9911796707
Advanced Search 
TMI Blog2024 (6) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... de interest and upholding disallowance of depreciation of Rs. 46,23,33,692/- claimed on intangible assets@ 25% taking addition of Rs. 22,52,009/- on account of interest income. 2. Brief facts of the case are that appellant/assessee is a Special Purpose Vehicle incorporated for carrying out construction, operation and transfer of a stretch of the Rohtak Bawal Highway Project on Built Operate and Transfer (BOT) basis. The assessee was a concessionaire for the Rohtak- Bawal Section of NH-71 Project of National Highways Authority of India (NHAI) and had, pursuant to Concession Agreement dated 13.09.2010, developed the aforesaid project under Design, Build, Finance, Operate and Transfer Basis (DBFOT). The assessee had been granted commercial ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee filed detailed submissions dated 04.06.2018. 7. Learned CIT(A) called for a remand report from the assessing officer. The assessing officer vide remand report dated 24.4.2019 [Pg. 283 of PPB] relied upon Circular No. 9 of 2014 dated 23.04.2014 to deny the claim of depreciation to the appellant. The Learned AO submitted the order sheet entry dated 16.12.2016 [Pg. 269 of PPB] made during assessment proceedings wherein the revised claim made by the appellant regarding depreciation on intangible assets was denied by the Learned AO by relying on CBDT Circular No.9 of 2014. 8. The appellant filed a rejoinder to remand report dated 24.6.2019 submitting that (a) order sheet dated 16.12.2016 has been provided for the first time, and (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;) with NHAI on 13.07.2010 for development, operation, management, and maintenance of the Rohtak Bawal section of NH-71 [including 4-laning the highway) on Design, Build, Finance, Operate and Transfer Basis (DBFOT). Total cost of project was Rs. 8,17,13,77,974/-. The appellant was, under the Agreement, granted license to collect toll for a period of 28 years such commercial right/ license was treated as 'intangible' and depreciation was claimed thereon @ 25% u/s 32(1)(ii) of the Act amounting to Rs. 204,3,08,982/-. The project became operational from 01.09.2013. 13. Learned representative for appellant/assessee submitted that the salient features of Agreement entered between the appellant and NHAI are as follows: 13.1 The contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cession Agreement, the Appellant is vested with the "license/ commercial rights" relating to collection of toll, which is a separate/ distinct commercial asset. It is ex facie evident that the right to operate toll roads granted under the Agreement and the right collect toll is in the nature of "license" vested with the appellant. further, and in any case and in the alternative, such right/ license falls under the residuary category of "any other business or commercial rights" - accordingly, the appellant is eligible to claim depreciation @ 25% as "Intangible" under section 32(1)(ii) of the Act. Clause 27.1 which confers upon the appellant exclusive right, license and authority, to levy and collect toll fees from the vehicles utilizing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative for appellant/assessee submitted that Learned AO and Learned CIT(A) erred in relying on CBDT circular No. 09/2014 to disallow the claim of depreciation. The circular issued by the CBDT is not binding on the assessee or the appellate authority because the CBDT cannot pass any direction/circular so as to require any Income Tax Authority to make a particular assessment or to dispose of a particular case in a particular manner. Reliance was placed on following binding judicial precedents:- - UCO Bank vs CIT 237 ITR 889(SC) - Keshavji Ravji and Company vs. CIT: 183 ITR1, 17 (SC); - CIT vs. Indra Industries: 248 ITR 338 (SC); - CIT vs. Honda Cycles Pvt. Ltd. & ors. 228 ITR 463(SC); - CCE vs. Ratan Melting & Wire Industries [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation claim @ 25% on the Road Construction Project in view of the CBDT Circular No. 9/2014 dated 23.04.2014. 20. The rights under BOT projects have been considered to be intangible assets in judgment of Special Bench of ITAT Hyderabad in ACIT Hyderabad M/s. Progressive Construction Limited, Hyderabad, ITA No. 214/Hyd./2014 reported as [2018] 63 ITR 516 (Hyd.) wherein, while dealing with the similar issue, it was held that - "17. In the case of Techno Shares and Stocks Ltd. (supra), the Hon'ble Supreme Court while examining the assessee's claim of depreciation on BSE Membership Card, after interpreting the provisions of section 32(1)(ii), held that as the membership card allows a member to participate in a trading session o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
