Second Vivekananda Bridge TollywayCo.Pvt. Ltd., Kolkata V. DCIT, Cir-2(2), Kolkata, Kolkata

ITA 19/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6064 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 05-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G HANGSHING
• Assessee Lawyers: S RUDRA
• Keywords: Depreciation; Search and seizure; Rule of consistency; Corroborative evidences
• Section: 143(3); 154

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI, M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 19 / KOL / 20 17 ASSESSMENT YEAR :2012-13 SECOND VIVEKANANDA BRIDGE TOLLWAY CO. PVT. LTD., BLOCK GP, SECTOR-V, SALT LAKE ELECTRONICS COMPLEX, KOLKATA-91 [ PAN NO.AAHCS 8573 Q ] V/S . DCIT, CIRCLE-2(2), AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI S. RUDRA, ADVOCATE /BY RESPONDENT SHRI G. HANGSHING, CIT-DR /DATE OF HEARING 21-06-2018 /DATE OF PRONOUNCEMENT 11-07-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 CALLS INTO QUESTION THE COMMISSIONER OF INCOME TAX (APPEALS)-1, KOLKATA S ORDER DATED 04.11.2016 PASSED IN CASE NO.1221/CIT(A)-1/C-2(2)/2 015-16 UPHOLDING ASSESSING OFFICERS ACTION DISALLOWING ITS DEPRECIA TION CLAIMED OF 41,99,22,054 IN RESPECT OF LICENCE TO COLLECT THE TOLL REVENUE OF THE SECOND VIVEKANANDA BRIDGE (TREATED AS THE RELEVANT INTANGI BLE ASSET) AND DISALLOWING LEAVE ENCASHMENT PROVISION OF 1,84,562/- U/S 43B(F) IN ASSESSMENT ORDER DATED 11.05.2015, INVOLVING PROCEEDING U/S 143(3) O F THE INCOME TAX ACT, 1961; IN SHORT AS THE ACT. 2. WE COME TO FORMER ISSUE OF DEPRECIATION DISALLOW ANCE IN RESPECT OF ASSESSEES LICENCE TO COLLECT TOLL CHARGES ON THE S ECOND VIVEKANANDA BRIDGE. ITA NO.19/KOL/2017 A.Y. 2012-13 SECOND VIVEKANANDA BRIDGE TOLLWAY CO. LTD. VS. D CIT, CIR-2(2), KOL. PAGE 2 THE ASSESSEES CLAIM IN QUESTION WAS RAISED U/S 32( 1)(II) OF THE ACT. IT SOUGHT TO TREAT ITS RIGHT TO COLLECT TOLL TO BE AN INTANGI BLE ASSET. THE ASSESSING OFFICER QUOTED THE BOARDS CIRCULAR NO. 9/2014 DATED 23.04. 2014 TO OBSERVE THAT IMPUGNED CLAIM WAS NOT ALLOWABLE SINCE IT DID NOT P ERTAIN TO AN INFRASTRUCTURE FACILITY ITSELF BUT IT WAS REGARDING A LICENCE GRAN TED BY NATIONAL HIGHWAY AUTHORITY TO COLLECT TOLLWAY CHARGES. HE FURTHER WA S OF THE VIEW THAT ASSESSEE WAS ALSO NOT THE OWNER OF INFRASTRUCTURE FACILITIES IN QUESTION. ALL THIS RESULTED IN THE IMPUGNED DISALLOWANCE AMOUNTING TO 41,9,22,54/- BEING MADE IN ASSESSEES HAND IN ASSESSMENT ORDER DATED 11.05.201 5. 3. THE CIT(A) CONFIRMS ASSESSING OFFICERS ACTION A S FOLLOWS:- I HAVE CAREFULLY CONSIDERED THE MATERIAL BEFORE ME. THE APPELLANT COMPANY HAD DEVELOPED THE SECOND VIVEKANANDA BRIDGE UNDER THE B UILD, OPERATE AND TRANSFER (BOT) BASIS AND IT OBTAINED FROM NATIONAL HIGHWAYS AUTHORITY OF INDIA (NHAI), THE LICENSE TO COLLECT THE TOLLWAY CHARGES IN RELATION TO THE SAID BRIDGE. A COPY OF THE CONCERNED CONCESSIONAIRE AGREEMENT (EXTRACTS) IS EN CLOSED FOR READY REFERENCE. THE LICENSE TO COLLECT THE TOLLWAY CHARGES, WAS CLA IMED TO BE IN THE NATURE OF AN INTANGIBLE ASSET. THE A.O FOUND THAT THE APPELLANT HAD CLAIMED DEPRECIATION OF RS.41,99,22,054 U/S 32(1)(II) @25% ON THE TOTAL COS T INCURRED FOR DEVELOPING THE INFRASTRUCTURE FACILITY. THE ASSESSING OFFICER IN H IS ASSESSMENT ORDER HELD THAT THE APPELLANT WAS NOT THE OWNER OF THE INFRASTRUCTURE F ACILITY AND ALSO DOES NOT HOLD ANY RIGHTS IN THE PROJECT EXCEPT RECOVERY OF TOLL FEE T O RECOUP THE EXPENDITURE INCURRED, IT CANNOT THEREFORE BE TREATED AS AN OWNER OF THE PROP ERTY, EITHER WHOLLY OR PARTLY, FOR PURPOSES OF ALLOWABILITY OF DEPRECIATION UNDER SECT ION 32(1)(II) OF THE ACT. THE A.O HELD THAT IT WAS NOT BE ELIGIBLE FOR CLAIMING DEPRE CIATION ON THE WDV OF THE INTANGIBLE ASSETS, AND DISALLOWED THE APPELLANT'S CLAIM FOR DE PRECIATION OF RS.41,99,22,054. THE ASSESSING OFFICER IN HIS ORDER, ALSO MADE REFERRED TO THE CBDT'S CIRCULAR NO.09/2014 DATED 23/04/2014 AND HELD THAT THE APPEL LANT WAS NOT ENTITLED TO CLAIM DEPRECIATION ON THE INFRASTRUCTURE FACILITY. THE APPELLANT'S A. R HAS CONTENDED THROUGH THE WRIT TEN SUBMISSIONS THAT FIRSTLY, IN EARLIER ASSESSMENT YEARS, I.E. A.Y: 2009-10, ITS CL AIM FOR DEPRECIATION ON THE INTANGIBLE ASSET, I.E. THE APPELLANT'S RIGHT TO COL LECT THE TOLLWAY CHARGES AS PER THE CONCESSIONAIRE AGREEMENT, HAD BEEN EXAMINED IN DETA ILS BY THE THEN ASSESSING OFFICER AND ALLOWED VIDE ORDER U/S 143(3) DATED 15/ 12/2011 THE A.O HAD REFERRED TO THE PUNE ITAT'S ORDER DATED 31/12/2008 IN THE CASE OF ASHOKA INFO PVT. LTD. [(2008) 123 TTJ 77 (PUNE ITAT)] ON SIMILAR FACTS TO THAT OF THE CASE OF THE APPELLANT. FOR THE NEXT ASSESSMENT YEAR, VIZ., 2010-11, ALSO, THE A.O AFTER DUE EXAMINATION OF RELEVANT DETAILS HAD ACCEPTED THE APPELLANT'S CLAIM FOR DEDU CTION OF DEPRECIATION ON INTANGIBLE ASSET AS MADE IN THE RETURN VIDE ORDER U/S 143(3) D ATED 22/03/2013. SECONDLY, IT WAS ARGUED THAT THE A.O ERRED BY NOT FOLLOWING THE PRINCIPLE OF CONSISTENCY, THERE BEING NO CHANGE IN FACTS AS COMPARED TO THESE ASSMT .YEARS. FOR THIS PROPOSITION, RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: RAD HASOAMY SATSANG V. CIT [(1991) . 