ANDHRA PRADESH EXPRESSWAY LTD,MUMBAI vs. DY. COMMISSIONER OF INCOME TAX-10(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI ABY T. VARKEY, JM AND SHRI AMARJIT SINGH, AM आयकर अपील सं/ I.T.A. No.1522/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2011-12) & आयकर अपील सं/ I.T.A. No.1000/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2012-13) & आयकर अपील सं/ I.T.A. No.998/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2013-14) & आयकर अपील सं/ I.T.A. No.999/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2014-15) & आयकर अपील सं/ I.T.A. No.1521/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2015-16) & आयकर अपील सं/ I.T.A. No.1523/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2018-19) ITO-1(1)(1) बिधम/ Andhra Pradesh 579, 5th Floor, Aayakar Expressway Limited Vs. 5/6, 2nd Floor, Plot No.134, Bhavan, M. K. Road, Mumbai-400020. Birla Mansion, Nagindas Master Lane, Kala Ghodam, Mumbai-400001. आयकर अपील सं/ I.T.A. No.1528/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2011-12) & आयकर अपील सं/ I.T.A. No.1291/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2012-13) & आयकर अपील सं/ I.T.A. No.1290/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2013-14) & आयकर अपील सं/ I.T.A. No.1289/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2014-15) & आयकर अपील सं/ I.T.A. No.1526/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2015-16) & आयकर अपील सं/ I.T.A. No.1525/Mum/2023 (निर्धारण वर्ा / Assessment Years: 2018-19)

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. Andhra Pradesh बिधम/ DCIT-10(1) Expressway Limited Room No.455, Aayakar Vs. 5/6, 2nd Floor, Plot No.134, Bhavan, M. K. Road, Birla Mansion, Nagindas Mumbai-400020. Master Lane, Kala Ghodam, Mumbai-400001. स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : AAFCA6343J (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee by: Shri Ajay Vohra Revenue by: Ms. N. V. Nadkarni (DR) सुनवाई की तारीख / Date of Hearing: 03/08/2023 घोषणा की तारीख /Date of Pronouncement: 25/08/2023 आदेश / O R D E R PER BENCH: These are six appeals preferred by the assessee and six appeals by revenue (cross-appeals) against the order of the Ld. CIT(A)/NFAC, Delhi for AY. 2011-12 to AY. 2015-16 and AY. 2018-19. Both sides agree that the issue raised in all the appeals are common and facts are identical in all assessment years; and so were argued together, therefore, disposed off together by passing a common order. Therefore, the appeal of AY. 2011-12 is taken as the lead case and the decision of which will be followed in other assessment years. For AY. 2011-12 (Assessee’s Appeal ITA. No.1522/Mum/2023) & (Revenue Appeal ITA. No. 1528/Mum/2023).

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. under service concessionaire arrangement as building and allowing depreciation @ 10 percent where the rights are eligible for depreciation @ 25 percent being intangible asset. 2.2 That on the facts and circumstances of the case as well as in law, Ld. CIT(A) has erred in not following order passed by Hon’ble ITAT in Appellant’s own case for AY. 2010-11 stating that appeal has been filed before jurisdictional High Court by department against said order. 2.3 Without prejudice to ground no. 2.1 and 2.2, the appellant should be allowed depreciation @ 15 percent on toll road (as is also claimed in the return of income) treating the asset as Plant and Machinery.”

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. whether on facts and law the assessee is eligible for depreciation on the right to collect annuity on the toll road constructed by it as an intangible asset u/s 32(1)(ii) of the Income Tax Act, 1961 (hereinafter “the Act”). 5. Brief facts on the aforesaid ground is that the assessee filed Return of Income on 26.09.2011 declaring total loss of Rs.88,91,21,522/-. Later, the case of assessee was selected for scrutiny under CASS. During the assessment proceedings, the AO observed that the assessee [Infrastructural Development Company] had claimed depreciation of Rs.111,23,88,310/- @ 15% on opening WDV on toll roads constructed on BOT (Build, Operate, Transfer) basis as per the agreement with NHAI commencing on 15.09.2006, valid for 20 years and later on claimed depreciation @ 25% on right to collect “annuity”(intangible asset). However, the AO rejected the claim of the assessee on the ground that the company had no ownership rights or entitlements in the said Toll road; and therefore according to him, the assessee is not entitled for depreciation as per section 32 of the Act. However, the AO allowed the amortization of expenditure incurred on the said road amounting to Rs.43,66,99,212/-. 6. Aggrieved, by the aforesaid action of the AO, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to partly allow the claim of the assessee by allowing 10% depreciation. Aggrieved by the impugned order of the Ld. CIT(A), the assessee has preferred these appeals before this Tribunal claiming 25% depreciation on the intangible assets u/s 32(1)(ii) of the Act, i.e. in respect of

