2011 (3) TMI 1624 - AT - Income Tax

Depreciation on Intangible asset - Applicability of Doctrine of ejusdem generic - satisfaction of conditions viz. development operation and maintenance were not intended to be cumulative in nature - right to collection of toll from the road over bridge on the parity of reasoning that the assessee was not the owner - HELD THAT - This issue is covered by the order of the Tribunal Pune Bench Pune in the case of ASHOKA INFO (P) LIMITED. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX. 2008 (12) TMI 271 - ITAT PUNE-B wherein with regards to intangible assets and toll collection rights the Tribunal observed that the investment made by the assessee towards construction of a road on built operate and transfer (BOT) basis in terms of an agreement with the State Government and thereafter an independent right in the form of a licence of toll collection was granted to the assessee for a fixed period of 16 years and 9 months. Applying the doctrine of ejusdem generic for the purpose of interpretation of sec. 32(1)(ii) the word licence could be read along with the words commercial rights of similar nature . Therefore the licence granted by the State Government for collection of toll was held as an intangible asset and depreciation was held to be allowable thereon. Nothing contrary was brought to our knowledge - Facts being similar so following the same reasoning we hold that the assessee was entitled to claim of depreciation on intangible asset viz. right to collect toll from the road over the bridge on the parity of reasoning that the assessee was not the owner inspite of the fact that the collection was treated as income of the assessee company and was also approved by the State Government. Allowability of claim of deduction u/s 80-IA of the Act - assessee itself makes the investment and itself executes the development work as has been done by this assessee and the amendment introduced by inserting an explanation retrospectively wef. A.Y. 2000-01 by Finance Act 2007 and relevant C.B.D.T. Circular No.3 of 2008 becomes applicable to it - HELD THAT - Since this issue has not been discussed and decided by the lower authorities because they were not having advantage of decision of Hon ble Bombay High Court in the case of COMMISSIONER OF INCOME-TAX VERSUS ABG HEAVY INDUSTRIES LIMITED 2010 (2) TMI 108 - BOMBAY HIGH COURT at the relevant point of time - In the interest of justice we restore this issue to the file of the Assessing Officer to decide the same as per fact and law after providing adequate opportunity of hearing to the assessee. Appeal allowed in part.

Summary

Issues involved:
- Ex parte assessment under Section 144 of the Act
- Validity of initiating action under Section 147 of the Act
- Rejection of claim of depreciation on intangible asset
- Allowability of expenditure as revenue expenditure
- Eligibility for deduction under section 80-IA of the Act
- Levying of interest under sections 234-B/234-C of the Act

Analysis:

1. Ex parte assessment under Section 144 of the Act:
The appellant contested the ex parte assessment completed under Section 144 of the Act, seeking its annulment. However, the learned AR did not press this ground during the appeal, resulting in its dismissal as not pressed.

2. Validity of initiating action under Section 147 of the Act:
The appellant challenged the initiation of action under Section 147 of the Act while a revised return was pending for assessment. The CIT(A) upheld the AO's action, leading to this ground being dismissed. The issue was not pursued further during the appeal.

3. Rejection of claim of depreciation on intangible asset:
The key contention revolved around the depreciation claim on the right to collect toll from a road over bridge. The Tribunal relied on a precedent regarding intangible assets and toll collection rights, holding that the appellant was entitled to claim depreciation on the intangible asset. The reasoning was based on the ownership of the collection rights, despite not being the owner of the asset itself.

4. Allowability of expenditure as revenue expenditure:
The issue of allowing certain expenditures as revenue expenditure was raised, but since the previous issue on depreciation was decided in favor of the appellant, these subsequent grounds were deemed academic and not addressed during the appeal.

5. Eligibility for deduction under section 80-IA of the Act:
The appellant argued for the claim of deduction under section 80-IA of the Act, citing a decision of the Bombay High Court in a similar case. The Tribunal acknowledged the legal nature of the issue and remanded it to the Assessing Officer for a fresh decision, considering the recent judgment by the Bombay High Court.

6. Levying of interest under sections 234-B/234-C of the Act:
The appellant contested the levy of interest under sections 234-B/234-C of the Act. However, the judgment did not provide detailed analysis or resolution regarding this issue, indicating that it might not have been a significant aspect of the appeal.

In conclusion, the Tribunal partially allowed the appeals, addressing various issues such as depreciation on intangible assets, eligibility for deductions, and remanding certain matters back to the Assessing Officer for further examination based on legal precedents. The judgment emphasized the importance of legal interpretations and the application of relevant case laws in resolving complex tax matters.