193 ITR 221(SC)]; AND CIT V. LAGAN KALA UPVAN [(2 003) 259 ITR 489 (DEL)] .THIRDLY, IT WAS AVERRED THAT CBDT CIRCULAR DATED 2 3/04/2014, RELIED UPON BY THE A.O COULD ONLY BE CONSIDERED EFFECTIVE PROSPECTIVELY AN D NOT IN RELATION TO ANY EARLIER ASSESSMENT YEAR, WHEREIN THE APPELLANT HAD ACQUIRED A VESTED RIGHT FOR CLAIM OF DEPRECIATION ON INTANGIBLE ASSETS IN THE FORM OF RI GHT TO COLLECT TOLLWAY CHARGES. THE ITA NO.19/KOL/2017 A.Y. 2012-13 SECOND VIVEKANANDA BRIDGE TOLLWAY CO. LTD. VS. D CIT, CIR-2(2), KOL. PAGE 3 A.O HAD REFERRED TO CBDT'S CIRCULAR ISSUED IN APRIL , 2014, WHEREAS THE APPELLANT HAD CLAIMED DEDUCTIONS IN YEARS PRIOR TO THE ASSESSMENT YEAR 2015-16 (RELEVANT FOR THE FINANCIAL YEAR 2014-15), IN ACCORDANCE WITH THE CBD T CIRCULAR THE PROCEDURE FOR AMORTISATION COULD BE MADE IN RELATION TO THE TOTAL VALUE AS REDUCED BY THE CLAIMS OF DEPRECIATION MADE BY THE APPELLANT FOR AND UP TO TH E ASSESSMENT YEAR 2014-15 WHICH INCLUDED THE YEAR UNDER APPEAL, VIZ., ASSESSM ENT YEAR 2012-13. THE A.R ALSO STATED THAT SUBSEQUENTLY THE A.O VIDE HIS ORDER DAT ED 16/12/2015 U/S 154 ALLOWED DEDUCTION TOWARDS AMORTIZATION. HOWEVER, WHILE ALLO WING THE AMORTIZATION, THE A.O TOOK INTO ACCOUNT ONLY THE DEEMED REDUCED COST AT T HE END OF THE A.Y: 2008-09, IT IS FOUND THAT THE DISPUTE RELATES TO THE APPELLA NT'S CLAIM FOR DEPRECIATION ON THE INTANGIBLE ASSETS, I.E. THE APPELLANT'S RIGHT TO CO LLECT THE TOLLWAY CHARGES OF RS.41,99,22,054 U/S 32(1)(II) @25% ON THE TOTAL COS T INCURRED FOR DEVELOPING THE INFRASTRUCTURE FACILITY. THE A.O HAD DISALLOWED THE APPELLANT'S CLAIM BY HOLDING THAT THE INFRASTRUCTURE FACILITY WAS NOT OWNED BY THE AS SESSEE AND ALSO RELYING ON CBOT'S CIRCULAR DATED 23/04/2014, BUT IGNORING THE CBDT'S CLARIFICATION THAT WHERE BECAUSE OF NOT OWNING THE CONCERNED DEVELOPED ASSET AN ASSE SSEE COULD NOT BE ENTITLED TO DEPRECIATION ON THE COST OF THE ASSET, IT WOULD BE ELIGIBLE FOR DEDUCTION BY WAY OF AMORTISATION OF THE ENTIRE COST INCURRED BY IT FOR THE DEVELOPMENT OF THE CONCERNED ASSET. FROM PERUSAL OF BALANCE SHEET AS ON 31.03.20 12, IT IS OBSERVED FROM DETAILS OF FIXED ASSETS VIDE POINT NO.2.6 OF 'NOTES TO FINANCI AL STATEMENTS.., THAT AS PER THE ' PARTICULARS ' OF THE IMPUGNED ' INTANGIBLE ASSETS ' AS , 'DEPRECIATION AND AMORTIZED COST - INTANGIBLE ASSETS' - RS. 65.21 CRORE, WHICH, COMPRISES OF (I) SVB PROJECT BRIDGE & TOLLWAY - RS. 65.084 CRORE (H) OFFICE EQUIPMENT - RS. 0.18 CRORE (III) COMPUTERS/DATA PROCESSING EQUIPMENT - RS. 0.46 CROR E (IV) FURNITURE & FIXTURE-RS. 0.23 CRORE (V) VEHICLES/MOTOR CAR RS. 0.203 CRORE, HENCE, IT IS INFERRED THAT CONTRARY TO THE APPELLANTS CLAIM THE NATURE OF THE 'INTANGIB LE ASSETS' WAS NOT IN THE FORM OF AMORTIZATION OF EXPENSES FOR LICENCE FOR TOLLWAY AS CLAIMED BY THE APPELLANT, WHICH IS CONTRARY TO THE CONDITIONS FOR ALLOWING DEPRECIATIO N AS STIPULATED BY PROVISIONS OF SECTION 32( 1)(II) OF THE IT ACT, I.E. ' KNOW-HOW, PATENTS, COPYRIGHTS, TRADE MARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMME RCIAL RIGHTS OF SIMILAR NATURE, AS THE BLOCK OF ' INTANGIBLE ASSETS ' OF THE APPELLANT IS FOUND TO BE IN THE NATURE OF FIXED ASSETS AND NOT ON ACQUISITION OF INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1ST DAY OF APRIL, 19981 AS STIPULATED BY PROVISIONS OF SECTION 32(1)(II) OF THE IT ACT. IN VIEW OF THE ABOVE DISCUSSION, IT IS FOUND THAT THE A.O. WAS COR RECT IN HOLDING THAT THE APPELLANT WAS NOT ENTITLED TO CLAIM OF DEPRECIATION ON THE VA RIOUS ASSETS INCLUDED IN THE CATEGORY OF ' INTANGIBLE ASSETS ', WHEREBY THE APPELLANT WAS NOT THE OWNER EITHER WHOLLY OR PARTLY, FOR THE PURPOSES OF ALLOWABILITY OF DEPRECIATION. IN ADDITION, THE APPELLANT'S CLAIM FOR DEPRECIATION ON ' INTANGIBLE ASSETS ' CLAIMED IN RESPECT OF LICENSE OBTAINED TO COLLECT TOLLWAY CHARGES, WAS CONTRARY T O THE FACTS ON RECORD NOR WAS ANY SUPPORTING EVIDENCE TO SUBSTANTIATE THIS CLAIM WAS PRODUCED BY THE APPELLANT EITHER DURING THE ASSESSMENT OR APPELLANT PROCEEDINGS. ACC ORDINGLY, IT IS ALSO FOUND THAT THERE IS NO SUBSTANCE IN THE APPELLANTS CLAIM FOR F OLLOWING THE PRINCIPLE OF CONSISTENCY, REGARDING ITS CLAIM FOR DEPRECIATION W AS STATED TO HAVE BEEN ALLOWED BY THE AO IN ASSESSMENT ORDERS FOR THE PROCEEDING AY 2 009-10 & 2010-11. THIS IS BECAUSE THE FACTUAL MATRIX OF THE APPELLANT'S CASE ARE FOUND TO BE DIFFERENT FROM THE FINDINGS OF THE A.O IN THE EARLIER A.YS, WHEREIN TH E APPELLANT'S CLAIM FOR DEPRECIATION ON INTANGIBLE ASSETS WAS ACCEPTED BY THE A.O WITHOU T EXAMINING THE NATURE OF FIXED ASSETS IN QUESTION. IN THIS REGARD, IT IS WELL SETT LED THAT THE PRINCIPLE OF RES JUDICATA, IS NOT APPLICABLE TO INCOME TAX PROCEEDINGS, AS ISSUES FOR EACH ASSESSMENT YEAR ARE TO BE DECIDED ON THE FACTS AND CIRCUMSTANCES OF THE CASE FOR THAT YEAR ONLY. MOREOVER, CONSIDERING THE FACT THAT ALTHOUGH THE AP PELLANTS CLAIM WAS IN RESPECT OF DEPRECIATION ON LICENSE FEE AS INTANGIBLE ASSETS WH ICH WAS HELD TO BE NOT ALLOWABLE ON LAW AND FACTS. THUS, THE RATIO OF THE DECISION I N THE CASE OF ASOKA INFO PVT. LTD. - VS - ACIT (2009) 123 TTJ 77(PUNE), DATED 31.12.2008 OF ITAT, PUNE, RELIED UPON BY ITA NO.19/KOL/2017 A.Y. 2012-13 SECOND VIVEKANANDA BRIDGE TOLLWAY CO. LTD. VS. D CIT, CIR-2(2), KOL. PAGE 4 THE A.O IS FOUND TO BE DISTINGUISHABLE AS IT IS NOT APPLICABLE TO THE FACTS ON THE INSTANT CASE, AS THE FACTS OF THE APPELLANT'S CASE DID NOT RELATE TO THE CLAIM OF DEPRECIATION ON LICENCE FEE, BUT ON AMORTIZATION OF EXPENDITURE ON FIXED ASSETS. THEREFORE, IT IS HELD THAT THERE IS NO INFIRMITY IN THE FINDING OF A.O. D ISALLOWING THE APPELLANT'S CLAIM FOR DEPRECIATION AMOUNTING TO RS.41,99,22,OS4 U/S 32(1) (II), WHICH IS CONFIRMED. THESE GROUNDS ARE NOT ALLOWED. