Dy, CIT Cir-I Nashik, Nashik V. Ashoka DSC Katni Bypass Road P. Ltd, Nashik

ITA 239/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 66956 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.239/PN/2012 ASSESSMENT YEAR : 200 8 - 0 9 DY. CIT, CIRCLE-I NASHIK VS. ASHOKA DSC KATNI BYPASS ROAD P. LTD., ASHOKA HOUSE, ASHOKA MARG WADA, NASHIK (APPELLANT) (RESPONDENT) PAN NO. AAECA4746J APPELLANT BY: SHRI DILIP KOTHARI RESPONDENT BY: SMT. SHEETAL M. GADIYA DATE OF HEARING : 30-04-2013 DATE OF PRONOUNCEMENT : 30-04-2013 ORDER PER R.S. PADVEKAR, JM:- IN THIS APPEAL, THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD.CIT(A)-I, NASHIK DATED 17-11-2011 FOR THE A.Y. 200 8-09. THE REVENUE HAS TAKEN FOLLOWING EFFECTIVE GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD.CIT(A)-II, NASHIK WAS JUSTIFIED IN ALLOWING THE DEPREC IATION OF RS.8,09,95,688/- CLAIMED ON THE ASSET LICENCE TO COLLECT TOLL. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD.CIT(A)-II, NASHIK WAS JUSTIFIED IN HOLDING THAT THE A SSESSEE IS ELIGIBLE FOR DEPRECIATION ON ASSET LICENCE TO COLLECT TOLL. 2. THE SHORT ISSUE IN CONTROVERSY IN RESPECT OF THE DEP RECIATION CLAIMED BY THE ASSESSEE ON THE EXPENDITURE INCURRED ON THE RO AD PROJECT I.E. THE KATNI BY PASS ROAD ON N.H. 7 IN MADHYA PRADESH WHICH HAS BEEN BUILT ON BOT BASIS, TREATING THE SAME AS LICENCE TO COLLECT TOLL. 3. THE BRIEFLY STATED FACTS AS UNDER. THE APPLICANT COMP ANY ENGAGED IN THE BUSINESS OF DEVELOPMENT, OPERATION AND MAINTENANCE OF KATNI BY PASS ROAD ON N.H. 7 IN MADHYA PRADESH ON BOT BASIS. THE ASSE SSEE HAS ENTERED INTO AGREEMENT WITH MINISTRY OF ROAD TRANSPORT & HIGHWAYS OF THE GOVERNMENT OF INDIA. THE ASSESSMENT YEAR 2008-09 IS TH E FIRST YEAR OF COMMENCEMENT OF THE OPERATIONS I.E. THE TOLL COLLECTION. THE ASSESSEE FILED 2 ITA NO.239/PN/2012, ASHOKA DSC KANTI BYPASS ROAD P. LTD., NASHIK THE RETURN OF INCOME DECLARING NIL INCOME. THE ASSESSEE HA S CLAIMED DEPRECIATION @ 25% ON LICENCE TO COLLECT TOLL AMOUNTING T O RS.8,85,71,900/-. THE ASSESSING OFFICER DISALLOWED THE CLAIM AND INSTEAD ALLOWED AMORTIZATION OF EXPENSES AT RS.75,76,212. THE ASSES SEE CARRIED THE ISSUE BEFORE THE LD.CIT(A). THE LD.CIT(A) FOLLOWING THE DECISION OF THE ITAT, PUNE IN THE CASE OF ASHOKA INFO PVT. LTD VS. ACIT 123 TT J 77 ALLOWED THE CLAIM OF THE ASSESSEE. THE OPERATIVE PARTS OF THE FINDING O F LD.CIT(A) ARE AS UNDER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE RIVAL SUBMISSIONS. IT IS UNDISPUTED