SAGAR DAMOH TOLL ROADS LIMITED, MUMBAI V. ASST CIT 8(1)(2), MUMBAI

ITA 3147/MUM/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3439 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 09-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Search and seizure; Set aside
• Section: 32; 143(3); 142(1); 143(1); 250; 143(2); 191; 73; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 3147/Mum/2019 (A.Y: 2013-14) Sagar Damoh Toll Roads Ltd 513A, 5 th Floor, Kohinoor City, Kirol Road, Off LBS Marg, Kurla, Mumbai – 400070 Vs. ACIT, Circle – 8(1)(2) Room No. 651, 6 th Floor, Aayakar Bhavan, MK Road, Mumbai – 400020. ./ज आइआर ./PAN/GIR No. : AACCE2160Q Appellant .. Respondent Appellant by : Shri. K. Shivaram.AR Respondent by : Shri Ajay K. Shrivastava.DR Date of Hearing 22.03.2022 Date of Pronouncement 29.03.2022 आद श / O R D E R PER PAVAN KUMAR GADALE JM: The assessee has filed the appeal against the order of the Commissioner of Income Tax (Appeals)-14, Mumbai passed 143(3) and 250 of the Act. The assessee has raised the following grounds of appeal: 1.0. GROUND NO. 1: 1.1. The learned Commissioner of Income Tax (Appeals) ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 2 - - 14, Mumbai ('the learned CIT(A)') has erred in law and in f acts and in circumstances of the case in determining the loss at Rs.16,30,45,948 as against loss of Rs.35,14,65,037 declared by the Appellant in the return of income f iled for the assessment year under consideration. 2.0. GROUND NO. 2 2.1. The learned CIT(A) has erred in law and in f acts and in circumstances of the case by disallo wing depreciation on Intangible Assets (i.e. Concessionaire I Toll Collection Rights) and allowing amortization of construction cost of toll road over a period of toll collec tion rights i.e. 12 years, resulting in net disallowance of Rs.18,84,19,089 (depreciation claimed on intangible assets Rs.31 52,76,735!- and amortization allo wed Rs.12,68,57,6461-). 2.2. The learned CIT(A) has erred in law and in f acts and in circumstances of the case in not accepting the contention of the Appellant that Concessionaire I Toll Collection Rights falls within the definition of Intangible Assets as per section 32(1)(ii) of the Income tax Act, 1961 ('the Act') entitled f or depreciation © 25%. The disallowance of depreciation made by the learned CIT(A) in the order passed under section 250 of the Act is required to be deleted. 2.3. The learned CIT(A) has erred in law and in f acts and in circumstances of the case by not considering th e CBDT Circular No. 9 of 2014 which itself clarif ies that total deduction I depreciation claimed up to AY 2014-15 has to be reduced f rom the total cost and balance amount has to be amortized over the remaining period of toll concessionaire agreement. Thus, the said circular ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 3 - is prospective in nature and nevertheless it was not in existence at the time of filing the return of income f or the assessment year under consideration. In view of this, disallo wance of depreciation made by the learned CIT(A) in the order passed under section 250 of the Act by retrospective application of circular is required to be deleted 2.4 The ld. C IT(A) has erred in relying on the decision of Hon’ble Bombay High Court in the case M/s West Gujarat Express way ltd 82 taxmann.com 224. The appellant craves leave to add and / or to amend and / or to delete any ground out of the f oregoing grounds of appeal, at any time before the hearing or during the course of hearing. 2. The brief facts of the case are that the assessee company is engaged in the business of construction, maintenance and toll road collections on build operate and transfer(BOT) basis.The assessee has filed the return of income for the A.Y 2013-14 on 25.09.2013 disclosing a total loss of Rs. 35,14,65,037/-and the return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act are issued. In compliance, the Ld. AR of the assessee appeared from time to time and submitted the details and the case was discussed. The Assessing officer(A.O) on perusal of the financial ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 4 - statements and the Profit and loss account found that the assessee has claimed depreciation @ 25% on the “concessional rights toll 1” treating as intangible asset and the assessee is going to operate two lane High way project for a period of 12 years. The A.O. has issued a show cause notice for disallowance of depreciation claim and alternatively allow the amortization as in earlier year. The assessee has filed a letter dated 02.03.2016 referred at 5.2 of the assessment order explaining the nature of works, claim of depreciation on toll right and the facts in respect of earlier assessement years and the provisions of Income Tax Act in support of claim and relied on the judicial decisions. Whereas the A.O was not satisfied with the submissions and explanations and disallowed the claim of depreciation and assessed the total loss of Rs. 16,28,33,990/- and passed order u/sec143(3) of the Act dated 28-03-2016. 3. Aggrieved by the order, the assessee has filed an appeal before the CIT(A).Whereas the CIT(A) has considered the grounds of appeal, submissions of the assessee and findings of the scrutiny assesseement and observed that the assessee is not entitled for ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 5 - claim of depreciation on toll collection rights and confirmed the action of the A.O. Further the CIT(A) has directed the A.O to verify the correct disallowance and partly allowed the appeal of the assessee. Aggrieved by the CIT(A) order, the assessee has filed an appeal before the Hon’ble Tribunal. 