Deputy Commissioner of Income-tax, Circle - 1, Nashik V. Ashoka Highways (Bhandara) Ltd, Nashik

ITA 1388/PUN/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9259 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 29-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Cost of acquisition
• Section: 32; 43

Judgement Text

आयकर अपीलीय अिधकरण “बी” ᭠यायपीठ पुणे मᱶ । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE (Through Virtual Court) BEFORE SHRI INTURI RAMA RAO, AM AND SHRI S. S. VISWANETHRA RAVI, JM आयकर अपील सं. / ITA No.1388/PUN/2018 िनधाᭅरण वषᭅ / Assessment Year : 2014-15 DCIT, Circle- 1, Nashik. .......अपीलाथᱮ / Appellant बनाम / V/s. Ashoka Highways (Bhandara) Ltd., S.No.861, Ashoka House, Ashoka Marg, Wadala, Nashik- 422011. PAN : AAGCA2213A ......ᮧ᭜यथᱮ / Respondent आयकर अपील सं. / ITA No.1389/PUN/2018 िनधाᭅरण वषᭅ / Assessment Year : 2014-15 DCIT, Circle- 1, Nashik. .......अपीलाथᱮ / Appellant बनाम / V/s. Ashoka Highways (Durg) Ltd., S.No.861, Ashoka House, Ashoka Marg, Wadala, Nashik- 422011. PAN : AAGCA2214H ......ᮧ᭜यथᱮ / Respondent Assessee by : None Revenue by : Shri Deepak Garg सुनवाई कᳱ तारीख / Date of Hearing : 29.10.2021 घोषणा कᳱ तारीख / Date of Pronouncement : 01.11.2021 आदेश / ORDER PER INTURI RAMA RAO, AM: These are the appeals filed by the Revenue directed against the different orders of ld. Commissioner of Income Tax (Appeals)- 1, Nashik (‘CIT(A)’ for 2 ITA Nos.1388 & 1389/PUN/2018 short) commonly dated 14.06.2018 for the assessment year 2014-15 respectively. 2. Since the identical facts and issues are involved in both the appeals, we proceed to dispose of the same by this common order. 3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No.1389/PUN/2018 are stated herein. 4. The Revenue raised the following grounds of appeal :- “1.1 Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A)-1, Nashik was justified in allowing the depreciation of Rs. 1,03,89,78,720/- claimed on the asset " Right to Collect Toll", when it is evident that the asset on which depreciation has been claimed, does not form part of intangible asset defined u/s 32(1)(ii) of the Income Tax Act, 1961. 1.2 Whether on the facts and in the circumstances of the case, the Ld. CIT(A)- 1, Nashik was justified in holding that the assessee is eligible for depreciation on the asset " Right to Collect Toll" when it is evident that the underlying asset; i.e. road, is neither owned by the assessee nor is used for the purpose of business of the assessee. 02. The order of the CIT(A) may be vacated and that of the Assessing Officer may be restored. 03. The assessee craves leave to add, amend, alter or delete any ground of appeal.” 5. Briefly, the facts of the case are as under :- The appellant is a company incorporated under the provisions of the Companies Act, 1956. It is a special company formed for the purpose of undertaking the infrastructure project of constructing, developing and maintaining Durg to Chhattisgarh/Maharashtra Border section road facility on NH-6, in the State of Chhattisgarh, on Build, Operate & Transfer (BOT) basis. The return of income for the assessment year 2014-15 was filed on 28.11.2014 disclosing loss of Rs.1,02,05,60,703/-. Against the said return of income, the assessment was completed by the Assistant Commissioner of 3 ITA Nos.1388 & 1389/PUN/2018 Income Tax, Circle-1, Nashik (‘the Assessing Officer’) at a total loss of Rs.39,14,37,943/-. Disparity between the returned income and assessed income is on account of disallowance of depreciation claimed on the intangible asset of “Licence to Collect Toll” on the ground that the respondent-assessee is not owner of the road. The respondent-assessee was awarded contract by the National Highway Authority of India (NHAI), a contract of