THAT THE APPELLANT HAS GOT THE 'RIGHT TO COLLECT TOLL' FOR A SPECIFIED PE RIOD WHICH IS AUTHORIZED BY THE GOVT. OF INDIA. THIS 'RIGHT TO COLL ECT TOLL' WAS CONSIDERED AS AN ASSET BY THE APPELLANT AS THE SAME WAS ACQUIRED AS PER THE GOVERNMENTS ORDER OF EOT. THIS RIGHT OF THE APPELLANT IS A VALUABLE RIGHT HAVING COMMERCIAL VALUE. THE APPELLA NT RAISED LOANS BY ASSIGNING THIS 'RIGHT TO COLLECT TOLL' UNDER THE EO T SCHEME. ON THESE FACTS, IT CAN BE SAID THAT THE 'RIGHT TO COLLECT TO LL' IS AN INTANGIBLE ASSET COVERED BY THE INCOME TAX RULES, 1962. THE SUBMISSIONS AND ARGUMENTS MADE ON BEHALF OF THE APPELLANT HAVE MERIT AND, THEREFORE, ARE ACCEPTED. CONSEQUENTLY, THE APPELLANT IS HELD TO BE ELIGIBLE FOR DEPRECIATION ON THIS ASSET. THIS VIEW IS SUPPORTED BY THE DECISION OF THE HON'BLE TRIBUNAL IN THE CASE OF SISTER CONCERN OF TH E APPELLANT VIZ. ASHOKA INFO PVT. LTD. IN I.T.A. NO.44/PN/07 DATED 31/12/ 2008 - PUNE BENCH, AND ANOTHER DECISION OF THE HON'BLE TRIBUNAL IN THE CASE OF RELIANCE PORTS AND TERMINALS LTD. IN I.T.A. NOS. 17 43 TO 45/MUM/07 DATED 26/11/2007 - MUMBAI BENCH. ON IDENTICAL FACTS IN THE CASE OF APPELLANT'S SISTER CONCERN NAMELY ASHOKA BUILDCON LTD. IN I.T.A. NO.NSK/CIT(A)-1/412/09-10 DATED 24/03/2011, I HAVE HE LD THAT 'RIGHT TO COLLECT TOLL' IS AN INTANGIBLE ASSET, ELIGIB LE FOR DEPRECIATION @ 25%. IN VIEW OF THE ABOVE FINDINGS AND RESPECTFULLY FOLLOWING THE ORDERS OF THE HON'BLE TRIBUNAL (SUPRA) ON THIS ISSUE AND TO M AINTAIN CONSISTENCY IN THE JUDICIAL ORDERS, THEREFORE, IT IS HELD THAT THE 'RI GHT TO COLLECT TOLL' IS AN INTANGIBLE ASSET AND THE SAME IS ELIGIBLE FOR DEPREC IATION @ 25% AS PER THE CLAIM MADE BY THE APPELLANT. THE AO IS DIRECTED ACC ORDINGLY TO ALLOW DEPRECIATION OF RS.8,85,71,900/-. THE SUBSTANTIVE G ROUND IS, THEREFORE, ALLOWED. AS A COROLLARY TO THIS DECISION, THE DEDUCTION OF RS.75,76,212/- ALLOWED BY THE AO AS AMORTIZED PROPORTIONATE COST IS DIRECTED TO BE WITHDRAWN. GROUNDS NO.2 AND 3 BEING ALTERNATIVE GROUN DS HAVE, THEREFORE, BEEN RENDERED INFRUCTUOUS AND ARE DISMISSED. NOW, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. SO FAR AS THE BASIC FACTS ARE CONCERNED, THERE IS NO DISPUTE. WE FIND T HAT IN THE OPINION OF THE ASSESSING OFFICER THE RIGHT OF COLLECTION OF TOLL AS PER THE CONTRACT BETWEEN THE GOVERNMENT AND ASSESSEE IS NOT LICENSING AG REEMENT BUT REPAYMENT AGREEMENT. IT IS NOT DISPUTED BY THE ASSESS ING OFFICER THAT THE 3 ITA NO.239/PN/2012, ASHOKA DSC KANTI BYPASS ROAD