TAMILNADU ROAD DEVELOPMENT CO. LTD.,CHENNAI vs. ACIT, CHENNAI

The assessee has filed an appeal against the order of the Commissioner of Income Tax -3, Chennai in C. No. 3033(17)/CIT-III/263/2013-14, dated 18.11.2013 passed u/s. 263 of the Income Tax Act.

The assessee has raised the grounds challenging the jurisdictional u/s. 263 of the Act and also non compliance of twin conditions. The CIT failed to appreciate that the depreciation on developing and maintaining the roads dealt by the Assessing Officer and allowed the depreciation. Further, CIT failed to consider that the depreciation on leasehold rights inadvertently mentioned as leasehold land and the Ld. AO considered the facts and allowed the depreciation and prayed for set aside the Revision order of CIT.

The Brief facts of the case are that the assessee is a public limited company and engaged in the business of Improvement, Development and Implementation of Infrastructure Road Projects and joint venture with TIDCO and Infrastructure Leasing and Financial Services Ltd., and filed Return of income on 26.09.2009 declaring Nill income. Subsequently, the case was selected for scrutiny and notice u/s. 143(2) was issued. The Ld. AR appeared from time to time and case was discussed. The Assessing Officer found that :-3-: I.T.A. No. 2192/Mds/2014 the assessee has claimed depreciation on Improvement of roads. Whereas, the assessee has claimed total depreciation of Rs. 2,42,99,403/-, and the actual depreciation as per Companies Act is Rs. 1,96,32,037/- and on perusal of further records, Assessing Officer found that the depreciation of Rs. 2,07,43,371/- was in respect of Roads improvement and Electrical Installation as Plant and Machinery. The Ld. AR submitted that in the assessee's own case, in earlier year depreciation was allowed by the co-ordinate bench of the Tribunal at 10% as against 15% claimed. Whereas, the Ld. AO has restricted depreciation @ 10% as applicable to building and disallowed excess depreciation of Rs. 68,61,960/- and passed order u/s. 143(3) dated 28.10.2011. Subsequently, Ld. CIT in the Revision proceedings issued show cause notice dated 28.10.2013 on the two issues, as the assessment order 143(3) of the Act passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Further, the Assessing Officer has allowed the depreciation at the rate of 10% on the Roads development maintained by the assessee, but actually the assessee is not the owner of the roads and secondly the assessee claimed depreciation on lease hold land and there are no findings by the Ld. AO in order and also depreciation cannot be allowed on the Land. The assessee filed written submissions on 05.11.2013 explaining that the assessee is eligible for depreciation on roads on par with the Plant and Machinery and relied on Tribunal decision in the assessee's own case in & 817/Mds/2007 for the assessment years 2003-04 &

Aggrieved by the order, assessee filed an appeal before the Tribunal. The Ld. AR argued that the order passed by the CIT is not in accordance with the law as twin conditions of erroneous and prejudicial to the interest of the justice was not satisfied. The Assessing Officer has restricted depreciation on Roads at 10% based on decision of Tribunal in assessee's own case for earlier years. On other issue, the claim of depreciation on Leasehold land, the assessee stated that it is the Leasehold rights in the property and amortised and claimed depreciation treating as Intangible Asset.

We heard the rival submissions, perused the material on record and judicial decisions, the Ld. AR argued that the assessee is eligible for depreciation on road on par with the rate applicable to the Building. We find

On the second issue of claim of depreciation on Leasehold rights in the property, we perused the Assessment Order, the Assessing Officer has not made any findings or reference of submissions on the disputed issue.

In the result, the appeal of the assessee is partly allowed.