9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (10) TMI 579 - AT - Income TaxDepreciation claim on the asset Right to collect Toll - Depreciation on intangible asset - Held that - The issue raised in the present appeal is squarely covered by the order of Tribunal in sister concern s case i.e. Ashoka Infrastructure Ltd. Vs. ACIT 2013 (8) TMI 588 - ITAT PUNE the Right to collect the Toll is emerging as a result of the costs incurred by the assessee on development, construction and maintenance of the infrastructure facility. Such a right has been adjudicated by the Tribunal in the aforesaid precedents to be in the nature of intangible asset falling within the purview of section 32(1)(ii) of the Act and has been found eligible for claim of depreciation - section 32(1)(ii) permits allowance of depreciation on assets specified therein being intangible assets which are wholly or partly owned by the assessee and used for the purposes of its business. Thus the assessee is entitled to claim the depreciation on intangible assets as provided under section 32(1)(ii) of the Act. The second part of the order of Assessing Officer in amortizing the expenditure over the period of facility and allowing the same stands reversed. The Assessing Officer is thus, directed to allow the claim of assessee vis- -vis depreciation on intangible asset under section 32(1)(ii) of the Act. - Decided in favour of assessee.
Issues Involved:
1. Justification of allowing depreciation on the asset "Right to collect Toll." 2. Eligibility of the assessee for depreciation on the asset "Right to collect Toll." Issue-wise Detailed Analysis: 1. Justification of Allowing Depreciation on the Asset "Right to Collect Toll": The primary issue raised by the Revenue was whether the CIT(A)-I, Nashik, was justified in allowing depreciation of ?63,05,34,911/- claimed on the asset "Right to collect Toll." The Revenue argued that the twin conditions set forth in section 32(1) of the Income-tax Act, 1961, were not satisfied, as the road was neither owned wholly or partly by the assessee nor used in its business. The Assessing Officer had denied the depreciation claim, allowing instead the amortization of expenses. The Tribunal found that the issue was already covered by a prior decision in the case of Ashoka Infrastructure Ltd. Vs. ACIT, where it was held that the assessee was entitled to claim depreciation on the "Right to collect Toll" as an intangible asset under section 32(1)(ii) of the Act. The Tribunal referred to the CBDT Circular No. 9/2014, which clarified that the right to collect toll fees, even if not amounting to ownership of the road, could be considered an intangible asset eligible for depreciation. 2. Eligibility of the Assessee for Depreciation on the Asset "Right to Collect Toll": The Tribunal extensively discussed the nature of the "Right to collect Toll" and its classification as an intangible asset. It was noted that the assessee had incurred significant expenditure on the development, construction, and maintenance of infrastructure facilities, which granted it the right to collect toll. This right was considered an intangible asset as it provided enduring benefits to the assessee over the concession period. The Tribunal cited several precedents, including decisions from the Pune and Mumbai Benches, which supported the view that the right to collect toll qualified as an intangible asset under section 32(1)(ii) of the Act. The Tribunal emphasized that the right to collect toll, arising from the expenditure on infrastructure development, was capital in nature and not revenue expenditure. Consequently, the assessee was entitled to claim depreciation on this intangible asset. The Tribunal rejected the Revenue's argument that the right to collect toll should be treated as revenue expenditure and amortized over the concession period. Instead, it upheld the assessee's claim for depreciation, aligning with the precedent that such rights are intangible assets eligible for depreciation under section 32(1)(ii) of the Act. Conclusion: The Tribunal concluded that the assessee was entitled to claim depreciation on the "Right to collect Toll" as an intangible asset under section 32(1)(ii) of the Income-tax Act, 1961. The appeal of the Revenue was dismissed, and the order of the Assessing Officer to amortize the expenditure was reversed. The Tribunal directed the Assessing Officer to allow the claim of depreciation on the intangible asset.
|
