Case Law Details
DCIT Vs Ashoka Dhankuni Kharagpur Tollway Ltd (ITAT Pune)
Revenue’s sole substantive grievance raised in the instant appeal challenges correctness of the CIT(A)’s action reversing assessment findings dated 21.12.2019 disallowing the assessee’s depreciation claim amounting to Rs.3,47,61,85,194,/- pertaining to its ‘right to collect toll’ as an intangible asset under section 32(1)(ii) of the Act. The Assessing Officer appears to have amortized the assessee’s corresponding amount as per the CBDT’s circular issued on 09/2014. The CIT(A) on the other hand has adopted judicial consistency by placing reliance on the Tribunal’s various decisions deciding the issue in assessee’s favour.
The Revenue is fair enough in its pleadings in not pin-pointing any distinction of facts or law in all these assessment years so far as the assessee’s treatment of its right to collect toll as an intangible asset under section 32(1)(ii), is concerned. Faced with this situation, we affirm the CIT(A)’s findings under challenge.
FULL TEXT OF THE ORDER OF ITAT PUNE
This Revenue’s appeal for Assessment Year 2017-18 is directed against the Commissioner of Income Tax(Appeal), Pune-12’s order no.ITBA/APL/S/250/2020-21/1031080551(1) dated 28.02.2021, in proceedings u/s.250 of the Income Tax Act, 1961 [in short “the Act”].
2. The Revenue’s sole substantive grievance raised in the instant appeal challenges correctness of the CIT(A)’s action reversing assessment findings dated 21.12.2019 disallowing the assessee’s depreciation claim amounting to Rs.3,47,61,85,194,/- pertaining to its “right to collect toll” as an intangible asset under section 32(1)(ii) of the Act. The Assessing Officer appears to have amortized the assessee’s corresponding amount as per the CBDT’s circular issued on 09/2014. The CIT(A) on the other hand has adopted judicial consistency by placing reliance on the Tribunal’s various decisions deciding the issue in assessee’s favour.
3. This leaves the Revenue aggrieved.
4. We have given our thoughtful consideration to vehement rival contentions and find no merit in the Revenue’s stand. A perusal of the case file (pages 42 to 45) indicates that the very issue had arisen between these parties in Revenue’s appeals ITA No’s.157, 187 & 188/PUN/2018 for AY’s 2014-15 & 2015-16 which stand adjudicated against the department as follows:
“7. We have heard the rival contentions and perused material on record. The only issue in the present appeal relates to whether or not the cost of “Right to Collect Toll” qualifies as “intangible asset” as defined under clause (ii) of sub-section (1) of section 32 of the Act. There is no dispute about the cost of acquisition. The only dispute is with regard to the true nature of the rights acquired in terms of the contract awarded by the NHAI. The relevant provisions of section 32(1)(ii) are extracted herein below for ready reference:-
“Depreciation. 32. (1) In respect of depreciation of— (i) ……….
(ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, [not being goodwill of a business or profession,]”
8. Now the question that comes up for our consideration is whether the “Right to Collect Toll” falls within the definition of commercial right or “intangible asset”? There can be no doubt that as result of developing this project, the respondent-assessee had acquired a commercial right to collect the toll in terms of the contract awarded by NHAI. This right definitely falls within the meaning of “commercial right” or “intangible asset”. This definitely would qualify for depreciation @ 25%. To the same effect is the decisions of the Hon’ble Rajasthan High Court in the case of GVK Jaipur Expressway Ltd., the High Court has taken into consideration all the decisions and more particularly the decisions of (i) Hon’ble Delhi High Court in the case of Moradabad Toll Road Co. Ltd., (ii) Hon’ble Allahabad High Court in the case of CIT v. Noida Toll Bridge Co. Ltd. [reported in [2013] 30 com 207], (iii) Hon’ble Madras High Court in the case of CIT v. VGP Housing (P.) Ltd. [reported in [2016] 66 taxmann.com 354], (iv) Hon’ble Rajasthan High Court in the case of CIT v. Jawahar Kala Kendra [reported in [2014] 43 taxmann.com 159], (v) Hon’ble Rajasthan High Court in the case of CIT v. Mohd. Bux Shokat Ali [reported in [2001] 118 Taxman 712].
9. The decisions of the Hon’ble Jurisdictional High Court in the case of North Karnataka Expressway Ltd. vs. CIT, 372 ITR 145, (vii) CIT vs. West Gujarat Expressway Ltd. (No.1), 390 ITR 398 and (viii) Dy. CIT vs. West Gujarat Expressway Ltd. (No.2), 390 ITR 400 have no application to the facts of the present case, inasmuch as, the decision in the said two cases relates to the allowability of depreciation on roads treating as “building”. In the circumstances, we do not find any illegality in the order of the ld. CIT(A).
Accordingly, we do not find any merit in the appeal filed by the Revenue. Hence, the grounds of appeal raised by the Revenue are dismissed.”
5. The Revenue is fair enough in its pleadings in not pin-pointing any distinction of facts or law in all these assessment years so far as the assessee’s treatment of its right to collect toll as an intangible asset under section 32(1)(ii), is concerned. Faced with this situation, we affirm the CIT(A)’s findings under challenge.
6. This Revenue’s appeal is dismissed.
Order pronounced in the open Court on 27th September, 2022.