constructing, developing and maintaining Durg to Chhattisgarh/Maharashtra Border section road facility on NH-6, in the State of Chhattisgarh, on Build, Operate & Transfer (BOT) basis. The respondent- assessee had incurred a total cost of Rs.512 crores on the above project. The cost of the project was capitalized in the books of accounts under the head “Licence to Collect Toll” treated as intangible asset and claimed depreciation @ 25% and the said claim was disallowed by the Assessing Officer by holding that the respondent-assessee is not the owner of any asset. 6. On appeal before the ld. CIT(A), the claim of the respondent-assessee was allowed following the decisions of the Co-ordinate Bench of Pune Tribunal in the case of (i) Ashoka Highways (Durg) Ltd. vs. ITO (ITA No.1629/PUN/2016 dated 08.06.2018), (ii) Ashoka Info Pvt. Ltd. (ITA No.44/PN/2007 dated 31.12.2008), (iii) Ashoka Bridgeways (ITA No.686/PN/2012 dated 29.04.2013) and (iv) Reliance Ports and Terminals Ltd. (ITA Nos.1743 to 45/Mum/2007 dated 26.11.2007 – Mumbai Bench) by holding that “Right to Collect Toll” is an intangible asset which qualified for depreciation at the prescribed rate of 25%. 7. Being aggrieved by the above decision of the ld. CIT(A), the Revenue is in appeal before us. 4 ITA Nos.1388 & 1389/PUN/2018 8. The ld. Sr. DR submits that the ld. CIT(A) ought not to have granted the depreciation in view of the fact that the respondent-assessee is not the owner of any asset and placing reliance on the CBDT Circular No.9/2014 dated 23.04.2014 prayed that the claim of the respondent-assessee not to be allowed. 9. On the other hand, when the matter was called on none appeared on behalf of the respondent-assessee. However, filed a written submission placing reliance on the decisions of the Co-ordinate Bench of the Tribunal in the case of (i) Ashoka Highways (Durg) Ltd. vs. ITO (ITA No.1629/PUN/2016 dated 08.06.2018), (ii) Ashoka Highways (Durg) Ltd. vs. ITO (ITA No.156/PUN/2017 dated 05.02.2019), (iii) Ashoka Infrastructure Ltd. (ITA No.1452 to 1457/PUN/2014 dated 30.06.2017, (iv) decision of ITAT (Special Bench) Hyderabad in the case of ACIT vs. Progressive Constructions Ltd. (92 taxmann.com 104) and (v) decision of the Hon’ble Madras High Court in the case of Tamil Nadu Road Development Co. Ltd. (130 taxmann.com 63). 10. We heard the ld. Sr. DR and perused the written submission filed by the respondent-assessee as well as the 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 hereinbelow 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,]” 5 ITA Nos.1388 & 1389/PUN/2018 11. 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 taxmann.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]; (vi) 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) 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. 12. In the result, the appeal filed by the Revenue in ITA No.1389/PUN/2018 is dismissed. 6 ITA Nos.1388 & 1389/PUN/2018 ITA No.1388/PUN/2018 13. As mentioned earlier, the facts and issues involved in both the appeals are identical, therefore, our decision in ITA No.1389/PUN/2018 shall apply mutatis mutandis to the appeal in ITA No.1388/PUN/2018. Accordingly, the grounds of appeal raised by the Revenue in ITA No.1388/PUN/2018 are dismissed. 14. Resultantly, both the appeals of the Revenue are dismissed as above. Order pronounced on this 01 st day of November, 2021. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) ᭠याियक सद᭭य/JUDICIAL MEMBER लेखा सद᭭य/ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 01 st November, 2021. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-1, Nashik. 4. The Pr. CIT-1, Nashik. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “बी” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.