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TMI Blog2021 (9) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... ] - Accordingly, in the backdrop of our aforesaid deliberations, we concur with the view taken by the CIT(A) that now when the order passed by the Pr. CIT-4, Mumbai u/s 263 itself had been quashed by the Tribunal, therefore, as observed by him, and rightly so, the assessment order passed by the A.O in consequence thereto u/s 143(3) r.w.s 263, could not be sustained and was liable to be vacated. - Decided against revenue. - ITA No. 848/MUM/2020 - - - Dated:- 1-9-2021 - SHRI S. RIFAUR RAHMAN ( ACCOUNTANT MEMBER ) AND SHRI RAVISH SOOD ( JUDICIAL MEMBER ) Assessee by : None Revenue by : Ms. Usha Gaikwad , D. R ORDER PER RAVISH SOOD, J.M: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-49, Mumbai, dated 05.11.2019, which in turn arises from the order passed by the A.O u/s 143(3) r.w.s 263 of the Income Tax Act, 1961 (for short Act ), dated 31.08.2017. The revenue has assailed the impugned order on the following solitary ground before us: 1. Whether on the facts and circumstances of the case and in the law, the Ld. CIT(A) erred m deleting the disallowance made by the Assessing Officer without considering the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served by the A.O, that the assessee while computing its taxable income had claimed depreciation @ 25%. Referring to the annual accounts of the assessee for the year under consideration, it was observed by the A.O that as per Annexure 2 to Form 3CD (as per Form 3CB to 3CD) in Block VIII pertaining to Concession Rights an amount of ₹ 334,40,25,560/- had been added during the year in question to the opening W.D.V of ₹ 415,29,22,175/-; and depreciation was claimed @ 25% on the total amount of ₹ 731,17,57,434/- therein amounting to ₹ 182,79,39,359/-. In the backdrop of the aforesaid facts the A.O issued a Show cause notice (SCN) to the assessee company and called upon it to explain that as to why its claim for depreciation on roads @ 25% amounting to ₹ 182,79,39,359/- may not be disallowed u/s 32(1)(ii) of the Act. In support of his aforesaid conviction, it was observed by the A.O that the CBDT vide Circular No. 9 of 2014, dated 23.4.2014, had clarified that in respect of BOT arrangements for development of roads/highways etc. the assessee undertaking the project of improvement, operation and maintenance etc. not being an owner of the property either w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, therefore, as a consequence thereto the assessment framed by the A.O vide his order passed u/s 143(3) r.w.s 263, dated 31.08.2017 could not be survive on standalone basis, the CIT(A) deleted the disallowance of the assessee s claim for depreciation of ₹ 182.79 crores that was made by the A.O. 6. The revenue being aggrieved with the order passed by the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short A.R ) for the assessee at the very outset submitted that as the order passed by the Pr. CIT-4, Mumbai, u/s 263 of the Act, dated 22.03.2017 had been quashed by the Tribunal, therefore, the CIT(A) had rightly observed that as a consequence thereto the assessment framed by the A.O u/s 143(3) r.w.s 263, dated 31.08.2017 cannot survive on a standalone basis and thus, had to meet the same fate. 7. Per contra, the ld. Departmental Representative (for short D.R ) did not controvert the aforesaid contentions that were advanced by the assessee s counsel. 8. We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record. As observed by us he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion over the building in his own right uses the same for the purposes of the business or profession though a legal title has not been conveyed to him consistently with the requirements of laws such as the Transfer of Property Act and the Registration Act, etc., but nevertheless is entitled to hold the property to the exclusion of all others. 9. Similarly, basing the above decision, it is very clear that an assessee need not be a legal owner of an asset to claim depreciation. In case where an assessee is entitled to hold the property to the exclusion of all others and exercise dominion over the property and have the right to use and occupy the property and/or to enjoy its usufruct in his own right would be the owner. All of these conditions in our view is satisfied in the present case and thus the assessee is entitled to depreciation under section 32(1)(ii) of the Act on such intangible assets. We also noted that the Circular also does not dispute that the expense incurred by the assessee brings to it an enduring benefit in the form of right to collect toll during the period of the agreement. In the present case as mentioned earlier, and at the cost of repetition we reiterate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect that the impugned right is not of the nature referred to in section 32(1)(ii) of the Act for the reason that the agreement with the Government of Madhya 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 being 'intangible assets' which are wholly or partly owned by the assessee and used for the purposes of its business. The aforesaid condition is fully satisfied by the assessee and therefore considered in the aforesaid perspective we find no justification for the plea raised by the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project and operate the project facility during the concession period, on expiry of which the project/project facility will revert back to the Government of India. What the Government of India has granted to the assessee is the right to use the project site during the concession period and in the absence of such right, it would have been unlawful on the part of the concessionaire to do or continue to do anything on such property. However, the right granted to the concessionaire has not created any right, title or interest over the property. The right granted by the Government of India to the assessee under the C.A. has a license permitting the assessee to do certain acts and deeds which otherwise would have been unlawful or not possible to do in the absence of the C.A. Thus, in our view, the right granted to the assessee under the C.A. to operate the project/project facility and collect toll charges is a license or akin to license, hence, being an intangible asset is eligible for depreciation under section 32(1)(ii) of the Act. 15. Even assuming that the right granted under the C.A. is not a license or akin to license, it requires examination whether it can still be considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible asset as provided by Explanation 3(b) of section 32, at the same time, held that even applying the said principle 'goodwill' would fall under the expression any other business or commercial rights of similar nature . Thus, as could be seen, even though, 'goodwill' is not one of the specifically identifiable assets preceding the expressing any other business or commercial rights of similar nature , however, the Hon'ble Supreme Court held that 'goodwill' will come within the expression any other business or commercial rights of similar nature . Therefore, the contention of the learned Senior Standing Counsel that to come within the expression any other business or commercial rights of similar nature the intangible asset should be akin to any one of the specifically identifiable assets is not a correct interpretation of the statutory provisions. Had it been the case, then 'goodwill' would not have been treated as an intangible asset. The Hon'ble Delhi High Court in case of Areva T and D India Ltd. (supra), while interpreting the aforesaid expression by applying the principles of ejusdem generis observed, the right as finds place in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r:- The expenditure incurred by the assessee for construction of road under BOT contract by the Government of India has given rise to an intangible asset as defined under Explanation 3(b) r/w section 32(1)(ii) of the Act. Hence, assessee is eligible to claim depreciation on such asset at the specified rate. . 12. As the issue is highly debatable in the given facts of the case, revision under section 263 of the Act is not permissible. Hence, the revision order is quashed and the appeal of assessee is allowed. As the order passed by the Pr.CIT-4, Mumbai u/s 263 of the Act, dated 22.03.2017 had been set-aside by the Tribunal, therefore, the CIT(A) taking cognizance of the said fact had quashed the assessment order passed by the A.O u/s 143(3) r.w.s 263, dated 31.08.2017. We have given a thoughtful consideration to the issue before us and find no infirmity in the view taken by the CIT(A) that now when the order passed by the Pr. CIT-4, Mumbai u/s 263 of the Act, dated 22.03.2017 had been quashed by the Tribunal, therefore, as a consequence thereto the assessment order passed by the A.O u/s 143(3) r.w.s 263, dated 31.03.2017 cannot survive on a standalone basis and had to meet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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