Hazaribagh Ranchi Expressway Ltd Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that depreciation under section 32 of the Income Tax Act on the right to collect toll on the roads developed on BOT basis is not eligible.
Facts- The assessee is the Special Purpose Vehicle promoted by IL and FS Transportation Networks Ltd and Punj Llyod Ltd. During the assessment proceedings, from the perusal of the record, it was found that the assessee claimed depreciation on roads and bridges amounting to ₹ 153,56,83,533.
AO vide order dated 30/12/2016 passed under section 143(3) r/w section 92CA(4) of the Act disagreed with the submission of the assessee and held that the ownership of the asset is on a lease basis for a period of 18 years, therefore the assessee is not entitled to claim depreciation under section 32 of the Act. Accordingly, the AO disallowed the depreciation claim of ₹ 152,56,62,864 made by the assessee during the assessment year 2013-14. Further, the AO held that once the ownership itself is held to be not available with the assessee, the alternative claim regarding the treatment of the toll roads as “plant and machinery” becomes infructuous. However, the AO allowed the benefit of amortisation for the period of the concession agreement and allowed 1/18thportion of the cost to be deferred revenue expenditure which works out to ₹ 56,50,60,320.
