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TMI Blog2019 (4) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... ded against assessee. Expenditure incurred on construction of roads - allowable revenue expenditure u/s 37 - HELD THAT:- Argument in the present case cannot be allowed as neither the books of accounts of the Assessee are maintained as such by showing the grant received from the Government as income and the sum expended for the projects as expenditure. The further claim of writing off the expenses on building bridges on a pro rata basis as revenue expenditure is also rejected for the same reason. Interest income as income from other sources - investment of surplus HUDCO loan for building bridges temporary parked in investments to yield income - Assessee availed loans from HUDCO for the purpose of construction of bridges - amount of loan disbursed by HUDCO till utilization for the purpose of construction of bridges were temporarily invested in fixed deposits - interest paid on loans availed from HUDCO was capitalized as cost of the asset and the interest income earned on temporary parking of funds was reduced from the cost of assets - HELD THAT:- Revenue has accepted the order of the CIT(A) and is not agitating the same. It is the assessee s submission that the ITAT decide this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax matters of the Assessee and due to delay in placing facts of the case before the present counsel and getting advice from the present counsel. The delay in filing the appeal is therefore condoned. 3. The first two grounds of appeal and Ground Nos.6 7 are general grounds of appeal and need no specific adjudication. 4. Ground No.3 raised by the Assessee is with regard to the disallowance of depreciation on bridges by the Revenue authorities. The Assessee is a statutory corporation established and incorporated under the Companies Act, 1956 on 26.7.1999 by the Karnataka State Government. The objects of the corporation so set up will be to take up development program for roads, bridges and other related infrastructure developments works connected with surface transport. The Assessee claimed depreciation of ₹ 10,35,34,009/- on bridges. The Assessee claimed that the bridges on which depreciation were claimed by the Assessee were owned by them and they had complete dominion over the bridges. The Assessee claimed that depreciation was claimed on the cost of bridges completed during the relevant previous year that was put to use (open to traffic). The AO noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f construction and therefore was not entitled to claim depreciation on bridges as it was not owner of the bridges. 7. Aggrieved by the order of the CIT(A), the Assessee has raised Gr.No.3 before the Tribunal. We have heard the submission of the learned counsel for the Assessee who reiterated submissions that were made before the revenue authorities. The learned DR relied on the order of the CIT(A). 8. We have carefully considered the rival submissions. As per section 32 of Income Tax Act, 1961, an assessee is entitled to claim depreciation on fixed assets only if the following conditions are satisfied: 1. Assessee must be owner of the asset (though registered ownership is not necessary). 2. The asset must be used for the purposes of business or profession. 3. The asset must be used during the previous year. The use of the asset during the previous year may be active use or passive [i.e., kept ready for use]. 9. The Assessee does derive income from allowing right to use the bridges on which he had claimed depreciation during the previous year. The Assessee is not owner of the bridges and only constructs bridges out of funds provided by the State Government. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard the rival submissions. Before the CIT(Appeals), the Appellant took the plea that the interest earned ought not to be taxed under the head Income from Other Sources and that it should actually be set off against interest paid on loans from HUDCO as these deposits had a cost to it and were not made out of interest free funds. The assessee, without prejudice to this contention, also took an alternate plea that the entire interest paid on loans availed from HUDCO should actually be permitted to be written off as Revenue Expenditure. The CIT(A) in his common order passed for the AYs 2002-03, 2003-04 2004-05 rejected the plea of set off against interest payments and upheld the order of the AO on this count. He however allowed the alternate plea of the Appellant that the entire interest payment made to HUDCO on the loans availed from them ought to be allowed as Revenue Expenses. 13. It may be noted that the Revenue has accepted the order of the CIT(A) and is not agitating the same. It is the assessee s submission that the ITAT decide this issue based on the given set of facts for the AYs 2002-03, 2003-04 2004-05. In respect of AY 2005-06, however, the CIT(A) has dismissed the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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