the assessee on right to collect toll being an intangibl....
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.... of depreciation. (AY. 2007-08 to 2009-10) 1. M/s.Dimension Construction Pvt Ltd.,1148, E Ward, Respondent Sykes Extension, Kolhapur. ITA Nos. 540and541/PUN/2016 Assessment Years:2005-06 and 2007-08 dt. 05/01/2018 We have heard the rival submissions and perused the material on record. We find that identical issue of depreciation on the intangible asset namely, right to collection of toll from 'road over bridge' was decided by the Co-ordinate Bench of the Tribunal in A.Ys.2002-03, 2003-04, 2004-05 and 2006-07 in assessee's favour. We find that Co-ordinate Bench of the Tribunal in assessee's own case for A.Y. 2003-04 observed as under: "4. The next issue is regarding depreciation on intangible asset namely right to collection of toll from the road overbridge on the parity of reasoning that the assessee was not the owner. In this regard, the learned AR pointed out that this issue is covered by the order of the Tribunal Pune Bench, Pune in the case of Ashoka Info(P) Ltd. Vs. Asstt. CIT (2009)123TTJ(Pune)77 wherein with regards to intangible assets and toll collection rights the Tribunal observed that the investment made by the assessee towards const....
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....d/bridge and collect toll charges is a business or commercial right as envisaged under section 32(1)(ii) r/w Explanation 3(b) of the said provisions. Therefore, in our considered opinion, the assessee is eligible to claim depreciation on WDV as an intangible asset. Thus, we answer the question framed by the Special Bench as under :- The expenditure incurred by the assessee for construction of road under BOT contract by the Government of India has given rise to an intangible asset as defined under Explanation 3(b) r/w section 32(1)(ii) of the Act. Hence, assessee is eligible to claim depreciation on such asset at the specified rate. c M/s. Atlanta Limited 11. The ratio laid down in the aforesaid decision of the Special Bench squarely applies to the facts of the present case. Therefore, in our considered opinion, the assessee is entitled to claim depreciation on the cost incurred on construction of the BOT facility,since, by incurring such investment the assessee has acquired a valuable commercial or business right in the nature described under section 32(1)(ii) r/w Explanation 3 2(1), Explanation-3(b) of the Act. 12. Even otherwise also, the assessee's claim of depre....
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....opment Co. Ltd. ITA NO. 622/Mum/2015 Assessment Year: 2010-11 and 2011-12. (DT. 23/05/2018) ITA Nos. 622,636,4346/Mum/2015 & C.O.No. 25/Mum/2017 Assessing Officer on the plea that the assessee is not the owner of the toll road, hence not eligible for depreciation. To this extent, that the assessee is not the owner of the asset/road, we agree with the contention of the Ld. Assessing Officer as well as the Id. CIT-DR/DR. However, the issue before us falls within the category of intangible asset. The Ld. Commissioner of Income Tax (Appeal) also allowed depreciation as a building instead of plant and machinery. We feel this is neither building nor a plant and machinery rather the claim of depreciation to the assessee is allowable to the extent of Rs. 9,28,86,339/- in the category of commercial rights of similar nature being intangible asset as provided u/s 32 (1)(ii) of the Act. To this extent, only, the additional ground raised by the assessee is allowed at applicable rate of deprecation i.e. @ 25%. It is further noted the present road is since 2008-09 and license was granted to the assessee in terms of collecting tax/tolls and the Tribunal for Assessment Year Thiruvana....
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....rabad Special Bench of the Tribunal in the case of ACIT Vs. M/s. Progressive Construction Limited reported as 191 TTJ 549 has held that National Highway constructed on BOT basis gives rise to an intangible asset in the form of right to collect toll charges u/s. 32(1)(ii) and the assessee is eligible to claim depreciation on such asset. Thus, in view of the above decisions of the Tribunal we find no infirmity in the impugned order. Accordingly, the same is upheld and the appeal of Revenue is dismissed being devoid of any merit. 1. MokamaMunger Highway Ltd.(ITAT-Hyd) ITA No. 1729,2145 & 2146 Assessment Year: 2013-14 to 2015-16 Dt. 03.07.2019 In view of the above facts, it is not disputed or contested by the Revenue that the assessee is not entitled to any deduction. The only issue in dispute is as to under what head/provision the deduction is to be allowed to the assessee. The Hon'ble Jurisdiction High Court of Bombay in the case of "BalmukundAcharya vs. DCIT" reported in (2009)221 CTR 440 (Bom.)has held that the Hon'ble Apex Court and the various High Courts have ruled that the authorities under the Act are under obligation to act in accordance with law. Tax c....