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL SUBMISSIONS. THE FIRST QUESTION THAT ARISES FOR OUR APT ADJUDICATION IN THE INSTANT APPEAL IS AS WHETHER OR NOT THE ASSESSEES DEPRECIATION CLAIM PE RTAINING TO ITS LICENCE TO COLLECT TOLLWAY ON THE SECOND VIVEKANAND BRIDGE IS ELIGIBLE FOR SECTION 32(1)(II) DEPRECIATION IN THE NATURE OF AN INTANGIBLE ASSET. WE FIND THIS QUESTION TO BE NO MORE RES INTEGRA AS PER TRIBUNALS SPECIAL BENCHS DECISION IN M/S PROGRESSIVE CONSTRUCTION LTD. CASE HAS ON REJECTED REVENUES SIMILAR ARGUMENTS BASED ON BOARDS CIRCULAR (SUPRA) AS WELL AS ALL THE RELEVANT LEGAL OR FACTUAL ASPECT AS FOLLOWED:- 7. SHRI V. RAGHAVENDRA RAO, LEARNED AUTHORISED REPR ESENTATIVE, APPEARING FOR THE ASSESSEE SUBMITTED, THOUGH, IN THE FIRST YEAR O F CLAIM OF DEPRECIATION IN ASSESSMENT YEAR 2009-10 THE ASSESSEE HAD TREATED IT AS BUILDING, HOWEVER, IN ASSESSMENT YEAR 2010-11 AS WELL AS 2011-12, ASSESSE E HAD CLAIMED DEPRECIATION BY TREATING THE RIGHT ACQUIRED FOR OPE RATING THE BOT-BRIDGE AND COLLECTING TOLL FOR USER OF SUCH BRIDGE BY VEHICLES AS INTANGIBLE ASSET. HE SUBMITTED, THE ASSESSEE FOR CONSTRUCTING THE ROAD A ND BRIDGE HAS INVESTED HUGE AMOUNT OF RS.214 CRORE. AND UNDER THE TERMS OF C.A. ASSESSEE WAS NOT GOING TO BE REIMBURSED THE COST OF CONSTRUCTION. TH E ONLY WAY THE ASSESSEE CAN RECOVER THE COST OF INVESTMENT ALONG WITH PROFI T IS BY WAY OF OPERATING THE BRIDGE AND COLLECTING TOLL CHARGES FOR USER OF THE BRIDGE BY VEHICLES DURING THE CONCESSION PERIOD OF 11 YEARS AND SEVEN MONTHS. ACC EPTING THE FACT THAT ASSESSEE IS NOT THE OWNER OF THE ROAD AND BRIDGE LE ARNED AUTHORISED REPRESENTATIVE SUBMITTED, THE INVESTMENT MADE BY TH E ASSESSEE IN CONSTRUCTING THE ROAD AND BRIDGE HAD CREATED AN INT ANGIBLE ASSET IN THE FORM OF RIGHT TO OPERATE THE ROAD AND COLLECT TOLL CHARGES. THE LEARNED AUTHORISED REPRESENTATIVE TAKING US THROUGH DIFFERENT CLAUSES OF THE C.A. SUBMITTED, THE CONCESSION GRANTED BY THE GOVERNMENT OF INDIA IN AL LOWING THE ASSESSEE TO OPERATE THE ROAD AND COLLECT TOLL CHARGES DURING TH E CONCESSION PERIOD AMOUNTS TO GRANT OF LICENSE, HENCE IS AN INTANGIBLE ASSET. HE SUBMITTED, EVEN ASSUMING THAT THE RIGHT ACQUIRED BY THE ASSESSEE TO OPERATE THE ROAD AND COLLECT TOLL CHARGES IS NOT IN THE NATURE OF LICENS E, HOWEVER, IT CERTAINLY FALLS WITHIN THE CATEGORY OF ANY OTHER BUSINESS OR COMMER CIAL RIGHT OF SIMILAR NATURE AS PROVIDED UNDER SECTION 32(1)(II) OF THE ACT. HE SUBMITTED, APART FROM THE RIGHT TO OPERATE THE ROAD AND COLLECT TOLL CHARGES THE AS SESSEE WAS NOT GIVEN ANY OTHER BENEFIT UNDER THE C.A. THEREFORE, THE RIGHT G IVEN FOR OPERATING BOT-BRIDGE AND COLLECTING TOLL CHARGES FOR USER OF THE ROAD AN D BRIDGE IS A VALUABLE COMMERCIAL RIGHT ACQUIRED BY THE ASSESSEE BY INVEST ING IN THE CONSTRUCTION OF THE ROAD AND BRIDGE. IN SUPPORT OF HIS CONTENTION L EARNED AUTHORISED REPRESENTATIVE RELIED UPON THE DECISION OF THE TRIB UNAL, PUNE BENCH, IN ASHOKA INFO PVT. LTD. VIS ACIT, [2009] 123 TT] 77 ( PUNE). ITA NO.19/KOL/2017 A.Y. 2012-13 SECOND VIVEKANANDA BRIDGE TOLLWAY CO. LTD. VS. D CIT, CIR-2(2), KOL. PAGE 5 8. WE HAVE PATIENTLY AND CAREFULLY CONSIDERED THE R IVAL SUBMISSIONS, PERUSED THE MATERIALS ON RECORD AS WELL AS THE DECISION CIT ED AT THE BAR. 9. THE CORE ISSUE ARISING FOR CONSIDERATION IN THIS APPEAL IS IN RELATION TO ASSESSEE'S CLAIM OF DEPRECIATION ON THE ASSET CREAT ED BY INVESTING AN AMOUNT OF RS.214 CRORE IN CONSTRUCTION OF PUNE HYDERABAD S ECTION OF NATIONAL HIGHWAY NO.9, ON BUILD, OPERATE AND TRANSFER (BOT) BASIS WI TH A RIGHT TO COLLECT TOLL CHARGES FROM THE USER OF ROAD BY VEHICLES OVER THE CONCESSION PERIOD OF 11 YEARS AND 7 MONTH. IT IS A FACT ON RECORD THAT THE ASSESSEE COMPLETED THE CONSTRUCTION OF THE PROJECT IN THE FINANCIAL YEAR 2 008-09 AND HAD STARTED OPERATING THE SAME. IT IS ALSO EVIDENT, IN THE ASSE SSMENT YEAR 2009-10, THE ASSESSEE HAD CLAIMED DEPRECIATION @ 10% BY TREATING THE ASSET AS BUILDING. HOWEVER, FROM THE ASSESSMENT YEAR 2010-11, THE ASSE SSEE HAD STARTED CLAIMING DEPRECIATION BY TREATING THE ASSET CREATED AS AN INTANGIBLE ASSET IN TERMS OF SECTION 32(1)(II) OF THE ACT. WE HAVE ALSO BEEN INFORMED THAT ASSESSEE'S CLAIM OF DEPRECIATION IN ASSESSMENT YEAR 2009-10 AND 2010-11, WERE DISALLOWED BY THE ASSESSING OFFICER. HOWEVER, THE LEARNED COMMISSIONER (APPEALS) ALLOWED ASSESSEE'S CLAIM OF DEPRECIATION AS BUILDING IN ASSESSMENT YEAR 2009-10 AND AS INTANGIBLE ASSET IN ASSESSMENT YEAR 2010-11. THE AFORESAID ORDERS OF THE LEARNED COMMISSIONER (APPEA LS) WERE ALSO UPHELD BY THE TRIBUNAL WHILE DISMISSING DEPARTMENT'S APPEALS ON THE ISSUE. IT IS STATED THAT THE DEPARTMENT HAS CHALLENGED THE DECISIONS OF THE TRIBUNAL IN ASSESSMENT YEAR 2009-10 AND 2010-11 IN FURTHER APPE AL BEFORE THE HIGH COURT OF ANDHRA PRADESH AND TELANGANA AND THE MATTERS ARE STILL PENDING. BE THAT AS IT MAY, THE AFORESAID FACTS CLEARLY INDICATE THAT T HE IMPUGNED ASSESSMENT YEAR IS NOT THE FIRST YEAR OF CLAIM OF DEPRECIATION ON T HE BOT ROAD / BRIDGE. RATHER, IN THE IMPUGNED ASSESSMENT YEAR, DEPRECIATION HAS BEEN CLAIMED ON THE OPENING WDV WHICH HAS ALSO BEEN ACCEPTED BY THE LEARNED DEP ARTMENTAL REPRESENTATIVE IN THE WRITTEN SUBMISSIONS FILED BY HIM. THEREFORE, THE NATURE OF EXPENDITURE, WHETHER CAPITAL OR REVENUE, IS NOT A S UBJECT MATTER OF DISPUTE ARISING IN THE PRESENT APPEAL. BEARING THIS IN MIN D, WE HAVE TO EXAMINE THE VALIDITY OF ASSESSEE'S CLAIM OF DEPRECIATION QUA TH E ASSET CREATED. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPPOSED ASSESSEE'S CLAIM OF DEPRECIATION ON THE FOLLOWING PROPOSITIONS:- I) WHETHER THE EXPENDITURE CLAIM OF THE ASSESSEE BR INGS INTO BEING AN ASSET WHICH IS OWNED AND USED BY THE ASSESSEE IN ITS BUSI NESS; II) WHAT IS THE NATURE OF THE ASSET THAT HAS COME I NTO BEING ON ACCOUNT OF THE EXPENDITURE INCURRED BY THE ASSESSEE AND WHAT IS TH E NATURE OF SUCH EXPENDITURE; III) IF AN ASSET IS CREATED, WHETHER IT IS A TANGI BLE ASSET OR AN INTANGIBLE ASSET; IV) WHETHER THE CONCESSIONAIRE AGREEMENT (CA) HELD BY THE ASSESSEE CAN BE REGARDED AS A COMMERCIAL OR BUSINESS RIGHT AKIN TO A LICENSE; V) IF SUCH CA. IS AKIN TO A LICENSE, WHAT INTANGIBL E ASSET HAS BEEN CREATED FOR THE ASSESSEE AND WHAT IS THE EXPENDITURE INCURRED B Y THE ASSESSEE FOR ACQUIRING SUCH INTANGIBLE ASSET. 10. BEFORE DEALING WITH THE ISSUE, IT IS NECESSARY TO REITERATE THAT THE GOVERNMENT OF INDIA BEING DESIROUS OF IMPLEMENTING A PROJECT INVOLVING, CONSTRUCTION, OPERATION AND MAINTENANCE OF FOUR LAN E PUNE HYDERABAD SECTION OF N. H. NO. 9, WITH PRIVATE SECTOR PARTICIPATION O F BOT INVITED TENDER FROM INTERESTED PARTIES. THE ASSESSEE BEING SUCCESSFUL I N THE TENDER, THE GOVERNMENT OF INDIA ENTERED INTO A CONCESSION AGREE MENT (CA) WITH THE ASSESSEE ON 22ND DECEMBER 2005. AT THIS STAGE, IT I S NECESSARY TO LOOK INTO SOME OF THE RELEVANT CLAUSES OF C.A., WHICH IN OUR OPINION, WILL HAVE A CRUCIAL BEARING IN DECIDING THE ISSUE. AS PER CLAUSE 2.1 OF THE C.A., THE GOVERNMENT OF ITA NO.19/KOL/2017 A.Y. 2012-13 SECOND VIVEKANANDA BRIDGE TOLLWAY CO. LTD. VS. D CIT, CIR-2(2), KOL. PAGE 6 INDIA GRANTS AND AUTHORISES THE CONCESSIONAIRE I.E. , THE ASSESSEE TO INVESTIGATE, STUDY, DESIGN, ENGINEER, PROCURE, FINA NCE, CONSTRUCT, OPERATE AND MAINTAIN THE PROJECT AND TO EXERCISE AND/OR ENJOY T HE RIGHTS, POWERS, PRIVILEGES, AUTHORIZATIONS AND ENTITLEMENTS IN TERMS OF THE AGR EEMENT INCLUDING THE RIGHT TO LEVY DEMAND, COLLECT AND APPROPRIATE FEE FROM VE HICLE AND PERSONS FOR USING THE PROJECT / PROJECT FACILITIES OR ANY PART THEREO F. AS PER CLAUSE 2.2 OF THE C.A., THE ASSESSEE IS GRANTED CONCESSION FOR A PERIOD OF 11 YEARS 7 MONTHS FROM THE COMMENCEMENT DATE. AS PER CLAUSE 2.4, THE GOVERNMEN T OF INDIA WAS OBLIGED TO HAND OVER TO THE ASSESSEE PHYSICAL POSSESSION OF THE PROJECT SITE FREE FROM ENCUMBRANCES WITHIN 30 DAYS FROM THE DATE OF THE AG REEMENT. IT FURTHER PROVIDES, ONCE THE PROJECT SITE IS HANDED OVER TO T HE CONCESSIONAIRE, IT SHALL HAVE EXCLUSIVE RIGHT TO ENTER UPON, OCCUPY AND USE THE PROJECT SITE AND TO MAKE AT ITS COSTS, CHARGES AND EXPENSES SUCH DEVELO PMENT AND IMPROVEMENT IN THE PROJECT SITE AS MAY BE NECESSARY OR APPROPRI ATE TO IMPLEMENT THE PROJECT AND TO PROVIDE PROJECT FACILITY IN TERMS OF THE AGR EEMENT. CLAUSE- 2.5 OF THE AGREEMENT PROVIDES THAT THE CONCESSIONAIRE WITHOUT PRIOR WRITTEN CONSENT OR APPROVAL OF THE GOVERNMENT OF INDIA CANNOT USE THE PROJECT SITE FOR ANY PURPOSE, OTHER THAN, FOR THE PURPOSE OF THE PROJECT / PROJECT FACILITIES AS PERMITTED UNDER THE C.A. CLAUSE 2.7 OF THE C.A. MAK ES IT CLEAR THAT THE PROJECT SITE BELONGS TO AND HAS VESTED IN GOVERNMENT OF IND IA AND THE GOVERNMENT OF INDIA HAS FULL POWER TO HOLD, DISPOSE OFF AND DEAL WITH THE SAME CONSISTENT WITH THE PROVISIONS OF THE C.A. HOWEVER, IT ALSO MAKES I T CLEAR THAT THE CONCESSIONAIRE, SUBJECT TO COMPLYING WITH THE TERMS / CONDITIONS OF THE AGREEMENT REMAINS IN PEACEFUL POSSESSION AND ENJOYM ENT OF THE PROJECT SITE DURING THE CONCESSION PERIOD. IT FURTHER PROVIDES, IN THE EVENT THE CONCESSIONAIRE IS OBSTRUCTED BY ANY PERSON CLAIMING ANY RIGHT, TITLE OR INTEREST OVER THE PROJECT SITE OR ANY PART THEREOF OR IN THE EVENT OF ANY ENFORCEABLE ACTION INCLUDING ANY ATTACHMENT, DISTRAINT, APPOINT MENT OF RECEIVER OR LIQUIDATOR BEING INITIATED BY ANY PERSON CLAIMING I NTEREST OVER THE PROJECT SITES. GOVERNMENT OF INDIA NOT ONLY WILL DEFEND SUCH CLAIM S OR PROCEEDINGS BUT ALSO KEEP THE CONCESSIONAIRE INDEMNIFIED AGAINST ANY DIR ECT OR CONSEQUENTIAL LOSS OR DAMAGE WHICH IT MAY SUFFER ON ACCOUNT OF ANY SUC H RIGHT, TITLE, INTEREST OR CHARGE. AS PER CLAUSE 2.8 OF THE C.A., THOUGH, THE CONCESSIONAIRE SHALL HAVE EXCLUSIVE RIGHT TO USE OF THE PROJECT SITE IN ACCOR DANCE WITH THE PROVISIONS OF THE AGREEMENT AND FOR THIS PURPOSE, IT MAY REGULATE THE ENTRY AND USE OF THE SAME BY THE THIRD PARTIES, HOWEVER, IT SHALL NOT PA RT WITH OR CREATE ANY ENCUMBRANCE ON THE WHOLE OR ANY PART OF THE PROJECT SITE SAVE AND EXCEPT, AS SET FORTH AND PERMITTED UNDER THE AGREEMENT. CLAUSE 4.1 OF THE C.A. ENTITLES THE CONCESSIONAIRE TO LEVY, DEMAND AND COLLECT FEE FOR USER OF THE ROADS BY VEHICLES AND PERSONS IN ACCORDANCE WITH THE FEE NOT IFICATION TO BE ISSUED BY THE GOVERNMENT OF INDIA. HOWEVER, CONCESSIONAIRE CA NNOT LEVY AND COLLECT ANY FEE UNTIL IT HAS RECEIVED COMPLETION CERTIFICATE. C LAUSE 5.1 AND 5.2 OF THE C.A. LAYS DOWN THE OBLIGATION OF THE CONCESSIONAIRE FOR EXECUTION AND IMPLEMENTATION OF THE PROJECT / PROJECT FACILITY DU RING