P. LTD., NASHIK ASSESSEE AFTER ENTERING INTO THE CONCESSION AGREEMENT U NDER BOT BASIS, INVEST ITS OWN FUNDS FOR CONSTRUCTING/DEVELOPING THE ROAD, SETS UP TOLL PLAZAS AND COLLECTS TOLL FROM THE VEHICLES TO USE THE DEVELO PED ROADS AT THE RATES AGREED WITH THE GOVERNMENT FOR A FIXED PERIOD AND AFTER THE EXPIRY/LAPSE OF THE AGREEMENT PERIOD, TRANSFERS THE ENTIRE PROJECT BACK TO THE GOVERNMENT. 5. WE FIND THAT THE IDENTICAL ISSUE HAS COME FOR THE CONSID ERATION BEFORE ITAT, PUNE IN THE CASE OF ACIT(C), CIRCLE-I, NASHIK VS . ASHOKA INFRAWAYS PVT. LTD. ITA NOS. 185 & 186/PN/2012 ORDER D ATED 29-04-2013. THE FACTS OF THE CASE ARE IDENTICAL WITH THE CASE OF PRES ENT ASSESSEE. THE TRIBUNAL CONSIDERED THE DECISION IN THE CASE OF RELIANCE POR T AND TERMINAL LTD. ITA NOS. 1743 TO 1745/MUM./2007 DATED 26-11-2007 ITAT MUMBAI BENCHES AND ASHOKA INFO PVT. LTD ITA NO. 44/PN/2007 D ATED 31-12-2008 ITAT PUNE BENCH AND HELD AS UNDER: 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS . FACTUALLY SPEAKING, THERE IS NO DISPUTE TO THE FACT THAT THE C OSTS CAPITALISED BY THE ASSESSEE UNDER THE HEAD LICENSE TO COLLECT TOLL HAV E BEEN INCURRED FOR DEVELOPMENT AND CONSTRUCTION OF THE INF RASTRUCTURE FACILITY, I.E., DEWAS BY-PASS ROAD. IT IS ALSO NOT IN DISPUTE THA T THE ASSESSEE WAS TO BUILD, OPERATE AND TRANSFER THE SAID INFRASTRU CTURE FACILITY IN TERMS OF AN AGREEMENT WITH THE GOVERNMENT OF MADHYA PRADESH. THE EXPENDITURE ON DEVELOPMENT, CONSTRUCTION AND MAINTENAN CE OF THE INFRASTRUCTURE FACILITY FOR A SPECIFIED PERIOD WAS T O BE INCURRED BY THE ASSESSEE OUT OF ITS OWN FUNDS. MOREOVER, AFTER THE END OF THE SPECIFIED PERIOD, ASSESSEE WAS TO TRANSFER THE SAID INFRASTRUCT URE FACILITY TO THE GOVERNMENT OF MADHYA PRADESH FREE OF CHARGE. IN CO NSIDERATION OF DEVELOPING, CONSTRUCTING, MAINTAINING THE FACILITY FOR A SPECIFIED PERIOD AND THEREAFTER TRANSFERRING IT TO THE GOVERNMENT OF MADHYA PRADESH FREE OF CHARGE, ASSESSEE WAS GRANTED A RIGHT TO COLLE CT TOLL FROM THE MOTORISTS USING THE SAID INFRASTRUCTURE FACILITY DUR ING THE SPECIFIED PERIOD. THE SAID RIGHT TO COLLECT THE TOLL IS EMERGING AS A RESULT OF THE COSTS INCURRED BY THE ASSESSEE ON DEVELOPMENT, CONSTR UCTION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY. SUCH A R IGHT HAS BEEN ADJUDICATED BY THE TRIBUNAL IN THE AFORESAID PRECEDE NTS TO BE IN THE NATURE OF INTANGIBLE ASSET FALLING WITHIN THE PURVIEW OF SECTION 32(1)(II) OF THE ACT AND HAS BEEN FOUND ELIGIBLE FOR CLAIM OF DEPRECIATION. NO DECISION TO THE CONTRARY HAS BEEN CITED BY THE LD. DR BEFORE US AND, THEREFORE, WE FIND NO REASONS TO DEPAR T FROM THE ACCEPTED POSITION BASED ON THE AFORESAID DECISIONS. 