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. depreciation on the right to collect annuity on the toll road constructed by it pursuant to concessionaire arrangement between the assessee and National Highway Authority of India (NHAI); and the revenue is challenging the action of Ld. CIT(A) allowing 10% depreciation instead of amortization of expenditure (supra) as done by AO. 7. Assailing the action of the Ld. CIT(A), Sr. Counsel appearing for assessee, Shri Ajay Vohra submitted that the issue involved i.e. assessee’s claim of depreciation @ 25% for the intangible asset on its right for annuity is allowable as per law. According to him, the assessee’s right to collect “annuity” is a valuable right stemming from the concessionaire arrangement between assessee and NHAI for the toll road constructed by it ought to have been granted by the Ld. CIT(A) @ 25% because this Tribunal in assessee’s own case for AY. 2010-11 [ITA No.655/Mum/2015 and Cross Objection (CO)/Mum/2016 dated 28.02.2018] was pleased to allow the depreciation on road constructed by it under BOT basis as an “intangible asset”, since its claim falls within the scope of section 32(1)(ii) of the Act, and consequently held the revenue’s cross objection regarding amortization of the cost as academic. According to Ld. Sr. Counsel, despite the Tribunal order in assessee’s own case (supra), the Ld. CIT(A) did not allow the claim of depreciation @ 25% on intangible asset and instead allowed only 10% depreciation following the judicial precedents laid down by Hon’ble Rajasthan High Court in the case of Pr. CIT Vs. GVK Jaipur Expressway Ltd. (2018) 100 taxmann.com 95 ( Revenue’s SLP dismissed by Hon’ble

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. Supreme Court) which ratio was followed by Hon’ble Madras High Court in the case CIT Chennai Vs. Tamilnadu Road Development Co. Ltd. (2021) 130 taxmann.com 63 (Madras). According to him, the Ld. CIT(A) erred in properly appreciating the order of jurisdictional Hon’ble Bombay High Court in two cases (i) CIT-10 Vs. North Karnataka Expressway Ltd. (2014) (51 taxmann.com 214) (Bombay) and (ii) CIT-10 Vs. West Gujarat Expressway Ltd. (2017) (82 taxmann.com 224) and erred in not following the Tribunal order on the issue regarding 25% depreciation on intangible assets in assessee’s own case for AY 2010-11 (supra). 8. Further, according to Shri Ajay Vohra, the Ld. CIT(A) erred in partly allowing the claim of depreciation [i.e. 10%] by following the decision of the Hon’ble Rajasthan High Court in the case of PCIT Vs. GVK Jaipur Expressway Ltd. (2018) 100 taxmann.com 95 (Raj) wherein the Hon’ble High Court held that the developer of roadways was entitled to claim depreciation @ 10% which decision was challenged by the revenue before the Hon’ble Supreme Court by preferring an SLP which was dismissed (2018) 100 taxmann.com 96 (SC). The Ld. CIT(A) has also taken note of the decision of the Hon’ble Madras High Court in the case of Commissioner of Income Tax Corporate Circle-3 Vs. Tamilnadu Road Development Company Ltd. wherein their Lordship has followed the ratio of the decision of the Hon’ble Rajasthan High Court in the case of GVK Jaipur Expressway Ltd. (supra) and on the strength of the decision of the Hon’ble High Courts, the Ld. CIT(A) has allowed the depreciation @

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. 10% on the road built on BOT basis; and in that process did not allow the claim of the assessee for 25% depreciation on the intangible asset u/s 32(1)(ii) of the Act, which was already allowed by the Tribunal in assessee’s own case for AY 2010-11 without understanding the decision of the Hon’ble Bombay High Court in North Karnataka Expressway (supra). According to Ld. Sr. Counsel, the Ld. CIT(A) has not appreciated the judgment passed by the Hon’ble Bombay High Court in North Karnataka Expressway Ltd., wherein the Hon’ble High Court was testing the validity of Tribunal order, upholding the Commissioners action u/s. 263 of the Act and the claim of depreciation u/s. 32(1)(i) of the Act and the Hon’ble High Court has not dealt with the claim of depreciation on intangible asset u/s. 32(1)(ii) of the Act. Thus according to Ld. Sr. Counsel, the Ld. CIT(A) erred in properly understanding the Hon’ble High Court order in North Karnataka Expressway (supra). And according to Ld. Sr. Counsel, in the case of West Gujarat Expressway, the Hon’ble High Court followed the ratio laid in North Karnataka Expressway (supra). In this context, he drew our attention to the observation made by Hon’ble Supreme Court in the case of Sun Engineering reported in 198 ITR 297 (SC) wherein their Lordship reiterated the observation made in the case of Madhav Rao Jivaji Rao Scindia Bahadur Vs. Union of India (1971) (3 SCR 9; AIR 1971 SC 530) “ It is not proper to regard a word, a clause or a sentence occur-ring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. judgment.” In the light of the aforesaid observation of the Hon’ble Supreme Court, the Ld. Sr. Counsel submitted that depreciation on intangible asset u/s. 32(1)(ii) was not subject matter before Hon’ble High Court and drew our attention to the Hon’ble Bombay High Court decision in the case of North Karnataka Expressway Ltd. (supra) and submitted that the substantial question of law before the Hon’ble High Court was as under: - “(i) Whether, on the facts and in the circumstances of the case, and in law, the Tribunal was justified in confirming the order passed by the Commissioner of Income Tax under section 263 of the Income Tax Act, 1961 directing the Assessing Officer to examine the allowability of depreciation on toll road?”