THE CONCESSION PERIOD. FROM THE READING OF THE AFORESAID CLAUSES OF THE CO NTRACT, FOLLOWING FACTS EMERGE:- I) THE RIGHT, TITLE AND OWNERSHIP OF THE PROJECT SI TE VESTS ABSOLUTELY WITH THE GOVERNMENT OF INDIA AND IT HAS FULL POWERS TO H OLD, DISPOSE OFF AND DEAL WITH THE SAME; II) THE GOVERNMENT OF INDIA HAS HANDED OVER PHYSICA L POSSESSION OF THE PROJECT SITE TO THE CONCESSIONAIRE FOR EXECUTING / IMPLEMENTING THE PROJECT AND OPERATING THE SAME DURING THE CONCESSIO N PERIOD; III) CONCESSIONAIRE SHALL HAVE EXCLUSIVE RIGHT TO U SE THE PROJECT SITE FOR EXECUTING / IMPLEMENTING THE PROJECT IN TERMS OF C. A; ITA NO.19/KOL/2017 A.Y. 2012-13 SECOND VIVEKANANDA BRIDGE TOLLWAY CO. LTD. VS. D CIT, CIR-2(2), KOL. PAGE 7 IV) CONCESSIONAIRE SHALL, AT ITS OWN COSTS AND EXPE NSES, EXECUTE / IMPLEMENT THE ENTIRE PROJECT AND OPERATE AND MAINTA IN THE SAME DURING THE CONCESSION PERIOD; AND V) THE CONCESSIONAIRE SHALL HAVE THE RIGHT TO LEVY / DEMAND AND COLLECT FEE AS APPROVED BY THE GOVERNMENT OF INDIA TOWARDS USER OF THE PROJECT FACILITIES BY VEHICLES AND PERSONS. 11. UNDISPUTEDLY, FOR EXECUTING THE PROJECT, ASSESS EE HAS INCURRED EXPENSES OF RS.214 CRORE. IT IS ALSO NOT DISPUTED THAT AS PER T HE TERMS OF THE C.A., THE GOVERNMENT OF INDIA IS NOT OBLIGED / REQUIRED TO RE IMBURSE THE COST INCURRED BY THE ASSESSEE TO EXECUTE / IMPLEMENT THE PROJECT FAC ILITIES. THE ONLY RIGHT / BENEFIT ALLOWED TO THE ASSESSEE BY THE GOVERNMENT O F INDIA IS TO OPERATE THE PROJECT / PROJECT FACILITIES DURING THE CONCESSION PERIOD OF 11 YEARS 7 MONTHS AND TO COLLECT TOLL CHARGES FROM VEHICLES / PERSONS USING THE PROJECT / PROJECT FACILITIES. THUS, AS COULD BE SEEN, THE ONLY MANNER IN WHICH THE ASSESSEE CAN RECOUP THE COST INCURRED BY IT IN IMPLEMENTING THE PROJECT / PROJECT FACILITY IS TO OPERATE THE ROAD DURING THE CONCESSION PERIOD AND C OLLECT THE TOLL CHARGES FROM USER OF THE PROJECT FACILITY BY THIRD PARTIES. ADMITTEDLY, THE ASSESSEE HAS TAKEN UP THE PROJECT AS A BUSINESS VENTURE WITH A P ROFIT MOTIVE AND CERTAINLY NOT AS A WORK OF CHARITY. FURTHER, BY INVESTING HUG E SOME OF RS.214 CRORE, THE ASSESSEE HAS OBTAINED A VALUABLE BUSINESS / COMMERC IAL RIGHT TO OPERATE THE PROJECT FACILITY AND COLLECT TOLL CHARGES. THEREFOR E, IN OUR CONSIDERED OPINION, RIGHT ACQUIRED BY THE ASSESSEE FOR OPERATING THE PR OJECT FACILITY AND COLLECTING TOLL CHARGES IS AN INTANGIBLE ASSET CREATED BY THE ASSESSEE BY INCURRING THE EXPENSES OF RS.214 CRORE. THE CONTENTION OF THE LEA RNED SENIOR STANDING COUNSEL THAT EXPENDITURE OF RS.214 CRORE HAS BROUGH T INTO EXISTENCE A TANGIBLE ASSET IN THE FORM OF ROADS AND BRIDGES OF WHICH THE ASSESSEE IS NOT THE OWNER BUT IT IS THE GOVERNMENT OF INDIA IS NOBODY'S CASE. FURTHER, THE LEARNED SENIOR STANDING COUNSEL'S APPREHENSION THAT IT WILL LEAD T O A SITUATION WHERE BOTH GOVERNMENT OF INDIA AND THE CONCESSIONAIRE WILL CLA IM DEPRECIATION ON THE ASSET CREATED WITH THE VERY SAME EXPENDITURE, IN OU R VIEW, IS NOT BORNE OUT FROM FACTS ON RECORD. AT THE COST OF REPETITION WE MUST OBSERVE, AS PER THE TERMS OF AGREEMENT THE EXPENSES INCURRED BY THE ASS ESSEE TOWARDS CONSTRUCTION OF THE ROADS, BRIDGES, ETC., WERE NOT GOING TO BE REIMBURSED BY THE GOVERNMENT OF INDIA. THIS FACT WAS KNOWN TO BOT H THE PARTIES BEFORE THE EXECUTION OF THE AGREEMENT AS THE TENDER ITSELF HAS MADE IT CLEAR THAT THE PROJECT IS TO BE EXECUTED WITH PRIVATE SECTOR PARTI CIPATION ON BOT BASIS. THUS, FROM THE VERY INCEPTION OF THE PROJECT, ASSESSEE WA S AWARE OF THE FACT, IT HAS TO RECOUP THE COST INCURRED IN IMPLEMENTING THE PROJEC T ALONG WITH THE PROFIT FROM OPERATING THE ROAD AND COLLECTING TOLL CHARGES DURI NG THE CONCESSION PERIOD. THEREFORE, ASSESSEE HAS CAPITALIZED THE COST INCURR ED ON THE BOT PROJECT ON WHICH IT HAS CLAIMED DEPRECIATION. THUS, IN OUR VIE W, THE EXPENDITURE INCURRED BY THE ASSESSEE OF RS.214 CRORE FOR CREATING THE PR OJECT OR PROJECT FACILITIES HAS CREATED AN INTANGIBLE ASSET IN THE FORM OF RIGHT TO OPERATE THE PROJECT FACILITY AND COLLECT TOLL CHARGES. FURTHER, IT IS THE CONTEN TION OF THE LEARNED SENIOR STANDING COUNSEL THAT IF AT ALL ANY RIGHT IS CREATE D UNDER THE C.A. FOR COLLECTING TOLL, SUCH RIGHT ACCRUED TO THE , ASSESSEE ON THE D ATE OF EXECUTION OF AGREEMENT I.E., 22 ND DECEMBER 2005, THEREFORE, THE EXPENDITURE INCURRED BY SUCH DATE SHOULD BE THE VALUE OF INTANGIBLE ASSET WHICH CAN A LONE BE CONSIDERED FOR DEPRECIATION UNDER SECTION 32( 1 )(II) OF THE ACT. WE ARE AFRAID, WE CANNOT ACCEPT THE ABOVE ARGUMENT OF THE LEARNED SENIOR STA NDING COUNSEL. WHEN THE C.A. CONFERS A RIGHT ON THE ASSESSEE TO OPERATE THE PROJECT FACILITY AND COLLECT TOLL CHARGES OVER THE CONCESSION PERIOD OF 11 YEARS AND 7 MONTHS, THE ASSESSEE CAN START OPERATING AND COLLECTING TOLL CH ARGES ONLY WHEN THE PROJECT FACILITY IS READY FOR USE. THEREFORE, UNTIL THE PRO JECT IS COMPLETED AND READY FOR ITA NO.19/KOL/2017 A.Y. 2012-13 SECOND VIVEKANANDA BRIDGE TOLLWAY CO. LTD. VS. D CIT, CIR-2(2), KOL. PAGE 8 USE BY VEHICLES OR PERSONS ASSESSEE CANNOT COLLECT TOLL CHARGES FOR USER OF THE PROJECT FACILITIES. THUS, THE RIGHT TO OPERATE THE PROJECT FACILITY AND COLLECT TOLL CHARGES IS INTEGRALLY CONNECTED TO THE COMPLETION O F THE PROJECT FACILITY WHICH CANNOT BE DONE UNLESS THE ASSESSEE INVESTS ITS FUND FOR COMPLETING THE PROJECT. THEREFORE, KEEPING