Godhra Expressways Private Limited (Formerly known as BSCPL Godhra Tollways Limited), Hyderabad V. Dy. Commissioner of Income Tax , Circle-1(2), Hyderabad

ITA 2123/Hyd/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6522 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2014-2015
• Appeal Filed On: 05-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: O V ANJANEYULU
• Keywords: Depreciation
• Section: 143(3); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES : BENCH B HYDERABAD (THROUGH VIDEO CONFERENCE ) BEFORE SHRI S ATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 212 3 & 2124 /HYD./2018 A.Y. : 201 4 - 15 & 2015 - 16 GODHRA EXPRESSWAYS PRIVATE LTD. VS. D EPUTY C IT, CIRCLE 1(2) (FORMERLY KNOWN AS BSCPL HYDERABAD GODHRA TOLLWAYS LTD.) HYDERABAD PAN: AAECB0747N (APPELLANT/ ASSESSEE) (RESPONDENT) FOR ASSESSEE: SRI O.V. ANJANEYULU, ADV. FOR REVENUE: SRI Y.V.S.T. SAI, CIT, D.R. DATE OF HEARING : 0 7 /01/2021 DATE OF PRONOUNCEMENT : 19 /01/2021 O R D E R PER BENCH TH ESE ASSESSEES TWO APPEAL S FOR A .Y. 2014 - 15 AND 2015 - 16 ARISE FROM THE ORDER OF C OMMISSIONER OF INCOME TAX (APPEALS) - 1 [CIT(A) IN SHORT] HYDERABAD S ORDERS DATED 07.05.2018 AND 0 6 .07.201 8 PASSED IN APPEAL NO S . 0375 AND 0221 /2018 - 19 ; RESPECTIVELY INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 2. WITH THE CONSENT OF BOTH THE PARTIES, DELAY OF 62 AND 19 DAYS ; APPEAL WISE ; RESPECTIVELY IN FILING THE APPEALS STATED TO ATTRIBUTABLE TO COMMUNICATION GAP IS CONDONED IN THE LARGER INTEREST OF JUSTICE. THE SE TWO CASES ARE NOW TAKEN UP FOR ADJUDICATION ON MERITS. ITA NOS. 2123 & 2124/HYD/18 AYS: 2014 - 15 & 2015 - 16 GODHRA EXPRESSWAYS PVT.LTD. 2 HEARD BOTH THE PARTIES. CASE FILE S PERUSED. 3 . THE ASSESSEES IDENTICAL SOLITARY SUBSTANTIVE GRIEVANCE RAISED IN THESE TWO APPEALS CHALLENGES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION DISALLOWING ITS DEPRECIATION CLAIM AMOUNTING TO RS.6 , 08 , 23 , 278 / - AND RS.137 , 66 , 31 , 766 / - , A SSESSMENT Y EAR WISE ; RESPECTIV ELY IN THE COURSE OF ASSESSMENT AND UPH ELD IN THE CIT(A) S LOWER APPELLATE ORDER(S) UNDER CHALLENGE. 3 . 1. RELEVANT FACTS THAT REQUIRE OUR APT ADJUDICATION IN THE INSTANT TWO APPEALS ARE IN A VERY NARROW COMPASS. THIS ASSESSEE HA D ADMITTEDLY ENTERED I NTO A CONCESSIONAR E AGREEMENT WITH THE NATIONAL HIGHWAY AUTHORITY OF INDIA [ NHAI ] ON BUILD , TRANSFER , DESIGN, FINANCE, OPERATE AND TRANSFER BOT BASIS. IT THEREAFTER INCURRED THE EXPENDITURE ON THE CORRESPONDING ROAD PROJECT (S) I.E. IN