JCIT (OSD) Vs Gwalior Bypass Project Ltd (ITAT Delhi)
Depreciation on Highway Projects Allowed: ITAT Upholds Assessee’s Claim on BOT Roads
The Delhi Bench “B” of the ITAT, in JCIT v. Gwalior Bypass Project Ltd. (AY 2016-17), dismissed the Revenue’s appeal and upheld the allowance of depreciation on highway projects developed under the DBOT (Design, Build, Operate and Transfer) model.
The assessee, a special purpose vehicle executing a four-lane highway project for NHAI, had capitalised the entire project cost as intangible assets and claimed depreciation under section 32. The AO disallowed depreciation on the ground that the assessee was not the legal owner of the road and instead allowed amortisation based on CBDT Circular No. 9/2014, resulting in a net addition. The JCIT(A) deleted the disallowance by following binding precedents in the assessee’s own earlier years.
Affirming the JCIT(A)’s order, the Tribunal held that the issue was squarely covered by the Special Bench decision in Progressive Constructions Ltd. and by the Tribunal’s own decisions in the assessee’s case for AYs 2014-15 and 2015-16, where depreciation on BOT highway projects had been allowed. The ITAT reiterated that beneficial ownership and the right to use the asset for business during the concession period suffices for claiming depreciation, notwithstanding absence of legal title.
Since depreciation had consistently been allowed on the opening WDV in earlier years, and no contrary material was shown by the Revenue, the Tribunal found no infirmity in the JCIT(A)’s order. Accordingly, the Revenue’s appeal was dismissed and the assessee’s claim of depreciation stood confirmed
FULL TEXT OF THE ORDER OF ITAT DELHI
