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TMI Blog2022 (9) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... lect toll tax, which is an intangible commercial right under section 32(1)(ii) of the Act, at the rate as has been prescribed under the relevant rules. It is the golden rule of tax, as laid down in Article 265 of the Constitution of India that no tax can be collected except by authority of law. It is also well established that if the assessee, under a mistake, misconception or on not being properly instructed is over assessed, the authorities under the Act are required to assist him and ensure that only legitimate tax dues are collected. From the record, it is evident that it is not the case where the Revenue is alleging that rate of depreciation in case of intangible assets is 15% instead of 25% as claim by the assessee. Thus, once the right to collect the toll tax has been held to be intangible asset by the CIT(A), by following the judicial precedents in assessee s own case, we are of the considered view that the learned CIT(A) erred in denying deduction of depreciation at the rate of 25% and restricting the same to 15% by referring to the claim made under the return of income. We are further of the view that once asset has been characterised under the particular head i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said time-period, in view of the order passed by the Hon ble Supreme Court, there is no delay in filing the present cross appeals and we proceed to decide the same on merits. ITA No. 483/Mum/2021 Assessee s Appeal A.Y. 2012 13 3. In this appeal, the assessee has raised following grounds: The following grounds of appeal are distinct and separate and without prejudice to each other: 1. On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals)-22 ('CIT-A') had erred in directing the AO to restrict the depreciation allowed to the amount actually claimed by the appellant in the return of income. 2. On the facts and in the circumstances of the case and in law, the Learned CIT (A) erred in not accepting the claim of appellant to allow full relief of depreciation on Toll Road Rs. 28,18,53,651 as against Rs. 24,99,95,453. 4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is a public limited company, which is engaged in the business of developing, operation and maintenance of road infrastructure. For the year under consideration, assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 020, upheld the conclusion of the AO in disallowing depreciation on roads by treating the same as plant and machinery or building . However, the learned CIT(A) accepted the alternative plea of the assessee and allowed the depreciation on roads treating the assessee as owner of the right to collect toll , which is an intangible asset on which depreciation is allowable under section 32 of the Act, by following the decision of coordinate bench of Tribunal in assessee s own case for assessment years 2009 10 to 2011 12. Further, as regards the quantum of depreciation, the learned CIT(A) denied the claim of the assessee of allowing depreciation at the rate of 25% applicable in case of intangible assets and restricted the same to 15% as claimed by the assessee in its return of income, by observing as under: 4.34 As regards the quantum of depreciation allowable, the appellant had claimed depreciation @ 15% the return of income/treating the same as Plant Machinery and now vide the directions contained in the above para, depreciation is being allowed treating the same as an intangible asset on which depreciation is allowable @ 25%. This therefore leads to a situation wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the lower authorities and submitted that relief more than what was claimed by the assessee in the return of income cannot be allowed. 8. We have considered the rival submissions and perused the material available on record. The only grievance of the assessee is against restricting the rate of depreciation to 15%, as claimed in the return of income, against 25% allowable in case of intangible assets. In the present case, the assessee entered into an agreement on 22/03/2005, with NHAI for construction of road project for a period of 20 years commencing from 22/09/2005. Following the approach adopted in preceding assessment years, which has also been accepted by coordinate bench of the Tribunal in assessee s own case for assessment year 2007 08 and 2008 09, the assessee claimed depreciation on the road at 15% by treating the same as plant and machinery in its return of income. It is also undisputed that even in assessment year 2010 11, the learned CIT(A) in assessee s own case has allowed depreciation at 15% on the road by treating the same as plant and machinery . Thus, it is evident that such a claim of the assessee has been allowed in the previous assessment years and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of depreciation at the rate of 25% and restricting the same to 15% by referring to the claim made under the return of income. We are further of the view that once asset has been characterised under the particular head i.e., intangible asset in the present case, all the other consequences including the rate at which depreciation is allowable under the law follows. Therefore, in view of the above, we direct the AO to grant depreciation on toll road at the rate applicable in case of intangible assets i.e. at 25%. As a result, grounds raised by the assessee are allowed. 10. In the result, appeal by the assessee is allowed. ITA No. 2496/Mum./2021 Revenue s appeal A.Y. 2012 13 11. In this appeal, Revenue has raised following grounds: 1. Whether on the facts and in the circumstances of the case, the order of the Ld. CIT (A) is justified in holding that the expenditure incurred by the assessee for construction of a road under BOT contract with the Government has given rise to an intangible asset as defined under Explanation 3(b) r.w.s. 32(1)(ii) and hence, the assessee is eligible to claim depreciation on such asset as the specified rate? 2. Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which means it slowly will depreciate to the nil value. As per the provisions of the Income Tax Act, especially under section 32(1)(ii), the assessee is entitled to claim of depreciation on such type of rights. Such rights have been described as intangible assets under the Act and are eligible for claim of depreciation. 28. In view of the express provisions of the Act, we have no doubt to hold that the assessee is entitled to collect tax being an intangible commercial right under section 32(1)(ii) at the rate as has been prescribed under the relevant rules. Our above view is further supported by the decision of the co-ordinate Pune bench of the Tribunal in the case of M/s. Ashoka Infrastructure Ltd. Vs. ITO in ITA No.989/PN/2010 ITA No.1105/PN/2010,wherein, the Tribunal while further relying upon another decision of the Co-ordinate Bench of the Tribunal in the case of Ashoka Infraways Pvt. Ltd. Vs. ACIT in ITA No.185 186/PN/2012 dated 29.04.2013, has held in clear terms that the claim of the assessee for depreciation on licence to collect toll being an intangible asset falling within the scope of section 32(1)(ii) of the Act is liable to be upheld. The relevant part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before concluding that the impugned 'Right to collect Toll' was an 'intangible asset' eligible for claim of depreciation @ 25% as per sec. 32(1)01) of the Act. 10. We have carefully considered the rival submissions. Factually speaking, there is no dispute to the fact that the costs capitalised by the assessee under the head 'License to collect Toll' have been incurred for development and construction of the infrastructure facility, i.e., Dewas Bypass Road. It is also not in dispute that the assessee was to build, operate and transfer the said infrastructure facility in terms of an agreement with the Government of Madhya Pradesh. The expenditure on development, construction and maintenance of the infrastructure facility for a specified period was to be incurred by the assessee out of its own funds. Moreover, after the end of the specified period, assessee was to transfer the said infrastructure facility to the Government of Madhya Pradesh free of charge. In consideration of developing, constructing, maintaining the facility for a specified period and thereafter transferring it to the Government of Madhya Pradesh free of charge, assessee was granted a Ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Toll', being an 'intangible asset' falling with the scope of Section 32(1)(ii) of the Act is liable to be upheld. We hold so. 8. In so far as the reliance placed by the CIT(A) on the judgement of the Hon'ble Bombay High Court in the case of Techno Shares And Stocks Ltd. (supra) is concerned it may only be noted that the said judgement has since been altered by the Hon'ble Supreme Court vide its order reported at (2010) 327 ITR 323 (SC). Accordingly, in view of the aforesaid discussion, we hereby allow the Ground of Appeal No. 1.1 raised by the assessee. 29. In view of our observations made in the preceding paras and also agreeing with the above reproduced findings of the Tribunal, we hold that the assessee is entitled to the claim of depreciation on the road to collect toll being an intangible asset falling within the purview of section 32(1) (ii) of the Act. 30. So far as the other alternative contention of the assessee that the project be treated as plant machinery and the depreciation be accordingly allowed to it, we do not find that the said license of right to collect toll in any way falls in the definition of plant machinery. As held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration, the assessee earned interest of Rs.1,56,61,845, on fixed deposit, which was made out of the toll revenues earned and offered the same to tax under the head business income . The AO vide order passed under section 143(3) of the Act, without giving any specific findings, treated the interest income as income from other sources , while computing the total income of the assessee. 17. The learned CIT(A) vide impugned order, by following the decisions rendered in assessee s own case by its predecessor as well as by the coordinate bench of the Tribunal in preceding assessment years, allowed the appeal filed by the assessee on this issue and directed the AO to treat the interest income as business income . Being aggrieved, Revenue is in appeal before us. 18. During the course of hearing, learned DR vehemently relied upon the order passed by the AO. On the other hand, learned AR placed reliance upon the decisions of the coordinate bench of Tribunal in assessee s own case. 19. We have considered the rival submissions and perused the material available on record. We find that while deciding similar issue in assessee s own case for assessment year 2009 10, the Co-ordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest income had been earned by the assessee out of business compulsions of deposits in the Debit Service Reserve Account , hence the said interest income is linked to the business activities of the assessee. The issue is covered with the decisions of the Tribunal in the own case of the assessee for earlier assessment years. Hence, the interest income of the assessee is ordered to be assessed as Business Income. Ground No.1 of the Revenue s appeal is therefore dismissed. 20. We find that the aforesaid decision was challenged by the Revenue before the Hon ble jurisdictional High Court in PCIT vs M/s West Gujarat Expressway Ltd., in ITA No. 610 of 2016. However, vide order dated 19/03/2019, Hon ble jurisdictional High Court affirmed the findings of the coordinate bench of the Tribunal and did not admit the appeal of the Revenue on this issue. We further find that the coordinate bench of the Tribunal in assessee s own case in DCIT vs West Gujarat Expressway Ltd. (supra), for assessment year 2010 11, vide order dated 26/05/2017, rendered similar findings following the aforesaid decision in immediately preceding year. Similarly was held in assessment year 2011-12 by the coordina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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