NH 59 AND RAISED THE IMPUGNED IDENTICAL DEPRECIATION DEDUCTION CLAIM IN BOTH THESE A SSESSMENT Y EARS . IT IS NOT IN DISPUTE THAT THE A SSESSING O FFICERS ASSESSMENT ORDER (S) WENT BY THE CBDTS CIRCULAR NO.9/2014 DATED 23 RD APRIL, 2014 THAT SUCH A CONCESSIONAR E HOLD ING ASSESSEE OUGHT TO AMORTIZE THE COST OF THE EXPENDITURE INCURRED ON THE ROAD/HIGHWAYS PROJECT FOR THE COMPLETE TIME DURATION OF THE AGREEMENT ONLY. THE CIT(A)S LOWER APPELLATE ORDER(S) ALSO CONFIRM THE VERY REASONING. 3 . 2 . LEARNED A UTHORISED R EPRESENTATIVES VEHEMENTLY CONTENDED DURING THE COURSE OF HEARING THAT THE A SSESSING O FFICER AS WELL AS THE CIT(A) HAVE ERRED IN LAW AND ON FACTS IN DISALLOWING ASSESSEES DEPRECIATION CLAIM IN THESE TWO ASSESSMENT YEARS. HE QUOTED TH IS T RIBUNALS S PECIAL B ENCH DECISION IN ACIT VS. PROGRESSIVE CONSTRUCTIONS LTD. ( 2018) 1 91 TTJ 549 (HYD) (SB) THAT SUCH AN AGREEMENT CULMINATES IN ACQUISITION OF A RIGHT OR A COMMERCIAL RIGHT U/S 32(1) OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) IN T HE NATURE OF AN INTANGIBLE ASSET ONLY WHICH IS VERY MUCH ENTITLED FOR DEPRECIATION RELIEF. 3 . 3 . LEARNED CIT, DR STRONGLY SUPPORTED BOTH THE LOWER AUTHORITIES ACTION IN DISALLOWING THE ASSESSEES CLAIM OF DEPRECIATION. HE SOUGHT TO BUTTRESS THE POINT TH AT ASSESSEE CAN NEITHER BE HELD AS OWNER OF THE CONCERNED ROAD ITA NOS. 2123 & 2124/HYD/18 AYS: 2014 - 15 & 2015 - 16 GODHRA EXPRESSWAYS PVT.LTD. 3 PROJECT NOR HAS IT ACQUIRED ANY COMMERCIAL OR BUSINESS RIGHTS FOR ITS EXCLUSIVE USAGE SO AS TO CLAIM DEPRECIATION . HIS NEXT ARGUMENT IS THAT THE H ONBLE BOMBAY H IGH C OURT IN NORTH KARNATAKA EXPRESSWAYS LTD. VS. CIT (2015) 372 ITR 145 (BOM.) H AS MADE IT CLEAR THAT AN ASSESSEE WHO HAS EXECUTED SUCH A BOT AGREEMENT WITH NHAI CANNOT BE HELD AS OWNER OF THE CORRESPONDING ASSET ENTITLING IT TO CLAIM DEPRECIATION. MR. SAIS VEHEM ENT CONTENTION ACCORDINGLY IS THAT THE TRIBUNALS S PECIAL B ENCH DECISION MAY REQUIRE RE - CONSIDERATION IN VIEW OF ALL THESE LEGAL DEVELOPMENTS. HE THUS PRAYED IN FAVOUR OF THE IMPUGNED DISALLOWANCE . 4 . WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE FOREGOING RIVAL CONTENTIONS. THERE DOES NOT APPEAR TO BE ANY DISPUTE ABOUT THE FACT THAT THE ASSESSING OFFICERS ASSESSMENT ORDER; TAKE FOR INSTANCE , THE ORDER DATED 30 TH DECEMBER, 2017 IN PARA 7 PAGE 4 FOR A.Y. 2015 - 2016, HAS NOT CONTROVERTED THE ASS ESSEES PLEA THAT CLAUSE 3.1 OF THE C ONCESSION AGREEMENT HAS RESULTED IN THE NHAI GRANT ING CONCESSIONARY RIGHTS TO RECONSTRUCT, OPERATE AND