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....ing whether the assessee be granted depreciation on tollway which are not owned ITA Nos 1729 2145 and 2146 of 2018 Mokama Munger Highway Ltd Hyderabad. Page 20 of 25 by it. Since the distinction between both the cases before the Bombay High Court has been clearly brought out by the Coordinate Bench of the Tribunal at Pune in the case of Ashoka Infrastructure Ltd, we are of the opinion that the decision of the Coordinate Bench is applicable to the facts of the case before us. There is no decision by the Hon'ble Bombay High Court that the right _to collect toll fee over the roads built and operated by the assessee' is not an - intangible asset, particularly when it is held that the expenditure incurred by the assessee is not revenue in nature. Accordingly, the assessee's grounds of appeal on this issue are allowed. 1. ACIT vs M/s PNG Tollway Ltd. (ITAT Chennai) /I.T.A.No. 238/Chny/2019. Assessment Year : 2014-15, (dt. 26.07.2019.) Bench as under :- The expenditure incurred by the assessee for construction of road under BOT contract by the Government of India has given rise to an intangible asset as defined under Explanation 3(b) r/w section 32(1)(ii) of ....
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....perative circle 5(2), Chennai Vs. M/s PNG Toll Way Ltd (ITA No. 238/CHNNY/2019, dated 26.07.2019. In the backdrop of the aforesaid judicial pronouncements, we are of the considered view that the issue as to whether an Infrastructure Development company which had constructed a road on build, operate and transfer (BOT) basis on the land owned by the Central Government would be eligible for claim of depreciation in respect of its intangible rights i.e "right to collect toll" under Sec. 32(1)(ii), is squarely covered by the aforesaid order of the Special bench of the Tribunal in the case of ACIT, Circle 10(2), Hyderabad, Vs. Progressive Construction Ltd. (2018) 191 TTJ 549 (Hyd.) (SB), and also the orders of the coordinate benches of the Tribunal viz. (1) DCIT, Circle- 9(1)(2),Mumbai Vs. M/s Atlanta Ltd. Mumbai (ITA No. 3415/Mum/2015, dated 24.01.2018); and (N) ACIT Vs. M/s PNG Tata Ltd. (ITA No. 238/CHNNY/2019, dated 26.07.2019. We thus finding ourselves to be in agreement with the view taken by the Tribunal in the aforesaid cases, respectfully follow the same. Accordingly, the claim of the assessee towards depreciation under Sec.32(1)(ii) in respect of its intangible rights i.e "r....
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....ridge and collect toll charges is a business or commercial right as envisaged u/s 32(1)(ii)r/w Explanation 3(b) of the said provisions. Therefore, in our considered opinion, the assessee is eligible to claim depreciation on WDV as an intangible asset. Thus, we answer the question framed by the Special Bench as under :- The expenditure incurred by the assessee for construction of road under BOT contract by the Government of India has given rise to an intangible asset as defined under Explanation 3(b) r/w section 32(1)(ii) of the Act. Hence, assessee is eligible to claim depreciation on such asset at the specified rate. 12. Therefore, respectfully following the view expressed by the Hon'ble Bombay High Court and the Special Bench of this Tribunal, we hold that the assessee is eligible for depreciation @25% as claimed by the assessee. Thus, Ground of appeal No. 1 raised by the assessee is allowed. 1. North Karnataka Expressway Ltd. AY 2008-09,2009-10 & AY2010-11 ITA No 4160,4161 & 1260 pg. no-35 & 36 (Mumbai Tribunal dt. 19/09/2021) We find that the afore said order of the Special bench of the Tribunal, had there after been followed by the ITAT "J" bench, Mumbai, in....
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....the assessee for acquiring such right certainly is an intangible asset coming within the purview of section 32(1)(ii) of the Act. Therefore, the assessee would be eligible to claim depreciation. The decision of the learned Commissioner (Appeals) on the issue is here by reversed. 1. [2022] 145 taxmann.com 97 (Pune - Trib.) IN THE ITAT PUNE BENCH 'A' DCIT- tax V. Ashoka Dhankuni Kharagpur Tollway Ltd. (Dt. 19.07.2022) AY: 2014-15 & 2015-16. Now the question that comes up for our consideration is whether the "Right to Collect Toll" falls within the definition of commercial right or "intangible asset"? There can be no doubt that as result of developing this project, the respondent-assessee had acquired a commercial right to collect the toll in terms of the contract awarded by NHAI. This right definitely falls within the meaning of "commercial right" or "intangible asset". This definitely would qualify for depreciation @ 25%. To the same effect is the decisions of the Hon'ble Rajasthan High Court in the case of CIT v. GVK Jaipur Kishangarh Expresway Ltd. [D.B. IT Appeal No. 232 of 2016, dated 10-10-2017], the High Court has taken into consideration all the dec....
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....unal had re- framed the question by limiting the issue only to the determination of nature of asset, whether tangible or intangible. In fact, the learned Departmental Representative has also accepted the aforesaid factual position. In any case of the matter, the assessee neither in the preceding assessment years nor in the impugned assessment year has claimed it as deferred revenue expenditure, hence, there is no scope to examine whether the expenditure could have been amortized over the concession period in terms of CBDT circular No. 9. Moreover, the aforesaid CBDT Circular is for the benefit of the assessee. Therefore, the benefit in terms of the circular can be granted, provided, assessee makes a claim in terms of it. The benefit of the circular cannot be thrust upon the assessee if it is not claimed. Therefore, since the issue, as raised in ground No. 4, does not arise out of the orders of the Departmental Authorities, it cannot be the subject matter of adjudication in the present appeal. Accordingly, we dismiss ground No. 4 raised by the Department." 1. Telecommunication Consultants India Ltd. (ITAT-Delhi) ITANo. 3801/DEL Assessment Year: 2013-14 dt. 26.07.2023 ....
