ITO Vs M/s. Ashoka Highways (Bhandara) Ltd. (ITAT Pune)
It is not disputed that the assessee has been given license/commercial right over the project to receive the toll. The assessee may not be the owner of the toll road, but he, certainly, is owner in possession of the right to collect the toll. The said right has been given to the assessee for a specified period with enduring benefit. It is also not disputed that on the expiry of the time period of the agreement, the said right of the assessee will cease to have effect which means it slowly will depreciate to the nil value. As per the provisions of the Income Tax Act, especially under section 32(1)(ii), the assessee is entitled to claim of depreciation on such type of rights. Such rights have been described as intangible assets under the Act and are eligible for claim of depreciation.
In view of the express provisions of the Act, we have no doubt to hold that the assessee is entitled to collect tax being an intangible commercial right under section 32(1)(ii) at the rate as has been prescribed under the relevant rules.
FULL TEXT OF THE ITAT JUDGEMENT
The appeal filed by the Revenue is against the order of CIT(A)-1, Nashik, dated 24.07.2015 relating to assessment year 2011-12 against the order passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).
2. The Revenue has raised the following grounds of appeal:-
1. Whether on the facts and in the circumstances of the case, and in law, the Ld. CIT(A)-I, Nashik was justified in allowing the depreciation of Rs.63,05,34,911/- claimed on the asset “Right to collect Toll”.
2. Whether on the facts and in the circumstances of the case, and in law, the Ld. CIT(A)-I, Nashik was justified in holding that the assessee is eligible for depreciation on asset “Right to Collect Toll”.
3. The appellant prays the order of the Assessing Officer may be restored.
4. The appellant prays to adduce such further evidence to substantiate his case.
3. The learned Authorized Representative for the assessee at the outset pointed out that the issue raised in the present appeal is squarely covered by the order of Tribunal in sister concern’s case i.e. Ashoka Infrastructure Ltd. Vs. ACIT in ITA Nos.1452 to 1457/PUN/2014, relating to assessment years 2006-07 to 2011-12, order dated 30.06.2017.
4. The learned Departmental Representative for the Revenue placed reliance on the order of Assessing Officer.
5. We have heard the rival contentions and perused the record. Briefly, in the facts of the case, the assessee was engaged in the business of development operations and maintenance of infrastructure facilities. For the year under consideration, the assessee had filed the return of income declaring total income at Nil. The case of assessee was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer noted that the assessee had claimed depreciation on ‘Right to Collect Toll’ at Rs.63,09,15,059/-. The Assessing Officer held that the said depreciation was not allowable to the assessee being claimed on an intangible asset i.e. ‘Right to Collect Toll’; Concurrently amortization of expenses at Rs.14,63,16,551/-was allowed to the assessee.
6. The CIT(A) allowed the claim of assessee in turn, relying on the decision of the Pune Bench of Tribunal in the case of Ashoka Bridgeways in ITA No.686/PN/2012, relating to assessment year 2007-08, order dated 29.04.2013.
7. The Revenue is in appeal against the order of CIT(A) since twin conditions set forth in section 32(1) of the Act are not satisfied i.e. in the case of assessee, road is neither owned wholly or partly by the assessee nor its business. On the other hand, the assessee was claiming depreciation on the cost incurred for construction of road, which was not allowable in the hands of assessee.
8. We find that the issue raised in the present appeal is squarely covered by the subsequent order of the Tribunal in Ashoka Infrastructure Ltd. Vs. ACIT (supra), wherein it was held as under:-
“17. We have heard the rival contentions and perused the record. Search under section 132 of the Act was conducted at the premises of assessee on 20.04.2010. The assessee was incorporated for executing infrastructure project of laying down four lanes and for strengthening of Pune-Ahmednagar road with private finance on toll rights under Built-Operate-Transfer basis. On completion of the project, the operations started on 06.07.2005. The assessee for the year under consideration had collected toll to the extent of Rs.17.16 crores and had claimed depreciation to the extent of Rs.10,61,88,185/-. The said claim of depreciation on license to collect toll being an intangible asset, in view of Government notification granting such rights was claimed in the original return of income by the assessee. The assessment in the case of assessee for assessment year 2006-07 was completed under section 143(3) of the Act and the said claim was allowed. Further, in assessment year 2007-08, similar claim of depreciation on intangible asset was denied to the assessee. However, the Tribunal in ITA No.989/PN/2010, relating to assessment year 2007-08 vide order dated 18.07.2013 had allowed the claim of depreciation on license to collect toll @ 25% being intangible asset within the scope of section 32(1)(ii) of the Act.