MAINTAIN THE CORRESPONDING NATIONAL HIGHWAY PROJECT. WE WISH TO REPEAT HERE THAT THE A SSESSING OFFICER HAS ONLY QUOTED THE BOARDS CIRCULAR (SUPRA) IN FAVOUR OF AMORTIZATION BY FOLLOWING MATCHING CONCEPT ONLY . WE OBSERVE IN THESE FACTUAL BACKDROP THAT R EVENUES ARGUMENT S SUPPORTING THE IMPUGNED DISALLOWANCE ARE NOT SUSTAINABLE. WE MAKE IT CLEAR THAT ASSE SSEE S STAND QUA ITS CLAIM IS THAT IT HA S BEEN HOLDING THE CONCESSIONAR E RIGHTS IN THE NATURE OF LICENSE TO COLLECT ROAD TOLL OF AN INTANGIBLE ASSET T U/S 32(1) OF THE ACT. HONBLE BOMBAY H IGH C OURT S J UDGEMENT IS FOUND TO HAVE DEALT WITH THE C ONCERNED ASSESSEES DEPRECIATION SELF - PROCLAIMED BENEFICIAL OW N ER OF THE CONCERNED ROAD PROJECT (SUPRA) AS PER THE CASE LAW MYSORE MINERALS LTD. VS. CIT (1999) 239 ITR 775 (SC) A N D CIT VS. NOIDA TOLL BRIDGE CO. LTD.. (2013) 213 TAXMAN 333 (ALL). THEIR LORDSHIPS HELD THAT SUCH AN OWNERSHIP CLAIM IS NOT MAINTAINABLE UNDER THE NHAI NATIONAL HIGHWAY AUTHORITY OF INDIA ACT. IT IS THEREFORE SUFFICIENTLY CLEAR THAT AS AGAINST THE FACTS OF THE SAID CASE, THIS ASSESSEE HAS RAISED DEPRECIATION CLAIM ON ITS LICENSE TO COLLECT TOLL HELD AS AN INTANGIBLE ASSET ONLY. ITA NOS. 2123 & 2124/HYD/18 AYS: 2014 - 15 & 2015 - 16 GODHRA EXPRESSWAYS PVT.LTD. 4 4 .1. COMING TO THE EXCLUSIVE USAGE PART; WE SEE NO MATERIAL ON RECORD WHICH WOULD INDICATE THAT ANY BODY OTHER THAN THE ASSESSEE IS ENTITLED TO DILUTE ITS RIGHTS TO CONSTRUCT, OPERATE, MAINTA IN THE PROJECT IN LIEU OF THE TOLL COLLECTIONS RIGHT FOR THE SPECIFIED AGREEMENT PERIOD. WE THEREFORE HOLD THAT THE ASSESSEES RIGHT TO COLLECT TOLL WOULD FORM AN EXCLUSIVE RIGHT IN THE NATURE OF LICENSE ELIGIBLE TO BE TREATED AS AN INTANGIBLE ASSET AS PER S PECIAL B ENCH S DECISION (SUPRA) . WE THUS DECLINE THE REVENUES ARGUMENTS SUPPORTING THE IMPUGNED DEPRECIATION DISALLOWANCE . THE SAME IS DIRECTED TO BE DELETED IN BOTH THE SE ASSESSMENT YEARS. 5. TH ESE TWO A SSESSEES APPEALS ARE ALLOWED IN ABOVE TERMS . PRONOUNCED IN OPEN COURT ON 19 TH JANUARY, 2021. SD/ - SD/ - (LAXMI PRASAD SAHU) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 19 TH JANUARY, 2021. * GMV COPY OF THE ORDER FORWARDED TO: 1. BSCPL GODHRA TOLLWAYS LTD. [ PRESENTLY GODHRA EXPRESSWAYS PRIVATE LIMITED] C/O M/S ANJANEYULU & CO. CHARTERED ACCOUNTANTS, 30, BHAGYALAKSHMI NAGAR, GANDHI NAGAR, HYDERABAD 500 080 , TELANGANA . 2. DY.CIT, CIRCLE 1 ( 2 ), HYDERABAD 3. ACIT, RANGE 1 , HYDERABAD. 4. CIT(A) - 1 , HYDERABAD. 5. PR.CIT - 1 , HYDERABAD 6. DR, ITAT, HYDERABAD. 7. GUARD FILE.