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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI RAJENDRA & SHRI SANJAY GARG
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 20.11.2012 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2009-10.
The assessee has taken the following grounds of appeal:
1. The Ld. Commissioner of Income-tax (Appeals)-17, Mumbai [hereinafter referred to as "Ld. CIT(A)"] erred in confirming the action of the A.O. in making following additions and disallowances without appreciating the facts and circumstances the case:
Sr. Particulars Amount No. (Rs.)
A. T r e a t i n g b u s i n e s s l o s s a s s h o r t t e r m c a p i t a l l o s s - R s . 23,96,51,978/-
2. The Ld. CIT(A) erred in confirming the action of the A.O. in treating the business loss incurred during the impugned assessment year as Short Term Capital Loss.
The Ld. CIT(A) failed to appreciate that the Appellant's right to collect the toll was ceased during the impugned assessment year and hence, the expenditure incurred over and above the toll colleted amounts to business loss. The Appellant, therefore, prays that the Ld. CIT(A) is not at all justified in treating the business loss as Short Term Capital Loss and hence, the same may be deleted.
B. Disallowance of deduction under section 801A 4. The Ld. CIT(A) erred in confirming the action of the A.O. in denying the deduction under section 80IA of the Act holding that the same has not been claimed in return or in Form No. 10CCB. The Appellant prays that the denying the benefit of deduction under section 80IA is without any basis and hence, the same may be allowed.
5. The Ld. CIT(A) failed to appreciate that the Appellant is eligible to claim the deduction under section 80IA of the Act. The Appellant, therefore, prays that the denying the deduction under section 80IA is not at justified and the same may be deleted.
6. The Appellant denies any liability to pay interest under Section 234A, 234B, 234C of the Act. Hence, the same are not leviable.
7. The Appellant craves leave to add, amend, alter, rescind or delete any of the above grounds of appeal.”
3. The brief facts of the case are that during the assessment proceedings, Assessing Officer (hereinafter referred to as the AO) found from the depreciation schedule that the opening WDV (Written Down Value) of the river bridge was shown at Rs.23,96,51,678/- and the same was written off in the computation of income as depreciation allowable. The assessee has stated that the assessee had built a bridge on Buildings Operate Transfer (BOT) basis for the government. As per the contract, the assessee was entitled to collect
3 M/s. Koratalaiyar Bridge Pvt. Ltd. toll, maintain and operate the bridge for 9 years 11 months and 16 days. The said period expired on 11th January 2009 and the bridge was handed over to NHAI. Hence, on the date of balance sheet the bridge was not in a possession of the assessee. Therefore, the entire WDV was written off. The AO, however, rejected the explanation of the assessee observing that depreciation is given on block of assets and if the entire block does not exist, then no depreciation can be allowed and as per the provisions of section 50, the entire profit or loss shall be treated as short term capital gain/short term capital loss. The AO, therefore, disallowed the depreciation and treated the loss as short term capital loss.
The Ld. CIT(A) upheld the finding of the AO.
Before us, the Ld. A.R. of the assessee has invited our attention to the circular No.9 of 2014 dated 23.04.14 in relation to ‘clarification regarding treatment of expenditure incurred for development of roads/highways in BOT agreements under the Income Tax Act, 1961’. The Ld. A.R. has relied on relevant paras 5 to 7 of the said circular which for the sake of convenience are reproduced as under: “5. In view of above, Central Board of Direct Taxes, in exercise of the powers conferred under section 119 of the Act hereby clarifies that the cost of construction on development of infrastructure facility of roads/highways under BOT projects may be amortized and claimed as allowable business expenditure under the Act.
The amortization allowable may be computed at the rate which ensures that the whole of the cost incurred in creation of infrastructural facility of road/highway is amortized evenly over the period of concessionaire agreement after excluding the time take for creation of such facility.
In the case where an assessee has claimed any deduction out of initial cost of development of infrastructure facility of roads/highways under BOT projects in earlier year, the total deduction so claimed for the Assessment Years prior to the Assessment Year under consideration maybe deducted from the initial cost of infrastructure facility of roads /highways and the cost “so reduced” shall be amortized equally over the remaining period of toll concessionaire agreement.”
4 M/s. Koratalaiyar Bridge Pvt. Ltd.
6. In view of the above parars of the circular, the assessee is entitled to the amortization of the remaining cost of the infrastructure facility at the end of the term as business expenditure. We accordingly direct the AO to decide the claim of the assessee in the light of the above circular. The assessee in the alternative has contended that the income of the assessee from the project otherwise is exempt under section 80IA(4) of the Income Tax Act. He, in this respect, has relied on the decision of the Ld. CIT(A) in the own case of the assessee for A.Y. 2007-08 dated 21.05.10. For the year under consideration, the Ld. CIT(A) has refused to consider the above claim of the assessee on the ground that the assessee inadvertently has failed to make this claim in the return of the income for the year under consideration. It has been time and again held by the various courts of law that the AO should not take advantage of assessee’s ignorance of law. If the assessee is otherwise eligible for a claim and the assessee under a mistake or otherwise has failed to make a claim, the taxing authorities should assist him and only legitimate taxes due should be collected. Considering the above proposition of law, we direct the AO to consider the alternative claim of the assessee also and if the assessee is found eligible, then to give him the benefit as per the provisions of law irrespective of the fact that the assessee could not claim the same in the return of the income.
7. In view of the above, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 31.03.2016. आदेश क� घोषणा खुले �यायालय म� �दनांकः 31.03.2016 को क� गई ।