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TMI Blog2018 (9) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... used differently under Section 80-IA of the IT Act. All these facts taken together clear the position beyond any doubt that the ICDs are Inland Ports and subject to the provisions of the Section and deduction can be claimed for the income earned out of these Depots. The actual computation is to be made in accordance with the different Notifications issued by the Customs department with regard to different ICDs located at different places. Disallowance of depreciation on intangible assets being license acquired from Indian Railway for running container trains on Indian Railways - Held that:- This Tribunal for A.Y. 2008-09 in assessee’s own case held that, commercial right acquired by assessee by way of this license for earning enduring benefit for a period of 20 years would amount to capital asset. It is also observed that this view of Tribunal derives support from decision of Hon’ble Delhi High Court in the case of Areva T&D India Ltd. vs. DCIT [2012 (4) TMI 79 - DELHI HIGH COURT]. We hold intangible asset acquired by assessee is eligible for depreciation @ 25% u/s 32(1)(ii) of the Act. Disallowance of deduction on account of lease rent paid in advance against the land t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Hon ble Delhi High Court in the appellant s own case in A.Y. 2003-04 to 2005-06. 2. The Ld.CIT(A) erred, on the facts and in law, in confirming the disallowance of ₹ 2,70,88,72,618/- being claim u/s 80 IA of the Act on Rail System (Rolling Stock) ignoring the decision of the Hon ble Delhi High Court in the appellant s own case in A.Y. 2003- 04 to 2005-06. 3. The Ld.CIT(A) erred, on the facts and in law, in confirming the disallowance of ₹ 2,11,42,578/- on account of depreciation on intangible assets being License acquired from the Indian Railways for running container trains on Indian Railways. 4. The Ld.CIT(A) erred, on the facts and in law, in confirming the disallowance of ₹ 2,42,00,048/- being claim of deduction on account of lease rent paid in advance against land taken on long terms lease for business purposes on pro rata basis, ignoring the facts that similar claim was allowed by the Ld.CIT(A) in earlier years. 5. The Ld.CIT(A) erred, on the facts and in law, in confirming the disallowance of expenditure ₹ 1,10,90,500/- u/s 14A of the Act read with Rule 8D of Income Tax Rules, 1962 ignoring the fact that the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of Ld.CIT(A) revenue as well as assessee are in appeal before us. 5. At the outset Ld.Counsel submitted that the grounds raised in both the appeals are covered by order of this Tribunal for Assessment Year 2008-09 in assessee s own case which has been affirmed by Hon ble Delhi High Court as well as Hon ble Supreme Court . 6. ITA No. 77/Del/2015 (assessee s appeal) Ground No. 1 is in respect of deduction denied under section 80 IA of the Act by Ld. CIT (A) on ICDs/CFS, which are inland ports. 6.1. Ld.Counsel submitted that the issue was decided by this Tribunal in ITA No. 2851 and 3680/Del/2007 for Assessment Year 2003-04 to 2005-06 against assessee, which has been reversed by Hon ble High Court . He further submitted that decision of Hon ble High Court reported in (2012) 21 Taxmann.com 317, which has been subsequently affirmed by Hon ble Supreme Court in CIT vs Container Corporation of India Ltd. reported in ( 2018) 93 Taxmann.com 31 . Ld. Counsel placed before us decision of Hon ble Supreme Court wherein it has been held as under: 21. Moving further to the issue whether the ICDs can be termed as Inland Ports so as to entitle de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion, we are of the view that judgment of the High Court does not call for any interference and, hence, the appeal is accordingly dismissed. All the connected appeals are disposed of accordingly. The parties to bear cost on their own. 6.2. Ld.CIT, DR though supported the order passed by authorities below, could not bring out any distinguishing feature/facts for the year under consideration. 7. We have perused the submissions advanced by both the sides on the basis of the records placed before us. 7.1. It is observed that Ld. CIT (A) for the year under consideration has rejected the claim of assessee by following the order of this Tribunal in assessee s own case for Assessment Year 2003-04 to 2005-06 (supra), Hon ble High Court reversed the view of this Tribunal which has now been affirmed by Hon ble Supreme Court. Further it is observed that there are no factual differences regarding this issue in Assessment Year under consideration, vis-a-vis Assessment Year 2003-04 to 2005-06 (supra). 7.2. Respectfully following the decision of Hon ble Supreme Court, we allow this claim of assessee. 7.3. Accordingly this ground raised by assessee stands allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e examined the contention. Prior to the amendment made with effect from 1.4.2002 by the Finance Act, 2001, as noticed earlier, the Board was empowered to notify any public facility of a similar nature, other than what was mentioned as infrastructure facility. But an amendment was made and the power to notify was dropped. There was no provision made in the Act saying that the notification issued earlier would cease to have effect from 1.4.2002. Since the notification continued to have effect even beyond 1.4.2002, there is merit in the contention of the learned counsel for the assessee. Circular No.7/2002, dated 26th August, 2002, reported in (2002) 257 ITR (St.) 28 clarified as under: Such projects, for which agreements have been entered into on or after April 1, 1995, but on or before March 31, 2001, and which have been notified by the Board on or before March 31, 2001, would continue to be exempt, subject to the fulfillment of the conditions prescribed in section 80-IA(4)(i)(b), as it existed prior to its substitution by the Finance Act, 2001. This circular fortifies the assessee's claim. 8.2. Ld.Counsel has also placed before us a subsequent order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m one operator to another operator subject to rules and conditions. On reading of the above policy documents it is apparent that assessee has acquired a commercial right to operate trains on the Indian Railway Track for 20 years by payment of ₹ 50 crores and which is transferable. The Hon'ble Delhi High Court in case of Areva T D India Ltd Vs. DCIT 345 ITR 421 has held that intangible assets includes business claims, business information, business records and assets which are invaluable for carrying on the business of the assessee. It was further held that the intangible assets were comparable to a license to carry on the existing business and in Page 12 of 21 absence of such intangible assets it would have been difficult for the assessee to carry on its business. Therefore, it was held that such intangible assets are eligible for depreciation in terms of section 32(1)(ii) of the Act as under:- 12. In the present case, it is seen that the assessee, vide slump sale agreement dated June 30, 2004, acquired, as a going concern, the transmission and distribution business of the transferor company with effect from April 1, 2004. As a result thereof, the running busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would constitute a licence or a franchise in terms of section 32(1)(ii) of the 1961 Act . 