11. SO HOWEVER, THE PLEA OF THE LD. DR BEFORE US IS TO THE EFFECT THAT THE IMPUGNED RIGHT IS NOT OF THE NATURE REFERRED TO I N SECTION 32(1)(II) OF THE ACT FOR THE REASON THAT THE AGREEMENT WITH THE G OVERNMENT OF MADHYA PRADESH ONLY ALLOWED THE ASSESSEE TO RECOVER TH E COSTS INCURRED FOR CONSTRUCTING THE ROAD FACILITY WHEREAS SECTION 32(1)(II) OF THE ACT REQUIRED THAT THE ASSETS MENTIONED THEREIN SHOULD BE ACQUIRED BY THE ASSESSEE AFTER SPENDING MONEY. THE SAID ARG UMENT IN OUR 4 ITA NO.239/PN/2012, ASHOKA DSC KANTI BYPASS ROAD P. LTD., NASHIK VIEW IS FACTUALLY AND LEGALLY MISPLACED. FACTUALLY SPEAK ING, IT IS WRONG TO SAY THAT IMPUGNED RIGHT ACQUIRED BY THE ASS ESSEE WAS WITHOUT INCURRENCE OF ANY COST. IN FACT, IT IS QUITE EV IDENT THAT ASSESSEE GOT THE RIGHT TO COLLECT TOLL FOR THE SPECIFIED PERIOD ONLY AFTER INCURRING EXPENDITURE THROUGH ITS OWN RESOURCES ON DEVELOPMENT , CONSTRUCTION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY. SECO NDLY, SECTION 32(1)(II) PERMITS ALLOWANCE OF DEPRECIATION ON ASSETS S PECIFIED THEREIN BEING INTANGIBLE ASSETS WHICH ARE WHOLLY OR PARTLY OW NED BY THE ASSESSEE AND USED FOR THE PURPOSES OF ITS BUSINESS. T HE AFORESAID CONDITION IS FULLY SATISFIED BY THE ASSESSEE AND THERE FORE CONSIDERED IN THE AFORESAID PERSPECTIVE WE FIND NO JUSTIFICATION FOR THE PLEA RAISED BY THE REVENUE BEFORE US. 12. IN THE RESULT, WE AFFIRM THE ORDER OF THE CIT(A) IN HOLDING THAT THE ASSESSEE WAS ELIGIBLE FOR DEPRECIATION ON THE RIGHT TO COLLECT TOLL, BEING AN INTANGIBLE ASSET FALLING WITHIN THE PURVIEW OF SECTION 32(1)(II) OF THE ACT FOLLOWING THE AFORESAID PRECEDENTS. 6. WE FURTHER FIND THAT THE LD.CIT(A) HAS FOLLOWED THE DECISIO N OF THE ITAT, PUNE IN THE CASE OF ASHOKA INFOR PVT. LTD. ITA NO. 4 4/PN/2007 DATED 31-12-2008. WE, THEREFORE FIND NO REASON TO INTERFE RE WITH THE ORDER OF THE LD.CIT(A) FOR ALLOWING THE CLAIM OF THE DEPRECIATION IN FAV OUR OF THE ASSESSEE. ACCORDINGLY, THE ORDER OF THE LD.CIT(A) IS CONFIRMED. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30-04-2013 SD/- SD/- (R.K. PANDA) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER RK/PS PUNE, DATED: 30 TH APRIL, 2013 COPY TO 1 DEPARTMENT 2 ASSESSEE 3 THE C IT(A) - I, NASHIK 4 THE CIT - I, NASHIK 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE