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TMI Blog2017 (12) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... roper, for the interregnum period to disallow the claim of depreciation. Since there are two judgements of two different High Courts, we adopt the view, which is in favour of the assessee, in the backdrop of the facts and circumstances of the case and hold that the assessee is entitled to depreciation in the years under consideration. - I.T.A. Nos. 337, 338 & 339/Vizag/2012, C.O. Nos.37, 38 & 39/Vizag/2016 - - - Dated:- 8-12-2017 - Shri D. Manmohan, Vice President And Shri D. S. Sunder Singh, Accountant Member Appellant by : Shri B.C.S. Naik, DR Shri K.C. Das, DR Respondent by : Shri C.V.S. Murthy, AR ORDER Per D. Manmohan, Vice President These cross appeals pertain to the assessment years 2007-08 to 2009-10 and they are directed against the common order passed by the CIT(A), Visakhapatnam. Since the issue involved in all these appeals is identical, we proceed to dispose of these appeals by a combined order, for the sake of convenience. 2. Assessee company is being run in the name and style of Godavari Toll Bridge Private Limited and it was incorporated in the year 2006 as a wholly owned subsidiary of Navayuga Engineering Company Limited (NECL). A br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 125 crores, though the written down value of the bridge as on the date of transfer is ₹ 13.46 crores only. The case of the assessee was that the value of the bridge has been fixed on the basis of future earnings in the form of toll collections. During the remaining concession period, the assessee company paid the consideration in the form of admission of the outstanding loan of ₹ 10.30 crores, which was subsequently converted into share application money as the loan was repaid by NECL and the balance of ₹ 114.70 crores paid was adjusted by way of allotment of fully paid equity shares of ₹ 10/- each at a premium of ₹ 990/-. 5. Though the value of the bridge is taken at ₹ 125 crores in the books of the assessee company, for the purpose of claiming depreciation under the Income Tax Act, the value of the bridge is taken at ₹ 13.46 crores only, which is the WDV as on the date of transfer of the bridge to the assessee company. According to the assessing officer, the ownership of the bridge and approaches continue to vest with the Government since no enterprise can impose any restrictions whatsoever in this regard. Under these circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred appeals before the Tribunal. Since the claim of depreciation was allowed, the assessee did not chose to prefer appeals against the orders passed by the CIT(A) but by taking advantage of the appeals filed by the revenue, it chose to file cross objections to support the claim of deduction by raising the following ground: Alternatively, the respondent assessee (assessee) is eligible for amortization of the expenditure incurred as reduced by the depreciation allowed in the earlier years in terms of Para 7 of the Circular of CBDT No.9 of 2014 dated 23.4.2014. 11. Ld. D.R. strongly relied upon the judgement of the Hon ble Bombay High Court to submit that this issue was considered thread bear by the Hon ble Bombay High Court in the case of North Karnataka Expressway Limited Vs. CIT 51 Taxmann.com 214, wherein the court was of the opinion that the assessee can never be considered to be owner of the roads either under general law or under the Income Tax Act. The Hon ble Court also referred to various judgements to hold that even Municipal Corporation, by laying roads, would not become owner of the land as their role is limited to laying down roads and not to have control ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to be followed. 13. On the other hand, the Ld. Counsel for the assessee submitted that the assessee is a wholly owned subsidiary of M/s. Navayuga Engineering Company, which has originally incurred the expenditure for laying down the bridge on BOT basis. In fact, NECL claimed depreciation on the toll bridge in the earlier years, which was rejected by the A.O. but ultimately accepted by the ITAT. Since the same asset has been transferred to the present assessee, the decision of the Hyderabad bench of ITAT is binding and needs to be followed. It was further contended that the A.O. is duty bound to follow the decision of superior authority and cannot ignore the said judgement merely because it is not accepting the view taken by the ITAT. It was also contended that identical issue had come up before the ITAT special bench, Hyderabad in the case of Progressive Constructions Limited in ITA No.1845/Hyd/2014 dated 14.2.2017. The decision of the special bench was rendered on 14.2.2017 and therefore, it deserves to be followed, particularly when there are two views possible in the matter, having regard to the decision of the Hon ble Allahabad High Court in favour of the assessee. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Bombay High Court as well as the Allahabad High Court referred to therein. It is no doubt true that the Hon ble Bombay High Court has considered the issue elaborately by referring to the provisions under the National Highway Act but the fact remains that under similar circumstances not only the Hon ble Allahabad High Court had taken a view in favour of the assessee but even the special bench of the ITAT had taken a view that assessee is entitled to claim depreciation and the assessing officer for the assessment year 2011-12 had accepted the claim of the assessee. In fact circular no.9 of 2014 issued by the Board permitting the assessee to claim amortisation of the expenditure also shows that the expenditure incurred by the assessee has to be treated as a capital expenditure and by treating it as intangible asset the expenditure has to be allowed as deduction in each year, so as to arrive at real profit. The provisions of depreciation or amortisation are only aimed at arriving at the true profit, though the methodology is different. Since the tax authorities have accepted the claim of amortisation from 2014 onwards and even in 2011-12, it has allowed depreciation, under pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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