13. In the present case, applying the principle of ejusdem generis, which provides that where there are general words following particular and specific words, the meaning of the latter words shall be confined to things of the same kind, as specified for interpreting the expression business or commercial rights of similar nature specified in section 32(1)(ii) of the Act. It is seen that such rights need not answer the description of know-how, patents, trade marks, licences or franchises but must be of similar nature as the specified assets. On a perusal of the meaning of the categories of specific intangible assets referred to in section 32(1)(ii) of the Act preceding the term business or commercial rights of similar nature , it is seen that the aforesaid intangible assets are not of the same kind and are clearly distinct from one another. The fact that after the specified intangible assets the words business or commercial rights of similar nature have been additionally used, clearly demonstrates that the Legislature did not intend to provide for depreciation only in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he form of right to operate. It is a valuable commercial right available to the assessee for a considerable long period therefore, following the decision of the Hon'ble Delhi High Court we are of the view that the assessee has acquired a commercial right‟ which is eligible for depreciation u/s 32(1)(ii) of the Income Tax Act. Therefore, ground No. 3 and 4 of the appeal of the assessee is allowed holding that the assessee has acquired intangible assets which is a valuable commercial right for ₹ 50 crores and same is eligible for depreciation u/s 32(1)(ii) of the Act. In view of this ground No. 3 and 4 of the appeal of the assessee are allowed with above direction. 10.2 . Ld.Counsel thus submitted that the issue is squarely covered in favour of assessee by an order passed by this Tribunal in assessee s own case for Assessment Year 2008-09 and 2009- 10 in ITA No.1876/Del/2012 and 6377/Del/2012, vide order dt. 18.01.2017. 10.3. On the contrary, Ld.CIT, D.R. (by way of written submissions) submitted that the A.O. rightly treated nonrefundable registration fee of ₹ 50 crores as deferred revenue expenditure whereas assessee has reflected it as an intangi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of appeal of the revenue back to the file of Assessing Officer with a direction to the assessee to furnish the complete details of the claim of the assessee clearly bringing out the facts whether it is a claim of the depreciation or whether it is a claim of the allowability of expenditure. 12.2 . Ld. CIT DR did not object for the issue being set aside with a direction clearly bringing on the facts whether it is the claim of depreciation or whether the claim of allowability of expenditure. 13. We have perused the submissions advanced by both the sides in the light of the records placed before us. As there is no change in the factual circumstances, respectfully following the aforestated view taken by this Tribunal in assessee s own case for Assessment Year 2008-09 and 2009-10, we set aside this issue to the file of Ld. AO with the direction to assessee to furnish all requisite details in respect of the claim of depreciation. Ld. AO shall then verify the details to determine whether the claim of assessee is allowable or not as per law. 13.1. Accordingly this ground raised by assessee stands allowed for statistical purposes . 14. Ground No. 5 is in respect of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these Assessment Years. 16.2. Ld.CIT DR though supported the order of Ld.AO, could not controvert the aforesaid observation by Hon ble Delhi High Court on this issue. 17. We have perused the submissions of both the sides in the light of the records placed before us. 17.1 . It is observed that this Tribunal for Assessment Year 2008-09 decided this issue by observing as under: 20. We have carefully considered the rival contentions. The first appellate authority has allowed the claim of the assessee who following the decision of the earlier years in its own case and further following the decision of the Hon ble Delhi High Court. The Hon ble Delhi High Court in case of CIT Vs. Yamaha Motor India Pvt. Ltd has considered an identical issue in 328 ITR 297 as under:- 6. The relevant and related provisions, in this regard, for decision of the issue are section 32(1) (which requires that the assets are used for the purposes of the business), section 32(1)(iii) (lays down the details and requirements with respect to claim of depreciation inter alia of discarded machinery), section 43(6)(c)(i)(B) (defines written down value with respect to block of assets), section 50( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ser would be required of the discarded machinery which use is not possible because of various reasons viz., the age of the machinery, or that it has become obsolete as new technology has come in and so on. We thus hold that the discarded machinery may not be actually used in the relevant previous year as long as it is used for the purposes of business in the earlier years. 10. We, therefore, answer the two questions of law by holding that the Income-tax Appellate Tribunal was correct in law in directing the Assessing Officer to recompute depreciation after reducing the scrap value of the assets which have been discarded and written off in the books of account for the year under consideration from the written down value of the block of assets. Actual user of the machinery is not required with respect to discarded machinery and the condition for eligibility for depreciation that the machinery being used for the purpose of the business would mean that the discarded machinery is used for the purpose of the business in the earlier years for which depreciation has been allowed. 21. The Ld.DR could not point about any infirmity in the order of the Ld. CIT(A) wherein he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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