CIT V. M/S TCI INFRASTRUCTURE FINANCE LTD.

ITA/86/2010

AI Insights

The case involves multiple appeals by the Commissioner of Income Tax-I against M/s TCI Infrastructure Finance Ltd., concerning the amortization of expenditure under section 35D of the Income Tax Act. The primary legal question was whether the expenditure incurred for the development of infrastructure facilities under BOT projects could be amortized and claimed as allowable business expenditure. The Tribunal had previously allowed the appeal of the assessee, which was challenged by the appellant in these proceedings. The High Court of Rajasthan, after considering the substantial questions of law framed during the admission of the appeals, referred to the Circular issued by the Central Board of Direct Taxes, which provided clarity on the matter.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 688046 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 29-05-2017
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: GUNJAN PATHAK; SANDEEP TANEJA
• Assessee Lawyers: ANUROOP SINGHI; ADITYA VIJAY
• Keywords: Amortization of expenditure; BOT Projects; Business expenditure; Infrastructure finance
• Section: 35D; 25D; 35(1)(2)(D)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 86 / 2010 Commissioner of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur (Raj). ----Appellant Versus M/s TCI Infrastructure Finance Ltd., 2nd Floor, Meghalaya Tower, Jaipur ----Respondent Connected With D.B. Income Tax Appeal No. 186 / 2010 Commissioner of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur (Raj). ----Appellant Versus M/s TCI Infrastructure Finance Ltd., 2nd Floor, Meghalaya Tower, Jaipur. ----Respondent D.B. Income Tax Appeal No. 187 / 2010 Commissioner of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur (Raj). ----Appellant Versus M/s TCI Infrstructure Finance Ltd., 2nd Floor, Meghalaya Tower, Jaipur. ----Respondent D.B. Income Tax Appeal No. 10 / 2011 Commissioner of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur. ----Appellant Versus M/s TCI Infrastructure Finance Ltd.,, 2nd Floor, Meghalaya Tower, Church Road, Jaipur. ----Respondent (2 of 6) [ITA-86/2010] D.B. Income Tax Appeal No. 169 / 2014 Commissioner of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur (Raj). ----Appellant Versus M/s TCI Infrastructure Finance Ltd.,, 2nd Floor, Meghalaya Tower, Church Road, Jaipur. ----Respondent D.B. Income Tax Appeal No. 170 / 2014 Commissioner of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur (Raj). ----Appellant Versus M/s TCI Infrastructure Finance Ltd.,, 2nd Floor, Meghalaya Tower, Church Road, Jaipur. ----Respondent D.B. Income Tax Appeal No. 26 / 2017 Principal Commissioner of Income Tax-I,, New Central Revenue Building, Statue Circle, Jaipur (Raj.). ----Appellant Versus M/s TCI Infrastructure Finance Ltd.,, 2nd Floor, Meghalaya Tower, Church Road, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay For Respondent(s) : Mr. Gunjan Pathak & Mr. Sandeep Taneja _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE DR. JUSTICE VIRENDRA KUMAR MATHUR Judgment (3 of 6) [ITA-86/2010] Per Hon’ble Jhaveri, J. 29/05/2017 1. By way of these appeals, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal preferred by the assessee. 2. This Court while admitting the appeal No.86/2010 on 19.02.2010 has framed the following substantial question of law: “Whether amortization of expenditure of Rs.1,50,50,107/- under section 25D of the act can be permitted ignoring that the said expenditure is not allowable under Section 35D of the Act?” 2.1 This Court while admitting the appeal No.186/2010 on 20.08.2010 has framed the following substantial questions of law: “(i) Whether Tribunal was justified in upholding the order passed by CIT(Appeals) without giving their own finding on the issue in question except to concur with view taken by the CIT(Appeals)? (ii) Whether CIT(A)/Tribunal was justified in upholding the amount of expenditure claimed by the assessee in the assessment year under consideration without recording a categorical finding as to how and under what provisions of Income Tax Act, it is legally permissible? (iii) Whether the expenditure claimed by the assessee for its amortization satisfy the requirement of Section 35(1)(2)(D) and if so, whether it could have been allowed? (iv) If amortization of expenditure claimed by the assessee did not fall within any of the categories specified in section 35D then whether assessee could be allowed the benefit of amortization of their expenditure in the absence of any other provisions?” (4 of 6) [ITA-86/2010] 2.2 This Court while admitting the appeal No.187/2010 on 14.03.2011 has framed the following substantial question of law: “Whether on the facts and circumstances of the case, the Tribunal was right and justified in upholding the amortization of expenditure of Rs.1,56,70,818/- u/s 35D of the Act, ignoring that the said expenditure is not allowable under Section 35D of the Act, which was even observed by the CIT(A) and accepted by the assessee?” 2.3 This Court while admitting the appeal No.10/2011 on 14.03.2011 has framed the following substantial question of law: “Whether the Tribunal has acted perversely and contrary to the provisions of section 35D of the Act, by upholding the amortization of expenditure of Rs.1,52,50,933/- ignoring that the said expenditure is not allowable under Section 35D of the act, as the same was not preliminary expenses?” 2.4 This Court while admitting the appeal No.169/2014 on 05.07.2016 has framed the following substantial question of law: “Whether amortization of expenditure of Rs.26,38,77,016/- under section 35D of the Act can be permitted ignoring that the said expenditure is not allowable under Section 35D of the Act?” 2.5 This Court while admitting the appeal No.170/2014 on 05.07.2016 has framed the following substantial question of law: “Whether amortization of expenditure of Rs.96,10,1000/- under section 35D of the Act can be permitted ignoring that the said expenditure is not allowable under Section 35D of the Act?” (5 of 6) [ITA-86/2010] 2.6 This Court while admitting the appeal No.26/2017 on 31.01.2017 has framed the following substantial questions of law: “(i) Whether on the facts and circumstances of the case, the Tribunal was right and justified in upholding the amortization of expenditure of Rs.1,21,06,000/-U/s. 35D of the Act ignoring that the said expenditure is not allowable under Section 35D of the Act, which was even observed by the CIT(A) and accepted by the assessee? (ii) Whether on the facts and circumstances of the case, the finding of the Tribunal is perverse, contrary to the record and untenable in the eye of law?” 3. The issues are squarely covered by the Circular No.09/2014, DT.23RD APR., 2014 dated 23/04/2014 of which para No.5 & 6 reads as under: “5. In view of the above, Central Board of Direct Taxes, in exercise of the powers conferred under Section 119 of the Act hereby clarifies that the cost of construction on development of Infrastructure facility of roads/highways under BOT projects may be amortized and claimed as allowable business expenditure under the Act. 6. The amortization allowable may be computed at the rate which ensures that the whole of the cost incurred in creation of infrastructure facility of road/highway is amortized evenly over the period of concessionaire agreement after excluding the time taken for creation of such facility.” (6 of 6) [ITA-86/2010] 4. In that view of the matter, the appeals stand disposed of with liberty to revive the appeals in case of difficulty. 5. A copy of this judgment be placed in each file. (VIRENDRA KUMAR MATHUR),J. (K.S. JHAVERI),J. Asheesh Kr. Yadav/54-60 "