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. assessee and used for the purpose of his business or profession. Then, there are provisions below clause (ii) of sub-section (1) and it is not necessary to refer to the same and except explanation (3) which is an explanation for the purposes of sub-section (1)”. Thus according to him, the Hon’ble High Court in this order has not dealt with the claim of assessee under clause-(ii) of sub-section (1) of section 32 of the Act. And the Hon’ble High Court took note of the decision given by Tribunal at para no. 25 wherein the Tribunal noted that AO had allowed the depreciation claimed by assessee of Rs.59.92 crores on the toll road which was admittedly not owned by the assessee, and that too without conducting any inquiry on the allowability of the depreciation on the roads owned by the Union of India. Therefore, Tribunal upheld the action of the Ld. CIT exercising his power u/s 263 of the Act since the AO did not conduct any kind of enquiry before allowing depreciation on toll-road and this action of the Tribunal was upheld by the Hon’ble High Court. According to Shri Vohra, in that case the claim of assessee (North Karnataka Expressway) was regarding depreciation of toll roads as plant/machinery as a tangible asset, and not in respect of depreciation on the intangible asset i.e. right to collect toll / annuity on the toll road which it constructed under sub-clause (ii) of sub-section (1) of section 32 of the Act. According to Sr. Counsel the observation of their Lordship at para no. 47 of the Hon’ble High Court order (North Karnataka Expressway) need to be noted, wherein it was held “The assessee can definitely claim depreciation on the investment. He has definitely invested in the project of construction

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. development and maintenance of the National Highway and such of the assets in the form of building and plant and machinery etc. The claim for depreciation can be validly raised and granted. We are here concerned with the claim on the hand or a road itself. Merely, because the road is laid out does not mean that the assessee is the owner thereof. He has lid it out for the purpose of the union and for its ultimate vesting in the public”. And he also drew our attention to para 52 of the same order wherein their Lordship made it clear “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 sub-section (1) of section 32 of the Income Tax Act, 1961 if considered and granted shall not be affected by our judgement”. Thus, according to the Ld. Sr. Counsel, the Hon’ble High Court has clearly observed that the assessee can definitely claim depreciation in accordance to section 32(1) of the Act. Therefore, according to the Ld. Sr. Counsel the issue regarding depreciation on intangible asset ie. right to collect annuity as per the concessionaire agreement has been left open by the Hon’ble Bombay High Court in the case of North Karnataka Expressway Ltd. (supra). And therefore according to him, the Ld. CIT(A) erred in not following the ratio of the Tribunal order in assessee’s own case for AY. 2010-11 wherein the Tribunal allowed the depreciation claim on intangible

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. asset. In this context, the Ld. Sr. Counsel pointed out that this issue is covered in assessee’s favour by the decision of Special Bench (Hyderabad) of this Tribunal, and drew our attention to the decision of the Tribunal- Special Bench (Hyderabad) wherein the question before the Special Bench in the case of ACIT Vs. Progressive Construction Ltd. (2018) (92 taxmann.com 104) (SB), initially was as under: - “Whether on the facts and in the circumstances of the case, expenditure incurred by the assessee on construction of road on BOT basis is Capital or Revenue? If it is capital expenditure, whether the same is eligible for depreciation at the rate applicable to building or to an intangible asset as per section 32(1(ii)? And, if not, whether the same being Revenue expenditure is liable to be amortized over the period of concession? 10. And thereafter, the Ld. Special Bench re-framed the question in consonance with the fact of the case and framed the question as under: - “Whether on the facts and in the circumstances of the case, the expenditure incurred by the assessee for construction of a road under BOT contract with GOI gives rise to an asset and if so, whether it is an intangible asset or tangible asset? In case it is held to be tangible asset, whether it is building or plant or machinery?” 11. In that case (Progressive Construction Ltd.) supra, the Ld. Special Bench was also adjudicating similar claim, and in that case the assessee had claimed depreciation u/s 32(1)(ii) of the Act, since it had made investment in constructing the road and thus acquired the right to

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. operate the road and receive toll charged as per the Concession Agreement (hereinafter CA), which right was claimed as valuable commercial or business right in the nature of intangible assets and hence assessee claimed that it was eligible for depreciation u/s 32(1)(ii) of the Act which was also disallowed by the AO on the ground that the assessee was not the owner of the asset [as in the present case and in that case the only difference was that assessee- company after constructing the road as per concessionaire agreement was collecting toll from users of the road whereas in the present case the only difference was that assessee has right to collect “annuity” for construction of toll road]. And the Special Bench of the Tribunal observed at para 11 (relevant portion only) as under: - “……Thus, the right to operate the project facility and collect toll charges is integrally connected to the completion of the project facility which cannot be done unless the assessee invests its fund for completing the project. Therefore, keeping in view the aforesaid fact, it cannot be said that the right to collect toll has accrued to the assessee on the date of execution of the agreement. If we accept the aforesaid argument of the learned Senior Standing Counsel, in other words, it would mean that without even executing and completing the project facility, assessee would be collecting toll charges. Therefore, the contention of the learned Senior Standing Counsel that the expenditure incurred by the assessee till execution of the agreement can only be considered as an intangible asset, in our view, is illogical, hence, cannot be accepted. Thus, having held that the expenditure of Rs.214 crore incurred by the assessee has

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. resulted in creation of an intangible asset of enduring nature for the assessee, it is necessary now to examine whether such intangible asset comes within the scope and ambit of section 32(1)(ii) of the Act.”

