TaxTMI 
TaxTMI 
2026 (3) TMI 1664
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....s are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience. ITA No. 2921/Del/2016 - Asst Year 2011-12 - Assessee Appeal 2. None appeared on behalf of the assessee despite issuance of several notices. Since this is an old appeal, we proceed to dispose of this appeal on hearing the learned DR and based on materials available on record. 3. The only issue to be decided in this appeal is as to whether the assessee would be entitled for depreciation at the rate of 25% or 10% in respect of Right to Collect Toll. 4. We have heard the learned DR and perused the materials available on record. The return of income for the Asst Year 2011-12 was filed by the assessee company on 29.11.2011 declaring loss of Rs 112,75,07,887/-. The assessee company was incorporated with an object to undertake road projects on BOO / BOT / BOOT basis and during the year under consideration was engaged in the business of improvement / strengthening of existing two-lane road widening to four lanes, operation and maintenance of NH-1. The assessee claimed depreciation on right to collect toll at the rate of 25 percent which was r....
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....the project cost as per Explanation 10 to section 43(1) of the Act. Since the same was not done by the assessee and excess depreciation claimed by the assessee at the rate of 25 percent there on in the sum of Rs 9,86,25,000/-, the excess depreciation was rightly disallowed by the Learned AO. Hence, we do not find any infirmity in the order of the Learned CIT(A) in this regard. Accordingly, the Ground No. 3 raised by the assessee is dismissed. 9. The Ground No.4 raised by the assessee is challenging the disallowance of Rs 3,98,17,424/-. 10. We have heard the learned DR and perused the materials available on record. During the course of assessment proceedings, the learned AO noticed that assessee company had made provision for resurfacing expenses of Rs 3,98,17,424 and claimed the said expenses in the profit and loss account as deduction. The assessee company was asked to furnish the copy of the ledger account together with complete narration and explain as to why the same should not be disallowed vide show cause notice dated 18-02-2014. In response, the assessee company filed its reply on 28-02-2014. The assessee responded that the road maintenance activity is required at leas....
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....duction in the year of making provision only if the said calculation is based on scientific and rational method of working. Since in the instant case, the workings of the assessee are not scientific and rational, even the decision of the Hon'ble Supreme Court would not come to the rescue of the assessee. Further the Learned CIT(A) noted that the liability has been estimated starting from the period of construction whereas, even as per the concession agreement with NHAI, the periodic maintenance is to be carried out once every 5th year from the commercial operation date of the project highway. In the instant case, the commercial operation date was 29-04-2010. Hence the liability would occur to the assessee only in the year 2015 and the calculation adopted by the assessee from 1-4-2006 is totally flawed. The Learned CIT(A) also relied on the decision of Hon'ble Delhi High Court in the case of Seagram Distilleries Pvt. Ltd. reported in 62 taxmann.com 100 in support of his view wherein it was held that the provision made by a liquor company for breakages in transit of bottles while being transported to other states was held to be a contingent liability and it was held that the actual t....
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.... and 15th years of concession agreement on account of negative grant in terms of clause 23.2 of Chapter 5 of concession agreement dated 30-11-2005. The same was capitalized with carriageways in compliance of AS-29 issued by ICAI. The Learned AO confronted the assessee company and asked to explain why the depreciation claimed on the aforesaid amount should not be disallowed as the liability for acquisition had not been crystallized yet. The Learned AO noted that the explanation given by the assessee was not found satisfactory and accordingly held that the said liability on account of carriageways amount payable to NHAI was not an ascertained liability and consequentially the depreciation claimed thereon in the sum of Rs. 32,38,75,000 (25% of Rs. 129.55,00,000) was disallowed and added back to the total income. 18. The Learned CIT(A) noted that Part XXIII of Chapter V of concession agreement signed by NHAI and as per clauses 23.1 to 23.9, NHAI is to give cash support by way of grant to the assessee aggregating to Rs. 54.45 crores in year 1 to year 7 and the appellant is to make a cash payment i.e. a negative grant aggregating to Rs. 184 crores in years 13 to 15. The assessee claim....
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....l depreciation @25% by treating the carriageways as intangible assets. The learned AO granted additional depreciation @ 15% in the assessment. The Learned CIT(A) noted that the assessee had claimed depreciation at the rate of 25 percent on tollways / carriageways under the head intangible assets. On perusal of the Appendix-1 of Income Tax Rules 1962, building includes roads, bridges, culverts, well and tube wells, etc and therefore, the toll road come under the term 'building' and depreciation was allowed only at the rate of 10 percent instead of 25 percent as claimed by the assessee. The Learned CIT(A) also noted that similar addition was made in the assessment year 2011-12 and assessee submitted that Special Purpose Vehicle (SPV) was Built, Operate and Transfer (BOT) company incorporated to build and maintain the road up to concession period only. After that the SPV was to hand over the road to NHAI. Hence, the ownership of the road always lied with NHAI only. Accordingly, the Learned CIT(A) noted that assessee would be entitled for depreciation only at the rate of 10 percent and not 25 percent as intangible assets. 21. This issue is akin to Ground No. 2 raised by the assessee....