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TMI Blog2013 (8) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... ng it to be in the nature of 'building' - It was a common point between the parties that the aforesaid issue is rendered infructuous as assessee has succeeded in its substantive claim of depreciation on 'License to collect Toll' @ 25% in terms of Section 32(1)(ii) - Decided in favour of assessee. - ITA No. 989/PN/2010, ITA No. 1105/PN/2010 - - - Dated:- 18-7-2013 - Shri G. S. Pannu And Shri R. S. Padvekar,JJ. For the Petitioner : Mr. Sunil Pathak For the Respondent : Mr. Adarsh Kumar Modi ORDER Per G. S. Pannu, AM. The captioned cross-appeals, each by the assessee and the Revenue, pertaining to the assessment year 2007-08, were heard together and are being disposed-off by way of a consolidated order for the sake of convenience and brevity. The captioned appeals are directed against the order of the Commissioner of Income Tax (Appeals) - V, Pune dated 21.05.2010 which, in turn, has arisen from an assessment order dated 29.12.2009 passed by the Assessing Officer, under Section 143(3) of the Income Tax Act, 1961 (in short "the Act"), for the assessment year 2007-08. 2. We shall take-up the appeal of the assessee in ITA No.989/PN/2010 wherein the substantive disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity during the specified period w.e.f. 06.07.2005. The assessee capitalized the construction and development cost of the infrastructure facility under the head 'License to collect Toll' and claimed the same to be an intangible asset within the meaning of Section 32(1)(ii) of the Act and thus claimed depreciation @ 25%, amounting to Rs.30,04,85,739/-. In the assessment proceedings, in terms of the directions of the Additional Commissioner of Income Tax under Section 144A of the Act, the Assessing Officer held that assessee was not entitled for depreciation on the 'License to collect Toll'. Accordingly, the depreciation claimed at Rs.30,04,85,739/- was denied. The aforesaid action of the Assessing Officer was carried in appeal before the CIT(A). Before the CIT(A), assessee justified its claim for depreciation in terms of Section 32(1)(ii) of the Act on the basis of the following decisions of the Tribunal :- (i) Reliance Ports and Terminals Ltd. in ITA No. 1743 to 1745/Mum/07 dated 26.11.2007 of the Mumbai Bench; and, (ii) Ashoka Info Pvt. Ltd. in ITA No. 44/PN/07 dated 31.12.2008 of the Pune Bench. 5. The CIT(A) however did not accept the plea of the assessee and held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructure Ltd. (supra), Dimension Construction Pvt. Ltd. (supra) and Ashoka Info (P) Ltd. (supra). 9. On the other hand, the Ld. Representative for the respondent assessee pointed out that the aforesaid argument set up by the Revenue has also been considered in the aforesaid precedents before concluding that the impugned 'Right to collect Toll' was an 'intangible asset' eligible for claim of depreciation @ 25% as per sec. 32(1)(ii) of the Act. 10. We have carefully considered the rival submissions. Factually speaking, there is no dispute to the fact that the costs capitalised by the assessee under the head 'License to collect Toll' have been incurred for development and construction of the infrastructure facility, i.e., Dewas By-pass Road. It is also not in dispute that the assessee was to build, operate and transfer the said infrastructure facility in terms of an agreement with the Government of Madhya Pradesh. The expenditure on development, construction and maintenance of the infrastructure facility for a specified period was to be incurred by the assessee out of its own funds. Moreover, after the end of the specified period, assessee was to transfer the said infrastructure f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling within the purview of section 32(1)(ii) of the Act following the aforesaid precedents." 7. In terms of the aforesaid precedent, the claim of the assessee in the present case for depreciation on 'License to collect Toll', being an 'intangible asset' falling with the scope of Section 32(1)(ii) of the Act is liable to be upheld. We hold so. 8. In so far as the reliance placed by the CIT(A) on the judgement of the Hon'ble Bombay High Court in the case of Techno Shares And Stocks Ltd. (supra) is concerned it may only be noted that the said judgement has since been altered by the Hon'ble Supreme Court vide its order reported at (2010) 327 ITR 323 (SC). Accordingly, in view of the aforesaid discussion, we hereby allow the Ground of Appeal No. 1.1 raised by the assessee. 9. Ground of Appeal Nos. 1.2 and 1.3 raised by the assessee are alternative pleas, which read as under :- "1.2 The learned CIT(A) erred in rejecting appellant's claim to first credit the entire toll collection against the cost of construction of the road and not to treat the same as income till the entire cost of construction of the infrastructure facility is recouped. He failed to appreciate the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of unabsorbed depreciation of Rs.28,88,64,777/- pertaining to A.Y. 2006-07 when the assessee had not claimed the same in its return of income filed under Section 139 for A.Y. 2007-08 and thereby not applying the Law laid down by the Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT (2006) 284 ITR 323 (SC)? 2. Whether on the facts and circumstances of the case, and in law, the Ld. CIT(A) was justified in allowing the assessee the benefit of depreciation @ 10% eligible for buildings and mistakenly applying the ratio of the decision of the order of the ITAT C Bench of Chennai in the case of Tamil Nadu Road Development Co. Ltd. vs. ACIT 123 TTJ 702, when the assessee had not constructed the said road as a part of expansion of and to give access to buildings but had constructed the said road as a part of contract to construct highways?" 15. In so far as the first Ground is concerned it relates to the allowance of unabsorbed depreciation remaining after assessing the income for the earlier assessment year 2006-07. Before the CIT(A), assessee submitted that while determining the total income for the year under consideration, the Assessing Officer did not allow an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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