9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (11) TMI 1600 - AT - Income TaxDisallowance of 25% of depreciation on upfront fees - Held that - As decided in assessee s own case for A.Y. 2007-08 that CIT(A) has rightly held that the payment of upfront fee of ₹ 150 crores paid by assessee to AAI has created capital assets in the form of license to develop and modernize the Airport and collect charges as per terms and conditions as prescribed under the agreement entered into which is an intangible assets to the assessee. Thus assessee is entitled for depreciation at the rate of 25% on the said payment of upfront fee. Nature of expenses - expenses incurred towards realignment of nallah s in forecourt of proposed integrated Terminal, reallocation of CPWD staff and other operational expenditure - revenue or capital - Held that - As decided in case of the assessee for A.Ys. 2009-10, 2010-11 and 2011-12 nothing has been discussed about the nature of the expenses, position of crystallisation of these expenses, availability of particulars of the payees, etc. It has been observed in the order by Ld. CIT(A) that whenever payments are actually made against these provisions, TDS is deducted as was stated by the Ld. Counsel. But, what are the precise facts in this regard has not been discussed in the order. No details are available or discussed by the Ld.CIT(A) regarding various aspects, e.g. when these expenses were actually incurred, in whose name these are finally credited, who are the actual payees, when the payments were made actually and whether the TDS was deducted at the time of making of payments or not? Nothing has been brought out on record to ensure that finally there was no revenue leakage and full compliance of the TDS provisions was made ultimately. We find that order of Ld. CIT(A) is devoid of any factual narration and, therefore, we find it appropriate to send this issue back to the file of the CIT(A) for complete factual analysis. Disallowance as retrenchment compensation paid to AAI - Held that - Following the order of his predecessor in the assessee s own case for A.Ys. 2010-11 and 2011-12 wherein noted that the said provision is applicable only if the assessee has incurred any expenditure in any previous year by way of payment of any sum to a employee in connection with voluntary retirement. In this case, we noted that the assessee has not incurred any expenditure by way of payment made to employees but the payment has been made by the assessee to Airports Authority of India in accordance with clause 6.14 of the OMDA on account of retrenchment compensation to be paid by Airports Authority of India to its employees. It is not an amount which the assessee is paying to its employees on their retrenchment. Therefore, the provisions of section 35DDA will not apply. It is not denied that the expenditure incurred by the assessee is revenue expenditure. Nature of receipt - treatment of development - revenue or capital receipt - Held that - It is not denied that the development fees so collected are utilized only for the purpose of aeronautical assets as per the provisions of section 22A of the Airports Authority of India Act. In view of this fact, we do not find any illegality or infirmity in the order of the CIT(A), which warrant our interference, while holding that the development fees so received by the assessee is a capital receipt. Rate of depreciation allowed on taxiways, aprons, parking bays and bridges @15% instead of 10% - Held that - Tribunal we have allowed the assessee depreciation @15% for A.Ys. 2009-10, 2010-11 and 2011-12 also. Facts and circumstances being similar and respectfully following the order of the Tribunal in the assessee s own case, which has been relied upon by the CIT(A), we see no reason to interfere with the impugned order. We uphold the same and dismiss the ground raised by the Revenue.
Issues Involved:
1. Disallowance of provision for leave encashment. 2. Taxability of Passenger Service Fee – Security Component (PSF-SC). 3. Depreciation on upfront fees of ?150 crores. 4. Treatment of various expenses as revenue expenditure. 5. Disallowance under Section 40(a)(ia) of the Income Tax Act. 6. Retrenchment compensation to AAI. 7. Treatment of Development Fee as capital receipt. 8. Disallowance under Section 14A read with Rule 8D. 9. Rate of depreciation on taxiways, aprons, parking bays, and bridges. Detailed Analysis: 1. Disallowance of Provision for Leave Encashment The Tribunal restored the issue to the Assessing Officer (AO) for proper verification of facts, including whether the provision for leave encashment was made on an actuarial basis. The Tribunal directed the AO to re-adjudicate the issue after considering all relevant facts and judgments, providing adequate opportunity for the assessee to present requisite details and documentary evidence. 2. Taxability of Passenger Service Fee – Security Component (PSF-SC) The Tribunal admitted the additional ground raised by the assessee, stating that the PSF-SC is not taxable income. The Tribunal directed the AO to re-compute the income, ensuring that no portion of the PSF-SC is utilized for purposes not permitted by MOCA or other competent authorities. Any misappropriated amount or TDS refund not deposited in the Escrow Account would be treated as income of the assessee. 3. Depreciation on Upfront Fees of ?150 Crores The Tribunal confirmed the CIT(A)'s order allowing 25% depreciation on the upfront fees of ?150 crores, treating it as an "intangible asset" under Section 32(1)(ii) of the Income Tax Act. The Tribunal followed its earlier decision in the assessee's own case for previous assessment years. 4. Treatment of Various Expenses as Revenue Expenditure The Tribunal upheld the CIT(A)'s decision to treat the expenses incurred towards realignment of nallahs, reallocation of CPWD staff, and other operational expenses as revenue expenditure. The Tribunal noted that these expenses were necessary for maintaining and developing the airport as per international standards and did not result in the acquisition of any capital asset by the assessee. 5. Disallowance under Section 40(a)(ia) of the Income Tax Act The Tribunal restored the issue to the CIT(A) for a complete factual analysis, directing the CIT(A) to examine the nature of the expenses, the position of their crystallization, and whether TDS was deducted at the time of making payments. The Tribunal emphasized ensuring no revenue leakage and full compliance with TDS provisions. 6. Retrenchment Compensation to AAI The Tribunal upheld the CIT(A)'s decision to allow the retrenchment compensation paid to AAI as revenue expenditure, stating that Section 35DDA was not applicable since the payment was made to AAI and not directly to the employees. The Tribunal followed its earlier decision in the assessee's own case for previous assessment years. 7. Treatment of Development Fee as Capital Receipt The Tribunal confirmed the CIT(A)'s decision to treat the Development Fee collected by the assessee as a capital receipt, not subject to tax. The Tribunal relied on the Supreme Court's judgment in Consumer Online Foundation vs. Union of India, which held that the Development Fee is in the nature of a cess or tax for specific purposes under Section 22A of the Airports Authority of India Act. 8. Disallowance under Section 14A read with Rule 8D The Tribunal upheld the CIT(A)'s decision to delete the disallowance under Section 14A, as the assessee did not derive any exempt income during the assessment year. The Tribunal followed the decisions of the Delhi High Court in Cheminvest Ltd. and the Bombay High Court in Principal CIT vs. Ballarpur Industries Limited. 9. Rate of Depreciation on Taxiways, Aprons, Parking Bays, and Bridges The Tribunal upheld the CIT(A)'s decision to allow depreciation at 15% on taxiways, aprons, parking bays, and bridges, treating them as part of plant and machinery. The Tribunal followed its earlier decision in the assessee's own case for previous assessment years. Conclusion: The assessee's appeal was allowed, and the revenue's appeal was partly allowed. The Tribunal provided detailed directions for re-adjudication and upheld the CIT(A)'s decisions on various issues, ensuring compliance with relevant legal provisions and judgments.
|