IN VIEW THE AFORESAID ' FACT, IT CANNOT BE SAID THAT THE RIGHT TO COLLECT TOLL HAS ACCRUED TO THE ASSESSEE O N THE DATE OF EXECUTION OF THE AGREEMENT. IF WE ACCEPT THE AFORESAID ARGUMENT OF T HE LEARNED SENIOR STANDING COUNSEL, IN OTHER WORDS, IT WOULD MEAN THAT WITHOUT EVEN EXECUTING AND COMPLETING THE PROJECT FACILITY, ASSESSEE WOULD BE COLLECTING TOLL CHARGES. THEREFORE, THE CONTENTION OF THE LEARNED SENIOR STA NDING COUNSEL THAT THE EXPENDITURE INCURRED BY THE ASSESSEE TILL EXECUTION OF THE AGREEMENT CAN ONLY BE CONSIDERED AS AN INTANGIBLE ASSET, IN OUR VIEW, IS ILLOGICAL, HENCE, CANNOT BE ACCEPTED. THUS, HAVING HELD THAT THE EXPENDITURE OF RS.214 CRORE INCURRED BY THE ASSESSEE HAS RESULTED IN CREATION OF AN INTANGI BLE ASSET OF ENDURING NATURE FOR THE ASSESSEE, IT IS NECESSARY NOW TO EXAMINE WH ETHER SUCH INTANGIBLE ASSET COMES WITHIN THE SCOPE AND AMBIT OF SECTION 32(1)(I I) OF THE ACT. FOR THIS PURPOSE, IT IS NECESSARY TO LOOK INTO THE SAID PROV ISION WHICH IS REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE. DEPRECIATION. 32(1)(II) KNOW-HOW, PATENTS, COPYRIGHTS, TRADE MARK S, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGH TS OF SIMILAR NATURE, BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1S T DAY OF APRIL, 1998, OWNED', WHOLLY OR PARTLY, BY THE ASSESSEES AND USE D FOR THE PURPOSES OF THE BUSINESS67 OR PROFESSION, THE FOLLOWING DED UCTIONS SHALL BE A 110 WED- ] 12. EXPLANATION 3 TO SECTION 32(1) DEFINES INTANGIB LE ASSET AS UNDER:- [EXPLANATION 3. -FOR THE PURPOSES OF THIS SUB-SECTI ON, 86[THE EXPRESSION 'ASSETS' ] SHALL MEAN- (A) TANGIBLE ASSETS, BEING BUILDINGS, MACHINERY, PLANT OR FURNITURE; (B) INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COP YRIGHTS, TRADE MARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMME RCIAL RIGHTS OF SIMILAR NATURE87. 13. A PLAIN READING OF THE AFORESAID PROVISIONS WOU LD INDICATE THAT CERTAIN KIND OF ASSETS BEING KNOWHOW, PATENTS, COPYRIGHTS, TRADE MARKS, LICENSE, FRANCHISE, OR ANY OTHER BUSINESSES OR COMMERCIAL RIGHTS OF SIM ILAR NATURE ARE TO BE TREATED AS INTANGIBLE ASSET AND WOULD BE ELIGIBLE F OR DEPRECIATION AT THE SPECIFIED RATE. IT IS THE CLAIM OF THE ASSESSEE THA T THE RIGHT ACQUIRED UNDER C.A. TO OPERATE THE PROJECT FACILITY AND COLLECT TOLL CH ARGES IS IN THE NATURE OF LICENSE. HOWEVER, THE LEARNED SENIOR STANDING COUNSEL HAS ST RONGLY COUNTERED THE AFORESAID CLAIM OF THE ASSESSEE BY REFERRING TO THE DEFINITION OF LICENSE AS PROVIDED UNDER THE INDIAN EASEMENTS ACT, 1882. FOR BETTER APPRECIATION, WE INTEND TO REPRODUCE HEREIN BELOW THE DEFINITION OF 'LICENSE' AS PROVIDED UNDER SECTION 52 OF THE INDIAN EASEMENTS ACT, 1882:- 'LICENSE' DEFINED:- WHERE ON PERSON GRANTS TO ANOTH ER, OR TO A DEFINITE NUMBER OF OTHER PERSONS, A RIGHT TO DO, OR CONTINUE TO DO, IN OR UPON THE IMMOVABLE PROPERTY OF THE GRANTOR, SOMETHING WHICH WOULD, IN THE ABSENCE OF SUCH RIGHT, BE UNLAWFUL AND SUCH RIGHT DOES NOT AMOUNT TO AN EA SEMENT OR AN INTEREST IN THE PROPERTY, THE RIGHT IS CALLED A LICENSE. 14. IT HAS BEEN THE CONTENTION OF THE LEARNED SENIO R STANDING COUNSEL THAT AS THE TERM 'LICENSE' HAS NOT BEEN DEFINED UNDER THE I NCOME TAX ACT, 1961, THE DEFINITION OF 'LICENSE' UNDER THE INDIAN EASEMENTS ACT, 1882, HAS TO BE LOOKED INTO. ACCEPTING THE AFORESAID CONTENTION OF THE LEA RNED SENIOR STANDING ITA NO.19/KOL/2017 A.Y. 2012-13 SECOND VIVEKANANDA BRIDGE TOLLWAY CO. LTD. VS. D CIT, CIR-2(2), KOL. PAGE 9 COUNSEL, LET US EXAMINE THE DEFINITION OF 'LICENSE' EXTRACTED HEREIN ABOVE. A PLAIN READING OF SECTION 52 OF THE ACT MAKES IT CLE AR, A RIGHT GRANTED TO A PERSON TO DO OR CONTINUE TO DO SOMETHING IN THE IMMOVABLE PROPERTY OF THE GRANTOR, WHICH, IN THE ABSENCE OF SUCH RIGHT WOULD BE UNLAWF UL AND SUCH RIGHT DOES NOT AMOUNT TO AN EASEMENT OR INTEREST IN THE PROPERTY, THEN SUCH RIGHT IS CALLED A LICENSE. IF WE EXAMINE THE FACTS OF THE PRESENT CAS E, VIS-A-VIS, THE DEFINITION OF LICENSE UNDER THE INDIAN EASEMENTS ACT, 1882, IT WO ULD BE CLEAR THAT IMMOVABLE PROPERTY ON WHICH THE PROJECT / PROJECT FACILITY IS EXECUTED / IMPLEMENTED IS OWNED BY THE GOVERNMENT OF INDIA AND IT HAS FULL PO WER TO HOLD, DISPOSE OFF AND DEAL WITH THE IMMOVABLE PROPERTY. BY VIRTUE OF THE C.A., ASSESSEE HAS ONLY BEEN GRANTED A LIMITED RIGHT TO EXECUTE THE PROJECT AND OPERATE THE PROJECT FACILITY DURING THE CONCESSION PERIOD, ON EXPIRY OF WHICH THE PROJECT / PROJECT FACILITY WILL REVERT BACK TO THE GOVERNMENT OF INDI A. WHAT THE GOVERNMENT OF INDIA HAS GRANTED TO THE ASSESSEE IS THE RIGHT TO U SE THE PROJECT SITE DURING THE CONCESSION PERIOD AND IN THE ABSENCE OF SUCH RIGHT, IT WOULD HAVE BEEN UNLAWFUL ON THE PART OF THE CONCESSIONAIRE TO DO OR CONTINUE TO DO ANYTHING ON SUCH PROPERTY. HOWEVER, THE RIGHT GRANTED TO THE CO NCESSIONAIRE HAS NOT CREATED ANY RIGHT, TITLE OR INTEREST OVER THE PROPE RTY. THE RIGHT GRANTED BY THE GOVERNMENT OF INDIA TO THE ASSESSEE UNDER THE C.A. HAS A LICENSE PERMITTING THE ASSESSEE TO DO CERTAIN ACTS AND DEEDS WHICH OTH ERWISE WOULD HAVE BEEN UNLAWFUL OR NOT POSSIBLE TO DO IN THE ABSENCE OF TH E C.A. THUS, IN OUR VIEW, THE RIGHT GRANTED TO THE ASSESSEE UNDER THE C.A. TO OPE RATE THE PROJECT / PROJECT FACILITY AND COLLECT TOLL CHARGES IS A LICENSE OR A KIN TO LICENSE, HENCE, BEING AN INTANGIBLE ASSET IS ELIGIBLE FOR DEPRECIATION