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. “In the present case, undisputedly by virtue of C.A. the assessee has acquired the right to operate the toll road / bridge and collect toll charges in lieu of investment made by it in implementing the project. Therefore, the right to operate the toll road / 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.” 14. And thereafter, Shri Vohra drew our attention to plethora of decisions especially to the decision of the Tribunal in the case DCIT Vs. Rajahmundry Express Ltd. (ITA. No.6487/Mum/2017 and DCIT Vs. Gorakhpur Infrastructure Co Ltd. (ITA. No.574/Mum/2020 wherein the assessee as in the present case had the right collect annuity from the NHAI on the road constructed as per the CA. Therefore, according to the Sr. Counsel, the decision of the Tribunal passed in assessee’s own case for AY. 2010-11 needs to be restored. 15. Per contra, the Ld. DR opposing the submission of Ld. Sr. Counsel, submitted that the Circular No. 09/2014 issued by CBDT on the issue was binding on the AO, and the CBDT has gone into the

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. precise issue which has been raised by assessee i.e. depreciation u/s 32(1)(ii) of the Act in respect of road constructed under BOT. According to the Ld. DR, the Ld. CIT(A) erred in not following the decision of Hon’ble Bombay High Court decision in the case of North Karnataka Expressway Ltd. (supra) as well as West Gujarat Expressway Ltd. (supra) wherein the depreciation claim of assessee was not allowed since the assessee was not the owner of the land on which toll road was constructed. According to him, in the light of the Hon’ble Jurisdictional High Court order (supra), the Ld. CIT(A) erred in following the decision of the Hon’ble Rajasthan High Court in the case of GVK Jaipur Expressway Ltd. (supra) and the Hon’ble Madras High Court in the case of Tamilnadu Road Development Company Ltd. (supra) and therefore he pleaded that the order of Ld. CIT(A) be reversed and order of AO be restored.

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. assessee as well as the Appellate Authorities and for such a proposition cited the decision of the Hon’ble Supreme Court in the case of UCO Bank Vs. CIT (237 ITR 889) (SC) wherein the Hon’ble Supreme Court observed at page no. 895 as under: - “What is the status of these circulars? Section 119(1) of the Income- tax Act, 1961, provides that, “the Central Board of Direct Taxes may, from time to time, issue such orders, instructions and directions to other incomes, authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and direction, of the Board. Provided that no such orders, instructions or directions shall be issued (a) so as to require any income-tax authority to make a particularly assessment or to dispose of a particular case in a particular manner; (b) so as to interfere with the discretion of the Appellate Assistant Commissioner in the exercise of his appellate functions”. Under sub-section (of section 119, without prejudice to the generality of the Board’s power set out in sub-section (1), a specific power is given to the Board for the purpose of proper and efficient management of the work of assessment and collection of revenue to issue from time to time general or special order in respect of any class of incomes or class of cases, setting forth directions or instructions, not being prejudicial to assessee, as to the guidelines principles or procedures to be followed in the work relating to assessment Such instructions may be by way of relaxation of any of the provisions of the sections specified there or otherwise. The Board thus has power, inte-alia, to tone down

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Income-tax Act which are binding on the authorities it the administration of the Act. Under section 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the assessee. Thus the authority which wields the power for its own advantage under the AC is given the right to forgo the advantage when required to wield it in* manner it considers just by. relaxing the rigour of the law or in other permissible manners as laid down in section 119. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases which can be properly categorized as belonging to a class, can thus be given the benefit of relaxation of law by issuing circulars binding on the taxing authorities.”

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. treating it as allowable business expenditure. According to the Ld. Sr. Counsel, the foundation/basis on which CBDT issued the circular was misplaced and drew our attention to Para No. 4 of Circular wherein the CBDT refers to the decision of the Hon’ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd. Vs. CIT in (225 ITR 802), which decision according to him, have no bearing on the subject matter and pointed out that the Hon’ble Supreme Court decision (Madras Industrial Investment Corporation Ltd. (supra) was in the context of discount written off proportionately each year over period of redemption of debenture; and the Hon’ble Supreme Court held that the liability to pay the discounted amount over and above the amount received for the debentures was a liability incurred by the assessee company for the purpose of its business in order to generate funds for its business activities and it was therefore, expenditure and the Hon’ble Supreme Court upheld the assessee’s claim of deduction only the proportionate part of discount over the relevant accounting period and noted that such a claim was inconformity with the accounting practice of showing the discount in the “discount on debentures account” which was written off over the period of the debentures. According to the Ld. Sr. Counsel thus it can be noted that decision in Madras Industrial Investment Corporation Ltd. (supra) was in the context of expenditure/discount on debentures and not in respect of claim of depreciation which is an allowance and not per-se expenditure/loss. Thus according to Shri Vohras CBDT erred in applying the ratio of the decision in Madras Industrial Investment Corporation (supra) to

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. disallow the claim of depreciation u/s. 32(1)(ii) of the Act as well to allow spreading of cost of construction of road during the tenure of concessionaire agreement. And therefore, according to him AO’s action of blindly following the circular no. 19/2014 for disallowing the assessee’s claim for depreciation @ 25% for the intangible asset claimed u/s 32(1)(ii) of the Act was erroneous.

