Case Law Details
We have considered the rival submissions of the parties and perused the relevant material available on record. It is undisputed fact that the department allowed the similar amortization of BOT Project expenditure in the earlier assessment year under scrutiny assessment under section 143(3) of the Act.
There is no dispute about the quantum of expenditure incurred by the assessee. It is the case of the assessee that the expenditure incurred on BOT Project is allowable as amortization and not as depreciation whereas it is the case of the department that neither the amortization nor the depreciation is allowable as deduction.
The main argument of the department is that the assessee should have claimed deduction under section 80IA and not as deduction towards revenue expenditure. In our considered opinion, the assessee can claim deduction under section 80IA only if the assessee carries on eligible business as specified in section 80IA of the Act. However, the issue before us is relating to allowability of the expenditure incurred on BOT Project on its amortization and not about the eligibility of deduction under section 801A of the Act. On similar and identical issue, the co-ordinate Bench of the Tribunal in the case of Nyse Infrastructure (supra) held that the assessee has to be given deduction either of depreciation, or cost of construction as revenue expenditure or in the form of amortization of expenditure by following the judgment in the case of Madras Industrial Investment Corporation (supra). It is well settled that the Co-ordinate Bench’s decision is binding and the same has to be followed in deciding the similar issues.
In the case of Nyse Infrastructure (supra) the Tribunal allowed the deduction as depreciation as in that case, the assessee itself claimed depreciation. In the case under consideration, the assessee company claimed amortization of the BOT Project expenditure as revenue expenditure and as per the ratio of decision rendered by the Tribunal in the case of Nyse Infrastructure (supra) the amortization of expenditure is also one of the options and is being allowable as deduction. Hence, by following the decision of Coordinate Bench of the Tribunal in the case of Nyse Infrastructure (supra), amortization of BOT project expenditure claimed by the assessee is to be allowed. Moreover, we do not see any merit in the arguments of the learned departmental representative that the amortization of expenditure can be allowed under section 35D of the Act and not under any other provisions of the Act. In the case under consideration, the assessee never claimed any deduction under section 35D of the Act. We also do not see any merit in the arguments of the learned Departmental Representative that the assessee company itself classified the assets as capital assets in its balance-sheet.
It is well settled law that the entries in the books of account and its treatment would not disentitle the assessee, in any way, to claim the expenditure to arrive its actual income for the purpose of taxation. It is case of the assessee that the expenditure incurred is in revenue nature and the same has to be allowed over a period 17/7 years as the case may be. In the case under consideration, the expenditure incurred by the assessee on BOT Project did bring some kind of an enduring benefit to the assessee; however, the said expenditure did not bring into existence any capital asset for the assessee. The asset which was created belongs to the Government and the assessee derived only an enduring business advantage by spending the amount. The expenditure incurred by the assessee has to be looked upon as having been made for the purpose of conducting the business of the assessee. Since the asset created by the assessee by spending the said amounts did not belong to the assessee but the assessee got the business advantage by collecting the toll charges as revenue. Thus, the assessee got the benefit of revenue collection for the period of 17/7 years and hence, the expenditure incurred by the assessee towards BOT project should be looked upon as revenue expenditure. Our view is fortified by the decision of the Apex Court in the case of CIT vs. Madras Auto Services Limited (supra) relied on by the learned counsel for the assessee. Once we held that the said expenditure is to be treated as revenue expenditure, consequently, the assessee is eligible to amortize the expenditure relating to BOT Project for the period of 17/7 years. In view of the above, after considering the totality of facts and the circumstances of the case, we allow the claim of the assessee with regard to the amortization expenditure incurred on BOT Projects as revenue expenditure Since we allowed the ground of the assessee with regard to the allowability of amortization of the expenditure, the ground raised by the revenue in challenging the findings of the CIT (A) in allowing the depreciation on the infrastructure facilities, stands rejected.
