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Income Tax Appellate Tribunal, MUMBAI BENCH “c”, MUMBAI
Before: SHRI AMARJIT SINGH & KAVITHA RAJAGOPAL
ORDER Per Kavitha Rajagopal (JM):
These appeals have been filed by the assessee as against the independent orders of the Ld.CIT(A)-24, Mumbai both dated 05/08/2019 for the assessment years 2012-13 & 2013-14. 2. The grounds of appeal raised by the assessee are identical in both the appeals, therefore, by way of this common order, we dispose of these appeals. – A.Y. 2012-13
3. The grounds raised by the assessee are as under:-
“1. The Ld CIT(A) erred in sustaining the disallowance of Rs. 32,79, 11,3407- made by the Ld AO on account of depreciation without appreciating the facts and circumstances of the case. 2 . Without prejudice to Ground No.1, the Ld CIT(A) erred in not allowing the deduction of rs.77,12,92,535/- claimed by way of Additional Ground of Appeal on account of Amortization of Expenses, ignoring the facts and circumstances and the documentary evidences furnished before him.
3. The appellant craves leave to furnish Additional Evidence which may be relevant to the above Grounds of Appeal in course of the appeal proceedings.
4. The appellant craves leave to amend or alter any of the above Grounds of Appeal or to add new Grounds of Appeal during the course of appeal proceedings.”
4. Briefly, the facts as before the authorities below are that the assessee is a company engaged in the business of construction of roads and operation and maintenance of toll plaza on a build, operate and transfer (BOT) basis. The assessee e-filed its return of income on 31/10/2010 declaring total loss at Rs.66,74,35,338/-. The case was selected for scrutiny and assessment was passed under section 143(3) of the Act was passed on 25/03/2015 accepting the returned loss. Thereafter, the case was reviewed under section 263 of the Income-tax Act, 1961 by the Ld.Principal Commissioner of Income-tax-15, Mumbai and by way of passing an order under section 263 dated 07/11/2016, held the assessment completed under section 143(3) as erroneous and prejudicial to the interest of the Revenue with regard to the issue relating to depreciation at Rs.45,20,11,030/- which included depreciation of Rs.44,96,15,895/- charged @25% on ‘Concession Assets’ with WDV of Rs.161,25,02,030/- after treating such assets under the head ‘INTANGIBLE ASSETS’ and therefore, the Ld.PCIT set aside the order dated 25/03/2015 passed under section 143(3) of the Act. The Assessing Officer, in compliance to the directions of the Ld.PCIT, has passed a fresh assessment order under section 143(3) r.w.s. 263 on 31/03/2017 determining total loss at Rs.33,95,23,998/- wherein he restricted the depreciation to Rs.12,17,04,558/- as against the claim of Rs.44,96,15,898/- and withdrew the excess claim of depreciation of Rs.32,79,11,340/- claimed and allowed in the order under 143(3) passed on 25/03/2015, for the reasons mentioned on pages 2 to 5 of the assessment order. The depreciation charged at 25% on “concession assets” after treating such assets under the head ‘Intangible assets’ was denied on the ground that the Hon’ble Bombay High Court in the case of CIT vs West Gujarat Expressway Ltd 73 taxmann.com 139 (Guj) wherein it was held that depreciation is not allowable in the case of toll roads by treating them as ‘Plant & Machinery’. With regard to the amortisation for the impugned assessment year, as per the CBDT circular No.9 of 2014 dated 23/04/2014 is that the assessee was granted extension to the toll collection period upto 10/07/2024 vide letter dated 20/10/2011 which was also accepted by the assessee thereby calculating the period of amortisation during the tenure of “concessionaire agreement” for a period from 25/08/2009 to 10/07/2024 which was calculated as 14 years, 10 months and 10 days. The Assessing Officer had calculated the allowable amortisation amount as Rs.12,17,04,558/- as against the amount claimed by the assessee under section 32(1)(ii) of the Act at Rs.49,96,15,898/- thereby disallowing the excess amount of depreciation claimed by the assessee. On appeal, the Ld.CIT(A), confirmed the addition made under section 32(1)(ii) of the Act. With regard to the amortisation over the period of right to collect the toll, the Assessing Officer’s finding in computing the amount of amortisation was upheld by the Ld.CIT(A) on the ground that the assessee has failed to provide any documentary evidence or details to substantiate its stand that MSRDC has failed to extend the right to collect the toll given to assessee uptill 10/07/2024 and the assessee had to terminate the contract on 28/04/2013 as it was in disagreement with the conditions laid down by MSRC. This explanation of the assessee was rejected by the Ld.CIT(A) on the ground that it was not substantiated with sufficient documentary evidence. Aggrieved by this, the assessee is in appeal before us.
The Ld.AR for the assessee contended that the agreement of the assessee with MSRDC was terminated prematurely as there was dispute in the terms laid down by the MSRDC. The Ld.AR invited our attention to the termination notice which are placed at pages 30 & 31 of the paper book. The Ld.AR further pointed out that an Arbitration Award was passed in favour of the assessee (placed at pages 118 to 135 of the paper book). The Arbitration Award was passed by the Arbitation Tribunal on 20/10/2020 wherein at para 180 on page 79, the Ld.AR pointed out the details of the termination agreement. That being so, the Ld.AR submitted that one more opportunity may be given to the assessee for producing additional evidence, which pertains to the events that took place subsequent to the assessment and the appellate proceedings. The Ld.AR placed reliance on the documents at serial Nos 13 to 16 of the paper book and prayed that the same may be permitted to be produced as additional evidence under rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, which, according to the Ld.AR, will substantiate the claims of the assessee.
The Ld.DR did not controvert the submissions of the Ld.AR.
Having heard both the learned representative and perused the materials on record, we are of the considered opinion that the assessee may be given another opportunity of being heard before the Ld.CIT(A) for producing the additional evidence now sought to be placed. Therefore, we restore the matter to the file of the Ld.CIT(A) for readjudication on the basis of additional evidence now sought to be produced by the assessee.
In the result, appeal is treated as allowed for statistical purpose. A.Y. 2013-14 9. The facts and circumstances in this appeal are stated to be identical to the appeal in ITA No.7340/Mum/2019. Therefore, the decision arrived therein shall apply mutatis mutandis to this appeal also. The appeal is treated as allowed for statistical purpose.
In the result, both the appeals are treated as allowed for statistical purpose.
In the result, the appeal of the Assessee is allowed. Order pronounced in the open Court on 25th July, 2022,