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Income Tax Appellate Tribunal, ‘A’ BENCH, PUNE
IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, PUNE SHRI S.S. GODARA, JM AND DR. DIPAK P. RIPOTE, AM ITA No. 282/PUN/2020 A.Y. 2014-15
The Dy. C.IT. Central Circle -1 Nasik : Appellant Vs. M/s. Mahakaleshwar Tollways (P) Ltd., Trade Center, M-83, 18 South Tukogani Indore, MP 452 001 PAN; AAFCM 7676 Q : Respondent Appellant by : Shri Rajiv Kumar Respondent by : Shri Ankit Gattani Date of Hearing : 30-06-2022 Date of Pronouncement : 27-07-2022
ORDER PER S.S. GODARA, JM : This Revenue’s appeal for A.Y. 2014-15 arises against the CIT(A)-12, Pune’s order dated 28-01-2020 passed in case No. CIT(A)- Pune- 12/170761/2016-17 involving proceedings u/s 143(3) of the Income-tax Act, 1961, in short “the Act”.
Both the parties heard. Case file perused.
The Revenue raises the following substantive grounds in the instant appeal. 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in withdrawal of amortization claim amounting to Rs.7,50,01,996/- and correspondingly allowing claim for depreciation on the "Concessionaire Rights" @ 25% amounting to Rs. 39,67,40,009/-. 2. On the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing depreciation on the expenditure incurred by the Assessee Company on the 'Build, Operate, and Transfer' project, by considering such expenditure as on intangible asset, and within the meaning of Section 32(1)(ii) of the Income Tax Act, 1961 even when it is clear that assessee is not the owner of the asset and thus depreciation on the same cannot be allowed u/s 32 of the IT Act. 3. On the facts and circumstances of the case and in law, the Id. CIT(A) has failed appreciating the fact that the depreciation is not allowable on toll road constructed under the Built, Operate and Transfer(BOT) basis, since the toll road belongs to the Government and the taxpayer was not the owner of the said road, thereby ignoring the Bombay High Court order in North Karnataka Expressway Ltd ITA No. 499 of 2012 dated 14th Oct.,2014 4. On the facts and circumstances of the case and in law, the Id. CIT(A)
2 ITA No.282/PUN/2022 Mahakaleshwar Tollways Pvt. Ltd. A.Y. 2014-15 erred in holding that the commercial rights are in the nature of license, and are therefore, to be held as intangible assets, and provisions of Section 32(1)(ii) are applicable even when it is clear that the Agreement is not in the form of licensing agreement, but in the form of repayment/reimbursement agreement. 5. On the facts and circumstances of the case and in law, the Id. CIT(A) erred in not considering the fact that permission granted by the State Government to collect toll, has no element of depreciation and that the project did bring some kind of enduring benefit to the assessee but it did not bring into existence any new capital asset for the assessee. 6. On the facts and circumstances of the case and in law, the Id. CIT(A) erred in accepting fresh claim of depreciation at the time of appeal without giving opportunity to AO to examine the claim made by assessee in violation of Rule 46A of Income Tax Rules 1962. 7. On the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing relief by relying on decision of M/s Ashoka Infraways(P.) Ltd failing to appreciate that the said decision of ITAT is pending before the Hon'ble Bombay High Court for adjudication. 8. On the facts and in the circumstances of the case, the ld. ICIT(A) at best should have kept the appeal in abeyance, till the decision of appeal by Hon’ble High court. 9. Any other grounds to be raised at the time of hearing. 10. It is humbly prayed to set aside the order of CIT(A) and restore the order of the A.O.”
Suffice to say, it emerges during the course of hearing that the Revenue’s sole substantive grievance is that the CIT(A) has erred in law and on facts in granting depreciation relief to the tax-payer despite the fact that it was not the owner of the road/BOT project concerned.
We find no merit in the Revenue’s instant arguments. The assessee had in fact claimed depreciation relief on the “right to collect toll” in the nature of an intangible asset u/s 32(1)(ii) of the Act which has been held as allowable not only in its own case for A.Y. 2011-12 before the tribunal involving Revenue’s appeal ITA No. 2641/PUN/2016 but also the tribunal’s Special Bench decision ACIT Cir. 16(2) Hyderabad Vs. Progressive Constructions Ltd. (2018) 92 taxmann.com 104 (Hyd- Trib)(SB) has rejected the Revenue’s identical arguments. This is coupled with the fact that their lordships in para 24 of foregoing case law have drawn a distinction that the assessee is entitled to claim
3 ITA No.282/PUN/2022 Mahakaleshwar Tollways Pvt. Ltd. A.Y. 2014-15 depreciation by treating the right to collect toll as a intangible asset u/s 32(1) of the Act. Faced with this situation, we reject the Revenue’s instant sole substantive ground as well as the main appeal. Ordered accordingly.
This Revenue’s appeal is dismissed. Order pronounced in the open court on 27TH day of July 2022.
Sd/- sd/- (DR. DIPAK P. RIPOTE) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated, this 27th day of July 2022 Ankam Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The CIT (A) 12, Pune 4. The PCIT Central, Nagpur 5. The D.R. ITAT A’ Bench, Pune. 5. Guard File BY ORDER,
Sr. Private Secretary ITAT, Pune. /// TRUE COPY ///
4 ITA No.282/PUN/2022 Mahakaleshwar Tollways Pvt. Ltd. A.Y. 2014-15
Date 1 Draft dictated on 30-06-2022 Sr.PS 2 Draft placed before author 21-07-2022 Sr.PS 3 Draft proposed and placed before the JM/AM second Member 4 Draft discussed/approved by second AM/JM Member 5 Approved draft comes to the Sr. PS Sr.PS 6 Kept for pronouncement on 27-07-2022 Sr.PS 7 Date of uploading of order 27-07-2022 Sr.PS 8 File sent to Bench Clerk 27-07-2022 Sr.PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order