DCIT Vs Madhucon Agra Expressway Ltd (ITAT Hyderabad)
ITAT Hyderabad held that NHAI grant shall not be reduced from the cost of project before allowing amortization of cost of project. Accordingly, appeal of revenue dismissed and order of CIT(A) upheld.
Facts- The assessee company is a Special Purpose Vehicle for construction of highways awarded by NHAI on Built-Operate & Transfer (BOT). The addition made by AO on account of grant received from National Highway Authority of India (NHAI) of Rs.38,40,00,000/- by reducing the cost on Written Down Value (WDV ). CIT (A) accepted the claim of the assessee and consequently, deleted the addition made by the Assessing Officer on this account while passing the impugned order. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that it is clear from clause 23.1 to 23.3 that this grant was given by the NHAI as a cash support by way of outright grant as a shareholders fund. Naturally the assessee cannot use the said grant given by the NHAI other than meeting the cost of the project but that does not lead to the conclusion that the grant was given by NHAI as a portion of cost of asset acquired by the assessee met directly or indirectly as provided in Explanation (10) to section 43 of the I.T. Act, 1961. It is the cash support in the nature of shareholders fund to make the project viable and to provide financial strength to the assessee to avail further financial support from the financial institutions in the shape of loan. Thus, it is clear that the learned CIT (A) has given the finding based on the analysis of facts and law which is also supported by various decisions as relied upon by the assessee. Therefore, we do not find any error or illegality in the order of the learned CIT (A), qua this issue.