UNDER SECTION 32(1)(II) OF THE ACT. 15. EVEN ASSUMING THAT THE RIGHT GRANTED UNDER THE C.A. IS NOT A LICENSE OR AKIN TO LICENSE, IT REQUIRES EXAMINATION WHETHER IT CAN STILL BE CONSIDERED AS AN INTANGIBLE ASSET AS DESCRIBED UNDER SECTION 32(1)(I I) OF THE ACT. IN THIS CONTEXT, IT HAS BEEN THE CONTENTION OF THE LEARNED SENIOR ST ANDING COUNSEL THAT THE INTANGIBLE ASSET MENTIONED UNDER SECTION 32( 1 )(II ) OF THE ACT ARE SPECIFICALLY IDENTIFIED ASSETS, EXCEPT, THE ASSETS TERMED AS 'AN Y OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE'. HE HAD SUBMIT TED, APPLYING THE PRINCIPLE OF EJUSDEM GENERIS THE RIGHTS REFERRED TO IN THE EX PRESSION 'ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE', SHOULD BE SIMILAR TO ONE OR MORE OF THE SPECIFICALLY IDENTIFIED ASSETS PRECEDING SUCH EXPRE SSION. THE AFORESAID CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATI VE IS UNACCEPTABLE FOR THE REASONS ENUMERATED HEREINAFTER. 16. WE HAVE ALREADY HELD EARLIER IN THE ORDER THAT BY INCURRING THE EXPENDITURE OF 'RS.214 CRORE ASSESSEE HAS ACQUIRED THE RIGHT TO OPERATE THE PROJECT AND COLLECT TOLL CHARGES. THEREFORE, SUCH RIGHT ACQUIRE D BY THE ASSESSEE IS A VALUABLE BUSINESS OR COMMERCIAL RIGHT BECAUSE THROU GH SUCH MEANS, THE ASSESSEE IS GOING TO RECOUP NOT ONLY THE COST INCUR RED IN EXECUTING THE PROJECT BUT ALSO WITH SOME AMOUNT OF PROFIT. THEREFORE, THE RE CANNOT BE ANY DISPUTE THAT THE RIGHT TO OPERATE THE PROJECT FACILITY AND COLLECT TOLL CHARGES THEREFROM IN LIEU OF THE EXPENDITURE INCURRED IN EXECUTING THE P ROJECT IS AN INTANGIBLE ASSET CREATED FOR THE ENDURING BENEFIT OF THE ASSESSEE. N OW, IT HAS TO BE SEEN WHETHER SUCH INTANGIBLE ASSET COMES WITHIN THE EXPR ESSION 'ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE'. A S COULD BE SEEN FROM THE DEFINITION OF INTANGIBLE ASSET, SPECIFICALLY IDENTI FIED ITEMS LIKE KNOWHOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENSES, FRANCHIS ES ARE NOT OF THE SAME CATEGORY, BUT, DISTINCT FROM EACH OTHER. HOWEVER, O NE THING COMMON AMONGST THESE ASSETS IS, THEY ALL ARE PART OF THE TOOL OF T HE TRADE AND FACILITATE SMOOTH CARRYING ON OF BUSINESS, THEREFORE, ANY OTHER INTAN GIBLE ASSET WHICH MAY NOT BE IDENTIFIABLE WITH THE SPECIFIED ITEMS, BUT, IS O F SIMILAR NATURE WOULD COME ITA NO.19/KOL/2017 A.Y. 2012-13 SECOND VIVEKANANDA BRIDGE TOLLWAY CO. LTD. VS. D CIT, CIR-2(2), KOL. PAGE 10 WITHIN THE EXPRESSION 'ANY OTHER BUSINESS OR COMMER CIAL RIGHTS OF SIMILAR NATURE', THE HON'BLE SUPREME COURT IN CIT VIS SMIFS SECURITIES (SUPRA) AFTER INTERPRETING THE DEFINITION OF INTANGIBLE ASSET AS PROVIDED IN EXPLANATION 3 TO SECTION 32(1), WHILE OPINING THAT PRINCIPLE OF EJUS DEM GENERIS WOULD STRICTLY APPLY IN INTERPRETING THE DEFINITION OF INTANGIBLE ASSET AS PROVIDED BY EXPLANATION 3(B) OF SECTION 32, AT THE SAME TIME, H ELD THAT EVEN APPLYING THE SAID PRINCIPLE 'GOODWILL' WOULD FALL UNDER THE EXPR ESSION 'ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE', THUS, AS .COU LD BE SEEN, EVEN THOUGH, 'GOODWILL' IS NOT ONE OF THE SPECIFICALLY IDENTIFIA BLE ASSETS PRECEDING THE EXPRESSING 'ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE', HOWEVER, THE HON'BLE SUPREME COURT HELD THAT 'GOODW ILL' WILL COME WITHIN THE EXPRESSION 'ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE', THEREFORE, THE CONTENTION OF THE LEARNED SENIOR STA NDING COUNSEL THAT TO COME WITHIN THE EXPRESSION 'ANY OTHER BUSINESS OR COMMER CIAL RIGHTS OF SIMILAR NATURE' THE INTANGIBLE ASSET SHOULD BE AKIN TO ANYO NE OF THE SPECIFICALLY IDENTIFIABLE ASSETS IS NOT A CORRECT INTERPRETATION OF THE STATUTORY PROVISIONS, HAD IT BEEN THE CASE, THEN 'GOODWILL' WOULD NOT HAV E BEEN TREATED AS AN INTANGIBLE ASSET, THE HON'BLE DELHI HIGH COURT IN C ASE OF AREVA T AND D INDIA LTD. (SUPRA), WHILE INTERPRETING THE AFORESAID EXPR ESSION BY APPLYING THE PRINCIPLES OF EJUSDEM GENERIS OBSERVED, THE RIGHT A S FINDS PLACE IN THE EXPRESSION 'BUSINESS OR COMMERCIAL RIGHTS OF SIMILA R NATURE' NEED NOT ANSWER THE DESCRIPTION OF KNOWHOW, PATENTS, TRADEMARKS, LI CENSE OR FRANCHISES, BUT MUST BE OF SIMILAR NATURE AS THE SPECIFIED ASSET. T HE COURT OBSERVED, LOOKING AT THE MEANING OF CATEGORIES OF SPECIFIED INTANGIBL E ASSETS REFERRED TO IN SECTION 32(1)(II) OF THE ACT PRECEDING THE TERM 'BU SINESS OR COMMERCIAL RIGHT OF SIMILAR NATURE', IT COULD BE SEEN THAT THE SAID INT ANGIBLE ASSETS ARE NOT OF THE SAME LINE AND ARE CLEARLY DISTINCT FROM ONE ANOTHER . THE COURT OBSERVED, THE USE OF WORDS 'BUSINESS OR COMMERCIAL RIGHTS OF SIMI LAR NATURE', AFTER THE SPECIFIED INTANGIBLE ASSETS CLEARLY DEMONSTRATES TH AT THE LEGISLATURE DID NOT INTEND TO PROVIDE FOR DEPRECIATION ONLY IN RESPECT OF SPECIFIED INTANGIBLE ASSETS BUT ALSO TO OTHER CATEGORIES OF INTANGIBLE ASSETS W HICH WERE NEITHER VISIBLE NOR POSSIBLE TO EXHAUSTIVELY ENUMERATE. THE HON'BLE COU RT, THEREFORE OBSERVED, IN THE CIRCUMSTANCES THE NATURE OF BUSINESS OR COMMERC IAL RIGHT CANNOT BE RESTRICTED ONLY TO KNOWHOW, PATENTS, TRADEMARKS, CO PYRIGHTS, LICENCE OR FRANCHISE. THE COURT OBSERVED, ANY INTANGIBLE ASSET S WHICH ARE INVALUABLE AND RESULT IN SMOOTHLY CARRYING ON THE BUSINESS AS PART OF THE TOOL OF THE TRADE OF THE ASSESSEE WOULD COME WITHIN THE EXPRESSION 'EN OTHER BUSINESS OR COMMERCIAL RIGHT OF SIMILAR NATURE'. THEREFORE, TH E CONTENTION