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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 ..... dinate and has been explained as due to change in the counsel who handled 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to generate revenue from bridges after construction. The AO therefore held that the claim for depreciation by the Assessee cannot be allowed. 5. Before the first appellate authority, the Assessee contended that ownership of bridges is not a sine quo non for claiming depreciation and in this regard relied on decisions of Hon'ble Supreme Court in the case of Mysore Minerals Ltd. Vs. CIT 239 ITR 775 (SC) wherein it was held that depreciation can be allowed even in the absence of legal title (Ownership) so long as the person claiming depreciation has dominion over the assets and is entitled to use it in his own rights and has in fact used it for the purpose of his business. The Assessee relied on decision of Hon'ble Supreme Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Therefore, the conditions for allowing depreciation both on the ownership aspect as well as use for business is not satisfied so as to allow depreciation on bridges claimed by the Assessee. The position is different where bridges are built under Build Operate & Transfer (BOT), where the cost of construction is reimbursed by allowing the person constructing bridges to recover his cost and profits by coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f bridges. The amount of loan disbursed by HUDCO till utilization for the purpose of construction of bridges were temporarily invested in fixed deposits. The 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. The CIT(A) confirmed the order of the AO. Aggrieved by the order of the CIT(A), the Assessee has raised Gr.No.4 before the Tribunal. 12. We have heard 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 14. The assessee has also pleaded before us that the Tribunal in-the event it does affirm the treatment of interest earned as Income from Other Sources, should allow the alternate plea that the interest paid on loans from HUDCO should be allowed as revenue expenditure as done so by the CIT(Appeals) in the order for the AYs 2002-03 to 2004-05 and which has been accepted by the Revenue. 15. We are of the view the prayer made in the alternative by the Assessee deserves to be allowed as was done in AYs 2002-03 to 2004-05 by the CIT(A) in the orders for those AYs. We direct the claim of the Assessee, to this extent, should be allowed. Gr.No.4 is thus treated as partly accepted. 16. Ground No.5 raised by the Assessee is with regard to disa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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