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....d machinery. However, since the assessee is not on appeal against the said finding, we are of the view that the decision of the Bombay High Court in the case of North Karnataka Expressway Ltd., does not advance the case of the Revenue before us. 24. On this issue, it would be beneficial to refer to the decision of the Rajasthan High Court in the case of Pr. CIT v. GVK Jaipur Expressway Ltd. [2018] 100 taxmann.com 95. This decision was rendered by the Court on 10-10-2017, which was much after the decision of the Bombay High Court in the case of North Karnataka Expressway Ltd., which was rendered on 14-10-2014. 25. In the decision of the Rajasthan High Court in the case of GVK Jaipur Expressway Ltd., the Court has taken into consideration all the decisions and more particularly the decisions of the (i) Delhi High Court in the case of Moradabad Toll Road Co. Ltd .; (ii) Allahabad High Court in the case of CIT v. Noida Toll Bridge Co. Ltd. [reported in [2013] 30 taxmann.com 207]; (iii) SB Madras High Court in the case of CIT v. VGP Housing (P.) Ltd. [reported in [2016] 66 taxmann.com 354]; (iv) Rajasthan High Court in the case of CIT v. Jawahar Kala Kendra [r....
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....reciation by Hon'ble Courts. D. Further Hon'ble Mumbai High Court where depreciation on toll road as investment in building were not allowed as held in the case of North Karnataka Expressway Ltd. 372 ITR 145 (AY 2005-06) The Hon'ble High Court after considering the fact & circumstances of the case has also held :- For the above reasons and which are in addition to those supplied by the Commissioner and the Tribunal, this Appeal fails. The reframed substantial question of law is answered in favour of the Revenue and against the Assessee, but by clarifying that the Assessee's claim for depreciation in respect of the building, plant and machinery and falling within the purview of subsection (1) of section 32 of the Income Tax Act, 1961 if considered and granted shall not be affected by our judgment. The above decision was followed by Mumbai High Court in case of West Gujarat Expressway Ltd. 390 ITR 398 AND 398 ITR 400. However thereafter Hon'ble ITAT of Mumbai Bench considering the peculiar facts & circumstances, related law and allowed the depreciation on capital investment in toll road as intangible asset for acquiring licence/....
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....DCIT, ITA No. 634 & 664/Mum/2015. 3. Andhra Prades Expressway Ltd. vs ACIT, ITA No. 655 & 146/Mum/2015. 6837/Mum/2011. 4. Thiruvananthapuram RoadDupmtCovs ACIT, ITA 6798 & 5. Thiruvananthapuram RoadDupmtCovs DCIT, 622, 636, 4346/M/2015 & CO No. 25/M/2015. 6. West Gujarat Expressway Ltd. vs DCIT, ITA No. 3668/4327/Mum/2016 AY 2011-12. 7. Infrastructure Leasing & Financial Services Ltd. Vs ACIT, ITA No. 3699, 3700 & 3786/M/2013. 8. Infrastructure Leasing & Financial Services Ltd. Vs DCIT, ITA No. 7091, 7092, 7284 & 6829/Mum/2014. 9. Selvel Advertising (P) Ltd vs. DCIT, 58 Taxmann.com 196. 10. North Karnataka Expressway Ltd. vs CIT, ITA No. 499/Mum/2012. 11. Godhra Expressway Pvt Ltd. vs DCIT, 2123 & 2124/Hyd/2018. 10. We find the facts of the present case are similar and identical to the Hon'ble Tribunal decision. We considering the factual aspects, circumstances, legal decisions and the judicial precedence of Hon'ble Tribunal decisions are of the opinion that the assessee is eligible for depreciation on Road on (B.O.T.) basis treating it as Intangible Asset u/s 32(1)(ii) of the Act. ....
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....assessee being depreciation on the intangible assets on capital investment on toll road for acquiring licence/rights to collect the toll may kindly be allowed." (E.3) However, the Assessing Officer has failed to cite even one precedent in support of the view taken by him. Moreover, in the written submissions (referred to in foregoing paragraph (C) of this order, the learned D.R. has cited precedents, which are clearly distinguishable on facts. In the case of Patna Bakhtiyarpur Tollway Ltd. vs ACIT [2025] 170 taxmann.com 586 (Hyderabad-Trib.) on which the learned D.R. has placed reliance, the assets belonged to NHAI and not to the assessee. However, in the present case before us, as discussed in foregoing paragraph (E.1) of this order, the deemed ownership and acquisition coupled with possession of the asset is with the assessee. Further in the case of North Karnataka Expressway Ltd. vs. CIT (supra) and in the case of L&T Infrastructure Development Projects Ltd. (supra), on which the learned D.R. has placed reliance, the project was of BOT nature whereas in the present case before us, the contract is of DBFOT nature having much wider scope than BOT. As noted in foregoing paragrap....