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. Expressway Ltd. (supra) wherein their Lordships held that the developer of roadways was entitled to claim depreciation [this decision of Hon’ble Rajasthan High Court was challenged by the revenue before Hon’ble Supreme Court by preferring SLP which was dismissed (supra)]. The Ld. CIT(A) also noted that the Hon’ble Madras High Court has followed the ratio of the decision of Hon’ble Rajasthan High Court in the case of Jaipur Expressway (supra) in the case of CIT Vs. Tamil Nadu Road Development Ltd. (supra) and allowed the claim of depreciation at the rate of 10% on the roadways built and maintained by the assessee on BOT basis. Still not satisfied the assessee has filed the appeal claiming 25% depreciation on the right to claim “annuity” on the roads it built (i.e. 25% on opening WDV) and the revenue has filed cross-appeal against the impugned action of Ld. CIT(A) allowing depreciation @ 10% instead of AO’s action allowing amortization of expenses. It was brought to our notice, that even though assessee brought to the notice of the Ld. CIT(A) that Tribunal in assessee’s own case for AY 2010-11 (supra) had allowed the claim of depreciation @ 25% on the right to collect annuity on the road built and maintained by it as per concessionaire agreement between the NHAI and assessee, but the Ld. CIT(A) has declined to follow the Tribunal’s order by taking note of the decision of the Hon’ble Bombay High Court in the case of CIT Vs. West Gujarat Expressway Ltd. (supra) and North Karnataka Expressway Ltd. (supra) wherein the Hon’ble High Court, had held that an Infrastructure Development Company that had constructed a ‘toll road’ on build, operate and transfer (BOT) basis on

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. the land owned by the Government/UOI, not being the owner of the said road would not be entitled for depreciation on the same. Thereafter the Ld. CIT(A) acknowledged that the Tribunal while upholding the claim of 25% depreciation on intangible asset has distinguished the decision of the Hon’ble Bombay High Court which action of Tribunal according to him, is not supported by the decision of any High Courts. Thereafter, he took note of the decision of Hon’ble Rajasthan High Court in the case of Jaipur Expressway Ltd. (supra) and Hon’ble Madras High Court decision in the case Tamil Nadu Road Development Ltd. (supra) and allowed the claim of depreciation partly by allowing 10% of the depreciation instead of the 25% depreciation on the opening WDV. 19. We do not countenance the action of Ld CIT(A) of not appreciating/understanding the Tribunal order in assessee’s own case for AY 2010-11 wherein the Tribunal has clearly distinguished the ratio of the Hon’ble Jurisdictional High Court in the case of North Karnataka Expressway Ltd. (supra) & West Gujarat Expressway Ltd. (supra) and in these two cases, the Hon’ble High Court did not dealt with assessee’s claim of depreciation on right to annuity [Intangible Asset u/s 32(1)(ii) of the Act]. It is further noted that Hon’ble High Court while deciding the case of North Karnataka Expressway Ltd. (supra) has observed that as the assessee had invested in the project of construction, development and maintenance of the National Highway, therefore, claim for depreciation on the assets in the form of building and plant & machinery etc. can be validly raised and granted. Also,

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. their Lordship had referred to the observation recorded by the CIT in his order passed under Sec.263 of the Act, wherein he had while declining the assesses claim for depreciation on ‘toll road’ had categorically stated that it was not the case of the assessee that the claim of depreciation was being raised in respect of its intangible rights i.e. right to use the asset without being the actual owner of the same. 20. We further note that in both the cases i.e. of North Karnataka Expressway Ltd. as well as of West Gujarat Expressway Ltd., (supra) the decision was rendered by the Hon’ble Jurisdictional High Court order in the context of the issue that as to whether or not an Infrastructure Development Company which had constructed a “toll road” on BOT basis on the land owned by Central Government would be entitled for depreciation on such ‘toll road’. We find that the Hon‟ble High Court had observed that in the absence of ownership of the ‘toll road’ which belonged to the Central Government, the assessee would not be entitled to claim depreciation on the same. However, the issue as to whether or not an Infrastructure Development Company that had constructed a ‘toll road’ on BOT basis on the land owned by Central Government would be entitled to claim depreciation under Sec.32(1)(ii) in respect of its “right to collect annuity/toll “i.e. an intangible asset” was not raised in both of the aforesaid cases. Our aforesaid view stands fortified from perusal of the order of the Hon‟ble High Court in the case of North Karnataka Expressway Ltd. (supra) wherein the Hon’ble High Court had observed that the question