OF THE LEARNED SENIOR STANDING COUNSEL THAT TO COME WITHIN THE EXP RESSION ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE TH E INTANGIBLE ASSET SHOULD BE AKIN TO ANY ONE OF THE SPECIFICALLY IDENTIFIABLE AS SETS IS NOT A CORRECT INTERPRETATION OF THE STATUTORY PROS. HAD IT BEEN T HE CASE, THEN GOODWILL WOULD NOT HAVE BEEN TREATED AS AN INTANGIBLE ASSET. THE H ON'BLE DELHI HIGH COURT IN THE CASE OF AREVA T AND D INDIA LTD. SUP, WHILE INT ERPRETING THE AFORESAID EXPRESSION BY APPLYING THE PRINCIPLES OF EJUSDEM GENERIS OBSERVED, THE RIGHT AS FINDS PLACE IN THE EXPRESSION BUSINESS OR COMMERCI AL RIGHTS OF SIMILAR NATURE NEED NOT ANSWER THE DESCRIPTION OF KNOWHOW, PATENTS, TRA DEMARKS, LICENSE OR FRANCHISES, BUT MUST BE OF SIMILAR NATURE AS THE SPECIFIED ASSE T. THE COURT OBSERVED, LOOKING AT THE MEANING OF CATEGORIES OF SPECIFIED INTANGIBLE A SSETS REFERRED TO IN SECTION 32(1)(II) OF THE ACT PRECEDING THE TERM BUSINESS OR COMMERCI AL RIGHT OF SIMILAR NATURE, IT COULD BE SEEN THAT THE SAID INTANGIBLE ASSETS ARE NOT OF THE SAME LINE AND ARE CLEARLY DISTINCT FROM ONE ANOTHER. THE COURT OBSERVED, THE USE OF WORDS BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE, AFTER THE SPE CIFIED INTANGIBLE ASSETS CLEARLY DEMONSTRATES THAT THE LEGISLATURE DID NOT INTEND TO PROVIDE FOR DEPRECIATION ONLY IN RESPECT OF SPECIFIED INTANGIBLE ASSETS BUT ALSO TO OTHER CATEGORIES OF INTANGIBLE ASSETS ITA NO.19/KOL/2017 A.Y. 2012-13 SECOND VIVEKANANDA BRIDGE TOLLWAY CO. LTD. VS. D CIT, CIR-2(2), KOL. PAGE 11 WHICH WERE NEITHER VISIBLE NOR POSSIBLE TO EXHAUSTI VELY ENUMERATE. THE HON'BLE COURT, THEREFORE OBSERVED, IN THE CIRCUMSTANCES THE NATURE OF BUSINESS OR COMMERCIAL RIGHT CANNOT BE RESTRICTED ONLY TO KNOWHOW, PATENTS , TRADEMARKS, COPYRIGHTS, LICENCE OR FRANCHISE. THE COURT OBSERVED, ANY INTANGIBLE AS SETS WHICH ARE INVALUABLE AND RESULT IN SMOOTHLY CARRYING ON THE BUSINESS AS PART OF THE TOOL OF THE TRADE OF THE ASSESSEE WOULD COME WITHIN THE EXPRESSION ANY OTHE R BUSINESS OR COMMERCIAL RIGHT OF SIMILAR NATURE. 25 M/S. PROGRESSIVE CONSTRUCTIO NS LTD. 17. IN THE CASE OF TECHNO SHARES AND STOCKS LTD. V/ S CIT, [2010] 327 ITR 323 (SC), THE HON'BLE SUPREME COURT WHILE EXAMINING THE ASSES SEES CLAIM OF DEPRECIATION ON BSE MEMBERSHIP CARD, AFTER INTERPRETING THE PROVISI ONS OF SECTION 32(1)(II), HELD THAT AS THE MEMBERSHIP CARD ALLOWS A MEMBER TO PARTICIPA TE IN A TRADING SESSION ON THE FLOOR OF THE EXCHANGE, SUCH MEMBERSHIP IS A BUSINES S OR COMMERCIAL RIGHT, HENCE, SIMILAR TO LICENSE OR FRANCHISE, THEREFORE, AN INTA NGIBLE ASSET. IN THE PRESENT CASE, UNDISPUTEDLY BY VIRTUE OF C.A. THE ASSESSEE HAS ACQ UIRED THE RIGHT TO OPERATE THE TOLL ROAD / BRIDGE AND COLLECT TOLL CHARGES IN LIEU OF I NVESTMENT MADE BY IT IN IMPLEMENTING THE PROJECT. THEREFORE, THE RIGHT TO OPERATE THE TO LL ROAD / BRIDGE AND COLLECT TOLL CHARGES IS A BUSINESS OR COMMERCIAL RIGHT AS ENVISA GED UNDER SECTION 32(1)(II) R/W EXPLANATION 3(B) OF THE SAID PROVISIONS. THEREFORE, IN OUR CONSIDERED OPINION, THE ASSESSEE IS ELIGIBLE TO CLAIM DEPRECIATION ON WDV A S AN INTANGIBLE ASSET. THUS, WE ANSWER THE QUESTION FRAMED BY THE SPECIAL BENCH AS UNDER: THE EXPENDITURE INCURRED BY THE ASSESSEE FOR CONSTRUCTION OF ROAD U NDER BOT CONTRACT BY THE GOVERNMENT OF INDIA HAS GIVEN RISE TO AN INTANGIBLE ASSET AS DEFINED UNDER EXPLANATION 3(B) R/W SECTION 32(1)(II) OF THE ACT. HENCE, ASSESSEE IS ELIGIBLE TO CLAIM DEPRECIATION ON SUCH ASSET AT THE SPECIFIED RATE. 2 6 M/S. PROGRESSIVE CONSTRUCTIONS LTD. IT IS THEREFORE SUFFICIENTLY CLEAR THAT THE LEARNED SPECIAL BENCH HAS SETTLED THE ISSUE TREATING A SIMILAR LICENCE TO COLLECT TOLLWAY TO BE AN INTANGIBLE ASSET UNDER THE RELEVANT STATUTORY PROVISION. WE THEREFOR E ADOPT THE ABOVE DETAILED REASONING MUTATIS MUTANDIS TO ACCEPT ASSESSEES INS TANT FORMER SUBSTANTIVE GROUND. THE IMPUGNED DEPRECIATION DISALLOWANCE OF 41,99,22,054/- STANDS DELETED ACCORDINGLY. 5. NEXT COMES LEAVE ENCASHMENT PROVISION OF 1,84,562/- MADE BY BOTH THE LOWER AUTHORITIES U/S 43B(F) OF THE ACT. 6. BOTH PARTIES ARE AD IDEM DURING THE COURSE OF HEARING THAT HON'BLE JURISDICTIONAL HIGH COURTS DECISION ON EXIDE INDUSTRIES LTD. VS. UNION OF INDIA (207) 292 ITR 470 (CAL) IS BOTH DELETING THE IMPUGN ED DISALLOWANCE AS WELL AS DECLARING THE STATUTORY PROVISION ITSELF AS UNCONST ITUNAL STANDS STAYED IN REVENUES APPEAL PREFERRED IN HON'BLE APEX COURT. W E THEREFORE DIRECT THE ITA NO.19/KOL/2017 A.Y. 2012-13 SECOND VIVEKANANDA BRIDGE TOLLWAY CO. LTD. VS. D CIT, CIR-2(2), KOL. PAGE 12 ASSESSING AUTHORITY TO KEEP THE INSTANT ISSUE IN AB EYANCE TILL HON'BLE APEX COURTS FINAL VERDICT. THIS SUBSTANTIVE GROUND IS A CCEPTED FOR STATISTICAL PURPOSES. 7. THIS ASSESSEES APPEAL IS PARTLY ALLOWED ACCORDI NGLY. ORDER PRONOUNCED IN THE OPEN COURT 11/ 07/2018 SD/- SD/- ( %) (' %) (M.BALAGANESH) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 11 / 07 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SECOND VIVEKANANDA BRIDGE TOLLWAY CO. PV T. LTD. BLOCK GP, SECTOR V, SALT LAKE ELEC TRONICS COMPLEX, KOLKATA-91 2. /RESPONDENT-DCIT, CIRCLE-2(2), P-7, CHOWRINGHEE SQU ARE, KOLKATA-69 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA (SENT THROUGH E-MAIL) 5. 7 ''3, 3, / DR, ITAT, KOLKATA (SENT E-MAIL) 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,