Jorabat Shillong Expressway Vs DCIT (ITAT Mumbai)
Mumbai ITAT held that concessionaire rights under a BOT/DBFOT agreement (right to operate and receive annuity) constitute an intangible asset eligible for depreciation u/s 32(1)(ii).
The assessee had constructed a highway project at its own cost under an NHAI concession and claimed depreciation @25% on the capitalized cost treated as intangible asset (right to receive annuity). The AO denied depreciation, treating the road as not owned by the assessee, and instead allowed amortization as per CBDT Circular 9/2014.
The Tribunal found that the department misunderstood the claim—the assessee was not claiming depreciation on the road, but on the license/right to operate and earn annuity, which is a “business or commercial right” akin to license. Such rights clearly fall within intangible assets under Section 32(1)(ii).
Relying on the Special Bench ruling in Progressive Construction Ltd. and multiple precedents, the ITAT held that investment in BOT projects creates an enduring intangible asset, i.e., the right to operate and earn revenue, and hence depreciation is allowable.
Accordingly, the assessee’s claim of depreciation was upheld, settling the issue in its favour.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Captioned appeals by the same assessee arise out of separate orders of learned first appellate authority, pertaining to the assessment years (‘A.Y.’ for short) 2017-18, 2018-19, 2020-21 and 2022-23. Since, the appeals involve common issues, they have been clubbed together and disposed of in a common order, for the sake of convenience.