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. before their Lordship was as to when a person who is in the business of Infrastructure Development constructs a road on build, operate and transfer (BOT) basis on the land owned by the Government, then, can it claim depreciation on such ‘toll road’. We find that the Hon‟ble High Court had observed that though an Infrastructure Development company that had constructed a road on BOT basis on the land owned by the Central Government was not entitled to claim depreciation on the ‟toll roads” as it was not owner of the same, however, it could definitely claim depreciation on its investments made in the project and such other assets. Accordingly, it was observed by the Hon’ble High Court of its order that the claim for depreciation could be validly raised and granted to the extent stated hereinabove. Also, it was clarified by the Hon‟ble High Court that their Lordships was concerned only with the claim of the assessee as regards depreciation on the road itself. It is noted that the Hon’ble High Court in its aforesaid judgments had confined its adjudication to the issue that as to whether or not an Infrastructure Development Company that had constructed a road on BOT basis on land owned by the Central Government would be eligible to claim depreciation on such ‘toll road’ so constructed and operated by it. Accordingly, we are of the considered view, that the issue as to whether an Infrastructure Development company that had constructed a road on build, operate and transfer (BOT) basis on the land owned by the Central Government would be entitled to claim depreciation under Sec. 32(1)(ii) in respect of its intangible rights i.e. “right to collect annuity /

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. toll” had not been adjudicated by the Hon’ble High Court in its aforesaid order in the case of North Karnataka Expressway Ltd. (supra). We further find that the Hon’ble Jurisdictional High Court had thereafter once again reiterated its aforesaid view while disposing off the appeal of the revenue in the case of M/s West Gujarat Expressway Ltd. (supra). As is discernible from the order, the only two issues which were raised by the revenue in its aforesaid appeal before the High Court were, viz. (i). Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in directing the A.O to grant depreciation on assets not owned by the Respondent that goes against provisions of Section 32 of the I.T Act?; and (ii). Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in its decision of treating toll roads as plant and machinery, when this is not as per rule 5 of New Appendix of the I.T Rules?. As such, we find that the revenue had only sought the adjudication of the issue as to whether the Tribunal was right in allowing depreciation to the assessee on “toll roads” by treating the same as plant and machinery. It is in the backdrop of the aforesaid issues which were raised by the revenue that the Hon‟ble High Court by relying on its earlier order in the case of North Karnataka Expressway (supra) had concluded, that the issue therein involved was squarely covered by the said decision. Accordingly, the Hon‟ble High Court by drawing support from the observations recorded in its earlier order in the case of North Karnataka Expressway Ltd. (supra) had therein answered the aforesaid two substantial questions of law in the

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. negative i.e. in favour of the appellant-revenue and against the respondent-assessee. Thus in our considered view, the Hon‟ble High Court in its aforesaid order M/s West Gujarat Expressway Ltd. (supra) had confined its adjudication to the aforesaid two substantial questions of law which were raised by the revenue before it.

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. Tribunal which on the issue under consideration before us are as under: “11. Undisputedly, for executing the project, assessee has incurred expenses of Rs.214 crore. It is also not disputed that as per the terms of the C.A., the Government of India is not obliged / required to reimburse the cost incurred by the assessee to execute / implement the project facilities. The only right / benefit allowed to the assessee by the Government of India is to operate the project / project facilities during the concession period of 11 years 7 months and to collect toll charges from vehicles / persons using the project / project facilities. Thus, as could be seen, the only manner in which the assessee can recoup the cost incurred by it in implementing the project / project facility is to operate the road during the concession period and collect the toll charges from user of the project facility by third parties. Admittedly, the assessee has taken up the project as a business venture with a profit motive and certainly not as a work of charity. Further, by investing huge some of Rs.214 crore, the assessee has obtained a valuable business / commercial right to operate the project facility and collect toll charges. Therefore, in our considered opinion, right acquired by the assessee for operating the project facility and collecting toll charges is an intangible asset created by the assessee by incurring the expenses of Rs.214 crore. The contention of the learned Senior Standing Counsel that expenditure of Rs.214 crore has brought into existence a tangible asset in the form of roads and bridges of which the assessee is not the owner but it is the Government of India is nobody's case. Further, the learned Senior Standing Counsel's apprehension that it will lead to a situation where both Government of India and the concessionaire will claim depreciation on the asset created with the very same expenditure, in our view, is not borne out from facts on record. At the cost of repetition we must observe, as per the terms of agreement the expenses incurred by the assessee towards construction of the roads, bridges, etc., were not going to be reimbursed by the Government of India. This fact was known to both the parties before the execution of the agreement as the tender itself has made it clear that the project is to be executed with private sector participation on BOT basis. Thus, from the very inception of the project, assessee was aware of the fact, it has to recoup the cost incurred in implementing the project along with the profit from operating the road and collecting toll charges during the concession period. Therefore, assessee has capitalized the cost incurred on the BOT project on which it has claimed depreciation. Thus, in our view, the expenditure incurred by the assessee of Rs.214 crore for creating the project or project facilities has created an intangible asset in the form of right to operate the project facility and collect toll charges. Further, it is the contention of the learned Senior Standing Counsel that if at all any right is created under the C.A. for collecting toll, such right accrued to the assessee on the date of execution of agreement i.e., 22nd December 2005, therefore, the expenditure incurred by such date should be the value of intangible asset which can alone be considered for depreciation under section 32(1)(ii) of the Act. We are afraid, we cannot accept the

