2010 (11) TMI 1040 - AT - Income Tax

Summary

Issues involved: Disallowance of depreciation on project assets being road and bridge in assessment years 2002-03, 03-04, and 04-05.

Depreciation Disallowance Issue:
The Department raised common grounds challenging the allowance of depreciation on project assets at a rate of 10% applicable to buildings. The Assessing Officer disallowed the depreciation claim, stating the assessee was not the owner of the project assets and thus ineligible for depreciation. However, considering the cost borne by the assessee and the recovery through toll fees, the Assessing Officer issued notices u/s 148 for excessive depreciation claims. The ld. CIT(A) allowed the appeals, citing similarities with a previous case and directing depreciation allowance based on a jurisdictional ITAT decision. The Department appealed, arguing against the depreciation allowance, but failed to show any reversal of the ITAT decision by the High Court. Consequently, the Tribunal upheld the ld. CIT(A)'s orders, dismissing the appeals of the Revenue for all four years.

Amortization Issue:
As the depreciation issue was decided in favor of the assessee, the question of amortization of project cost became irrelevant and was dismissed for statistical purposes.