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TMI Blog2014 (1) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... ue has raised a common grievance which is on account of the action of the CIT(A) in holding that assessee was eligible to claim depreciation on 'Right to collect Toll', as an 'intangible asset' in terms of section 32(1)(ii) of the Act. It was a common point between the parties that the facts and circumstances in both the appeals stand on an identical footing, therefore, the appeal of the Revenue in ITA.No.185/PN/2012 pertaining to the A.Y. 2006-07 is taken as the lead case. 3. Briefly put, the facts relevant to adjudicate the present controversy are as follows. The respondent assessee is a company incorporated under the provisions of the Companies Act, 1956, and is inter-alia, engaged in the business of construction, operation and maintena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under the terms of agreement with the Government of Madhya Pradesh, assessee made investment of Rs.61.06 crores approximately, in the development and construction of the infrastructural facility. The assessee capitalised the costs incurred on development and construction of infrastructural facility under the head 'License to collect Toll' for the reason that by incurring the expenditure on development and construction of the infrastructure facility (i.e. Dewas By-pass Road), assessee got an enduring benefit in the form of a right to collect Toll from the motorists using the road for a period of approximately 11 years. In this background, the assessee claimed that the right to collect Toll obtained by it was akin to a license, being an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. In coming to such conclusion, the CIT(A) relied upon 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. 6. Accordingly, the CIT(A) directed the Assessing Officer to allow depreciation @ 25% on the 'Right to collect Toll' amounting to Rs.11,44,86,734/- and so far as the deduction of Rs.5,38,75,193/- allowed by the Assessing Officer as amortized proportionate cost was concerned, the same was directed to be withdrawn. Against the action of the CIT(A) in allowing the claim of Depreciation, the Revenue is in appeal before us. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ya Pradesh only allowed the assessee to recover the costs incurred for constructing the road facility whereas section 32(1)(ii) of the Act required that the assets mentioned therein should be acquired by the assessee after spending money. The said argument in our view is factually and legally misplaced. Factually speaking, it is wrong to say that impugned right acquired by the assessee was without incurrence of any cost. In fact, it is quite evident that assessee got the right to collect toll for the specified period only after incurring expenditure through its own resources on development, construction and maintenance of the infrastructure facility. Secondly, section 32(1)(ii) permits allowance of depreciation on assets specified therein b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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