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. above argument of the learned Senior Standing Counsel. When the C.A. confers a right on the assessee to operate the project facility and collect toll charges over the concession period of 11 years and 7 months, the assessee can start operating and collecting toll charges only when the project facility is ready for use. Therefore, until the project is completed and ready for use by vehicles or persons assessee cannot collect toll charges for user of the project facilities. Thus, the right to operate the project facility and collect toll charges is integrally connected to the completion of the project facility which cannot be done unless the assessee invests its fund for completing the project. Therefore, keeping in view the aforesaid fact, it cannot be said that the right to collect toll has accrued to the assessee on the date of execution of the agreement. If we accept the aforesaid argument of the learned Senior Standing Counsel, in other words, it would mean that without even executing and completing the project facility, assessee would be collecting toll charges. Therefore, the contention of the learned Senior Standing Counsel that the expenditure incurred by the assessee till execution of the agreement can only be considered as an intangible asset, in our view, is illogical, hence, cannot be accepted. Thus, having held that the expenditure of Rs.214 crore incurred by the assessee has resulted in creation of an intangible asset of enduring nature for the assessee, it is necessary now to examine whether such intangible asset comes within the scope and ambit of section 32(1)(ii) of the Act. For this purpose, it is necessary to look into the said provision which is reproduced hereunder for the sake of convenience. Depreciation. 32(1)(ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature67, being intangible assets acquired on or after the 1st day of April, 1998, owned67, wholly or partly, by the assessee67 and used for the purposes of the business67 or profession, the following deductions shall be allowed—]

[Explanation 3.—For the purposes of this sub-section, [the expression "assets"] shall mean— (a) tangible assets, being buildings, machinery, plant or furniture; (b) intangible assets, being know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature.

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. Act, 1882. For better appreciation, we intend to reproduce herein below the definition of “license” as provided under section 52 of the Indian Easements Act, 1882: -

"License" defined:- Where on person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful and such right does not amount to an easement or an interest in the property, the right is called a license."

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. referred to in the expression "any other business or commercial rights of similar nature", should be similar to one or more of the specifically identified assets preceding such expression. The aforesaid contention of the learned Departmental Representative is unacceptable for the reasons enumerated hereinafter.

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. are not of the same line and are clearly distinct from one another. The Court observed, the use of words “business or commercial rights of similar nature”, after the specified intangible assets clearly demonstrates that the legislature did not intend to provide for depreciation only in respect of specified intangible assets but also to other categories of intangible assets which were neither visible nor possible to exhaustively enumerate. The Hon'ble Court, therefore observed, in the circumstances the nature of business or commercial right cannot be restricted only to knowhow, patents, trademarks, copyrights, licence or franchise. The Court observed, any intangible assets which are invaluable and result in smoothly carrying on the business as part of the tool of the trade of the assessee would come within the expression “any other business or commercial right of similar nature”. 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 right, hence, similar to license or franchise, therefore, an intangible asset. In the present case, undisputedly by virtue of C.A. the assessee has acquired the right to operate the toll road / bridge and collect toll charges in lieu of investment made by it in implementing the project. Therefore, the right to operate the toll road / 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. 18. In view of our aforesaid conclusion, there is no need to answer the second part of the question framed. This disposes of grounds no.2, 3, 5 and 6.”

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. squarely covered by the Special Bench decision of the Tribunal in the case of Progressive Construction Ltd. (supra) and also the decision of the Tribunal in assessee’s own case for AY 2010-11 wherein the Tribunal held that the assessee is eligible for depreciation on intangible assets which falls within the scope of section 32(1)(ii) of the Act and allowed ground no.2 of Cross Objection wherein assessee prayed for grant of depreciation of Rs. 215,72,80,138/- for AY 2010-11. In the light of the aforesaid discussion, we direct AO to grant the assessee claim of depreciation @ 25% on the opening WDV on toll roads constructed as per the agreement with NHAI commencing on 15.09.2006.

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. company, therefore, he held that the Interest Income need to be taxed as “Income from other Sources”.

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. receipt of “annuity” from NHAI and the income which was earned by the assessee was invested in the bank by way of fixed deposit and the assessee earned interest income, the details which are found placed at page 65 of paper book which shows the details of interest income received during the period 31 august 2010 to 20 March 2011. According to Ld. Sr. Counsel, the assessee has borrowed money from banks and the total amount outstanding as on 31 March 2011 was to the tune of Rs. 461.34 Crores and the loan outstanding as on 31 March 2010 was of Rs. 503.29 Crores. According to him, the assessee was obliged to maintain Escrow account with Bank of India, New Delhi Branch; and all the funds which the assessee receives have to be routed through the Escrow account. It was pointed out by the Ld. Sr. Counsel that the investment in fixed deposit was also from this Escrow account and he referred to common loan agreement entered into with the lenders which is found placed at page 148 to 233 of PB. In this agreement, according to him, there is reference to Escrow account to be opened with Escrow agent being Bank of India and referred to page 178 of paper book. The Ld. Counsel pointed out from page 185 of PB that there is a clause for repayment of principal amount and specified dates are mentioned on which dates the principal amount needs to be repaid to banks. The Ld. Sr. Counsel referred to page 186 of paper book wherein clause 4.1.7.2 it is stated that the borrower will deposit all amount, instruments, proceeds, claims, monies and cash flow in the Escrow account. According to him, assessee is permitted to make investments only in "Permitted Investments" ; and the "Permitted

