DCIT, Circle-3(2), Hyd, Hyderabad V. Swarna Tollway (P) Ltd., Hyd, Hyderabad

ITA 3/HYD/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6471 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 04-01-2016
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 03/HYD/2016 ASSESSMENT YEAR: 2011-12 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(2), HYDERABAD VS M/S. SWARNA TOLLWAY (P) LTD., MADHAPUR, HYDERABAD [PAN: AAFCS5282E] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI M. SITARAM, DR FOR ASSESSEE : SHRI V. RAGHAVENDRA RAO, AR DATE OF HEARING : 21-06-2016 DATE OF PRONOUNCEMENT : 24-06-2016 O R D E R THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-3 HYDERABAD DA TED 14-10-2015 FOR THE AY. 2011-12 ON THE FOLLOWING GROU NDS: 1. THE LEARNED CIT(A) ERRED ON BOTH LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN DELETING THE DISALLO WANCE OF DEPRECIATION U/S. 32 OF THE ACT, TO THE TUNE OF RS. 29,96,60,292/-. 3. THE LEARNED CIT(A) ERRED IN ALLOWING DEPRECIATIO N U/S. 32 OF THE ACT TO THE ASSESSEE, ON AN ASSET WHICH IS FIRST CON STRUCTED ON THE I.T.A. NO. 03/HYD/2016 M/S. SWARNA TOLLWAY (P) LTD :- 2 -: LAND OWNED BY THE GOVERNMENT OF INDIA AND SECONDLY WHERE THE INFRASTRUCTURE FACILITY IS NEVER OWNED BY THE ASSES SEE COMPANY. 4. ANY OTHER GROUNDS(S) THAT MAY BE URGED AT THE TI ME OF HEARING. 2. BRIEFLY STATED, ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND MAINTENANCE OF TOLLWAYS/CARRIAGEWAYS ON BUILD, OPERATE AND TRANSFER (BOT) BASIS, DERIVING ITS INCOME FROM COLLECTION OF TOLL FEE AND O THER INCOME. ASSESSEE IS A SPECIAL PURPOSE VEHICLE (SPV) PROMOTED BY CIDB INVENTURES SDN. BHD, A GOVT. OF MALAYSIA COMPANY. AS SESSEE ENTERED AN AGREEMENT WITH NHAI (NATIONAL HIGHWAY AUTHO RITY OF INDIA) FOR WIDENING AND MAINTENANCE OF NH NO. 5 & 9 ON BOT BASIS. ASSESSEE HAD SPENT AN AMOUNT OF RS. 714.61 CR ORES ON CONSTRUCTION OF THE ABOVE SAID TWO HIGHWAYS. THE CON STRUCTION WAS COMPLETED IN FY. 2004-05 AFTER WHICH THE HIGHWAY WAS OPENED TO TRAFFIC AND ASSESSEE STARTED CLAIMING DEPRECIATION F ROM AY. 2005-06 ONWARDS. 2.1. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME ON 28-09-2011 DECLARING A LOSS OF R S. 29,60,49,170/-. IN SCRUTINY ASSESSMENT INCOME WAS DET ERMINED AT RS. 35,71,120/- BY DISALLOWING DEPRECIATION CLAIMED ON ROADWAYS OF RS. 29,96,20,292/-. AGGRIEVED BY SUCH AN ASSESS MENT, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. ON THAT, ASSESSEE MADE ELABORATE SUBMISSIONS BEFORE CIT(A) CL AIMING THAT THE DEPRECIATION IS ALLOWABLE TO IT BY RELYING ON VARI OUS JUDGMENTS OF HIGH COURTS AND DECISIONS OF CO-ORDINATE BENCHES OF ITAT AND I.T.A. NO. 03/HYD/2016 M/S. SWARNA TOLLWAY (P) LTD :- 3 -: IN ITS OWN CASE. LD. CIT(A) ACCEPTED THE SAME AND AL LOWED THE DEPRECIATION. AGGRIEVED, REVENUE IS ON APPEAL BEFOR E ITAT. 3. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E ME, LD. DR OPPOSED THE ORDERS OF CIT(A) AND SUBMITTED THAT TH E ISSUE IS ALSO PENDING BEFORE THE SPECIAL BENCH. THE BRIEF ISSUE CONTESTED BY THE REVENUE IN THIS APPEAL IS WHETHER THE LD. CIT(A) IS CORRECT IN ALLOWING DEPRECIATION ON THE INFRASTRUCTURE FACILI TY WHICH WAS NOT OWNED BY ASSESSEE-COMPANY? 4. LD. COUNSEL FOR ASSESSEE RELIED ON THE DECISION OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE DT. JANUARY, 16, 2014 [30 ITR (TRIB) 171 (ITAT/TRIB)] FOR THE AYS. 2005-06 TO 2010-11. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AND DECISION(S) RELIED UPON BY THE LD. COUN SEL FOR ASSESSEE. SINCE THE ISSUE IS ALREADY CONSIDERED BY THE CO-ORDINATE BENCH IN THE ABOVE REFERRED CASE AND DIRECTED THE AO TO ALLOW DEPRECIATION, THERE IS NO NEED TO DEFER FROM THE FINDI NGS OF THE CIT(A). ACCORDINGLY THE ORDER OF THE LD. CIT(A) IS U PHELD. LD. DR HOWEVER, RAISED AN ISSUE THAT SIMILAR ISSUE IS PENDIN G BEFORE THE SPECIAL BENCH FOR ADJUDICATION. THIS ARGUMENT CANNO T BE ACCEPTED AT THIS STAGE AS WHETHER DEPRECIATION IS TO BE ALLOWED O R EXPENDITURE CAN BE ALLOWED AS DEFERRED REVENUE EXPEN DITURE CAN BE CONSIDERED IN THE FIRST YEAR OF OPERATIONS. NOW THAT AS SESSEE HAS ALREADY CLAIMED AND DEPRECIATION WAS ALLOWED ON CAPI TALISED AMOUNT IN EARLIER YEARS, THERE IS NO NEED TO DEFER FRO M THE FINDINGS I.T.A. NO. 03/HYD/2016 M/S. SWARNA TOLLWAY (P) LTD :- 4 -: IN ASSESSEES OWN CASE. I DO NOT FIND ANY MERIT IN KEEPING THE MATTER PENDING FOR ADJUDICATION BY THE SPECIAL BENCH ON AN ISSUE WHICH DOES NOT MATERIALLY AFFECT ASSESSEE. ACCORDIN GLY, GROUNDS ARE REJECTED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JUNE, 2016 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 24 TH JUNE, 2016 TNMM COPY TO : 1. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3( 2 ), HYDERABAD. 2. M/S. SWARNA TOLLWAY (P) LTD., H.NO. 1-81/1, PLOT N O. 42 & 43, KAVURI HILLS, PHASE-I, MADHAPUR, HYDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-3, HYDERABAD 4. THE PR. COMMISSIONER OF INCOME TAX-3, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.