2019 (2) TMI 1934 - AT - Income Tax

Depreciation on license to collect toll considering it as an intangible asset in terms of section 32(1)(ii) - AO disallowed assessee‟s claim holding that no intangible asset has been acquired by the assessee - HELD THAT - The issue raised in present appeal was considered by the Co-ordinate Bench of the Tribunal in the case of M/s. Ashoka Infrastructure Limited Vs. ACIT 2013 (8) TMI 588 - ITAT PUNE .wherein held that right to collect toll‟ is an intangible asset and the assessee is entitled to claim depreciation on same. We find that consistent view has been taken by the Tribunal in various other cases where depreciation has been claimed on right to collect toll‟, considering it to be an intangible asset. Tribunal in the case of ACIT Vs. M/s. Progressive Construction Limited 2017 (3) TMI 1167 - ITAT HYDERABAD has held that National Highway constructed on BOT basis gives rise to an intangible asset in the form of right to collect toll charges u/s. 32(1)(ii) and the assessee is eligible to claim depreciation on such asset. Thus, in view of the above decisions of the Tribunal we find no infirmity in the impugned order. Accordingly, the same is upheld and the appeal of Revenue is dismissed being devoid of any merit.

Summary

Issues:
Whether the assessee is eligible to claim depreciation on "license to collect toll" as an intangible asset under section 32(1)(ii) of the Income Tax Act, 1961.

Analysis:
The judgment pertains to an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2011-12. The key issue in the appeal was whether the assessee could claim depreciation on the "license to collect toll" as an intangible asset under section 32(1)(ii) of the Income Tax Act, 1961. The assessee was engaged in the development and construction of a road on a Build, Operate, and Transfer (BOT) basis. The Assessing Officer initially disallowed the claim for depreciation, stating that no intangible asset had been acquired by the assessee. However, the Commissioner of Income Tax (Appeals) allowed the depreciation, citing a Tribunal order that the right to collect toll was a depreciable intangible asset.

The appellant, represented by Shri K. Venkata Chalam, defended the order of the Commissioner of Income Tax (Appeals) and relied on previous Tribunal decisions to support their case. On the other hand, Shri S.B. Prasad, representing the Department, supported the Assessing Officer's decision. The Tribunal considered the issue and referred to its previous decisions where it was held that the "right to collect toll" is an intangible asset eligible for depreciation. The Tribunal also mentioned a Hyderabad Special Bench decision that supported the same view, stating that a National Highway constructed on a BOT basis gives rise to a right to collect toll charges as an intangible asset under section 32(1)(ii).

Ultimately, the Tribunal upheld the order of the Commissioner of Income Tax (Appeals) and dismissed the Revenue's appeal, citing consistency in previous decisions where depreciation was allowed on the "right to collect toll" as an intangible asset. The judgment concluded by dismissing the appeal of the Revenue, upholding the order in favor of the assessee.