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. Investments" are defined on page 167 of the paper book. Accordingly, the assessee was obliged to make investments in the “Permitted investments” and one of the mode was to deposit with scheduled commercial banks or financial institutions. According to him, these facts have been explained to the Assessing officer during the assessment proceedings that loans have to be repaid in fixed installments and hence the assessee was constrained to keep the funds in fixed deposits to earn interest, which would partly meet the interest burden of bank loans Further, it was also explained to AO that, having the complicated business structure and geographical location, the assessee had to keep some surplus funds in hand in order to meet the immediate requirements of the roads. In the aforesaid set of facts according to Ld. Sr. Counsel, since there were business exigencies in keeping the funds in fixed deposits, the assessee had earned interest income earned on those fixed deposits and is assessable as income from head “business”. Accordingly, he submitted that the fixed deposits have been made out of business exigencies and hence the interest income should have been assessed under the head “Income from Business” and the Ld. CIT(A) having appreciated the facts have reversed the action of AO and upheld the treatment given by assessee. Thus, according to him, it can be seen that the interest income is earned from the fixed deposits which was placed out of the income earned by the assessee during the year and there is a direct link between the interest incomes with the main business activity of the assessee.

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. 28. The assessee further submit that once the source of the investment in fixed deposit is out of the business income chargeable to tax, then the interest should be taxed under the head "Income from business and profession". And for this proposition the assessee relied on the decision of Hon’ble Bombay High Court in the case of Lok Housing Ltd reported in 308 ITR pg.356. The Ld. Sr. Counsel, also relied upon the decision of the Mumbai Tribunal in the case of West Gujarat Expressway Ltd for AY 2009-10, wherein the Tribunal has held that if the assessee was required to deposit the funds with the bank as per the loan agreement, the interest income earned on these investments need to be taxed under the head "Income from Business & Profession".

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. reliance made on the decision Hon’ble Bombay High Court in the case of M/s. Swami Spices Ltd. passed on 19th April, 2010 is distinguishable and in that case, the assessee company had deposited the surplus found in FD and therefore not applicable in the facts of the case. Therefore, he does not want us to disturb the impugned action of Ld CIT(A).

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. on the same, it is directly linked with the business activity of the appellant and hence, the same is to be considered as “Income from Business. The other activities for which the sums are deposited relate to operation and maintenance of the roadway and hence, the income earned therein is also generated out of business activity. Further, in appellant's own case in AY. 2010- 11 in ITA No. 663/Mum/2015 has allowed the appeal of the appellant that the said interest income is income from business. In view of all the above, the interest income earned is treated as Income from Business of the appellant and not Income from Other Sources. The AQ is hereby directed to do the same.”

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. has borrowed loans for executing the project and the amount of loan outstanding as on 31.3.2010 stand at Rs.824.73 crores. The loan taken from banks alone stands at Rs.503.29 crores. It is an admitted fact that the term loans have to be repaid in fixed installments and hence there is merit in the contentions of the assessee that it was constrained to keep the funds in fixed deposits to earn interest, which will meet a portion of interest burden of bank loans. Further, we find merit in the contentions of the assessee that it had to keep some surplus funds in hand in order to meet the maintenance requirements of the roads. In these set of facts, we are of the view that there were business exigencies in keeping the funds in fixed deposits and hence there is merit in the contentions of the assessee that interest income earned on those fixed deposits is assessable as income from business. In the case of Lok Holdings (supra), the assessee therein collected advances from the customers who intended to purchase the flats in the properties as developed by the assessee. Since the construction was going on, the surplus funds available with the assessee out of the advances so received was deposited in Fixed deposits. The Hon’ble jurisdictional Bombay High Court, after considering the decision of Hon’ble Supreme Court rendered in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd (supra), held that the interest income is assessable under the head Income from business. 6. In view of the foregoing discussions, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to assess the interest income earned on fixed deposits during

ITA No998 to 1000 & 1521 to 1523/Mum/2023 1289 to 1291 and 1525, 1526 & 1528/Mum/2023 A.Y. 2011-12 to 2015-16 & AY. 2018-19 Andhra Pradesh Expressway Ltd. the year under consideration as business income of the assessee.” 32. Respectfully following the Tribunal decision in assesse’s own case (supra), we confirm the action of Ld CIT(A) and dismiss the ground of appeal of the revenue. 33. In the result, appeals of the assessee are partly allowed and appeals of the revenue are dismissed. Order pronounced in the open court on this 25/08/2023 Sd/- Sd/- (AMARJIT SINGH) (ABY T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 25/08/2023 Vijay Pal Singh/SK, (Sr. PS) आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. ववभागीय प्रवतवनवि, आयकर अपीलीय अविकरण, मुंबई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यावपत प्रवत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीलीय अनर्करण, मुंबई / ITAT, Mumbai