4. At the time hearing, the Ld. AR submitted that the CIT(A) has erred in sustaining the disallowance of depreciation on toll collections rights, as it is an intangible asset u/s 32(1)(ii) of the Act. The Ld. AR explained the factual aspects of the case with the synopsis and mentioned that in the earlier assessment year the claim was allowed and supported with catena of judicial decisions and voluminous paper book and prayed for allowing the appeal. 5. Contra, the Ld.DR submitted that the assessee is not entitled for depreciation on toll rights and in earlier assessment year the ITAT has not considered the fact of intangible asset. The Ld.DR emphasized that the issue has not attained the finality and SLP is pending before the Hon’ble Supreme court. The Ld.DR relied on the decision of CIT Vs. Tamilnadu ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 6 - Road Development Company Ltd 436 ITR 323 (Madras) and supported the order of the CIT(A). 6. We heard the rival submissions and perused the material available on record. The sole crux of the disputed issue envisaged by the Ld.AR that the assessee is entitled for depreciation on toll collection rights as it is an intangible asset as per the section 32(1)(ii) of the Act. The assessee company is engaged in the business of design, engineering procure, construction, maintenance, management and operation of toll collection and has entered into agreement with Madhya Pradesh Road Developemnt Corporation (MPRDC) for the purpose of maintaining the roads on the basis of build, operate and transfer(BOT) basis and the A.Y 2012-13 is the first year were the asset was put to use and the assessee has claimed the depreciation u/s 32(1)(ii) of the Act treating as the intangible asset and the A.O has made the disallowance of depreciation, and on appeal, the CIT(A) has allowed the claim of the assessee. On further appeal filed by the revenue before the Hon’ble Tribunal, the ITAT has dismissed the revenue appeal considering the decisions of jurisdictional Honble ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 7 - High Court of Bombay in the case of North Karnataka Express Highway Ltd vs. CIT 372 ITR 145 (Bom, HC) and CIT Vs. West Gujarat Expressway Ltd, 390 ITR 398 (BOM HC). The Ld. AR has demonstrated the voluminous information in the paper book supporting the claim. The Ld.DR relied on the judicial decision were the roads developed and maintained by the asseessee are eligible for depreciation@10% by considering the roads as Buildings. Whereas, in the present case the depreciation@25% was claimed treating the toll rights as intangible Assets. 7. We find the Hon’ble Tribunal has dismissed the revenue appeal in ITA No. 7114/Mum/2016 & CO No. 84/Mum/2018 for the A.Y 2011-12 and observed at page 16 Para 7 to 14, which is read as under: 7. We have heard the authorized representatives f or both the parties, perused the orders of the lower authorities and the material available on record, and also the judicial pronouncements relied upon by them. Our indulgence in the present appeal has been sough t by the revenue for adjudicating as to whether the CIT(A) is right in law and the f acts of the case in concluding that the assesses claim for depreciation on “license to collect toll”, being an intangible asset, falling within the scope of Sec. 32(1)(ii) of the Act, was as per the mandate of law. It is the claim of the revenue, that the issue is covered against the ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 8 - assessee by the judgments of the Hon‟ble High Court of Bombay in the case of North Karnataka Express way Ltd. Vs. CIT-10 (2015) 272 ITR 145 (Bom) and CIT Vs. West Gujarat Express way Ltd. (2017) 390 ITR 398 (Bom). On the contrary, it is the claim of the assessee that the issue raised in the af oresaid cases was conf ined to the aspect, as to whether an Inf rastructure Development Company which had constructed a “toll road” on BOT basis on land owned by the Central Government would be entitled for depreciation on the same, or not. It is the claim of the ld. A.R, that as the issue as to whether an Inf rastruc ture Development Company which had constructed a “toll road” on BOT basis on land owned by the Central Government would be entitled to wards claim of depreciation under Sec. 32(1)(ii) in respect of its intangible rights i.e. “right to collect toll”, was neither raised bef ore or adjudicated upon by the Hon‟ble High Court in either of te af oresaid cases, theref ore, the reliance placed by the revenue on the said judicial pronouncements which were distinguishable in the backdrop of the issue involved in the said matters, wo uld thus not assist its case. 8. We have given a thoughtf ul consideration to the issue before us in the backdrop of the material available on record and the contentions advanced by the authorized representatives f or both the parties. Admittedly, as the assessee which being an Inf rastructure Development Company had constructed the “toll road” on build, operate and transf er (BOT) basis on the land owned by the Central Government, not being the owner of the said road would not be eligible f or claim of depreciation on the same. Our af oresaid view is f ortif ied by the judgment of the Hon’ble High Court of Bombay in the case of North Karnataka Express way Ltd. Vs. CIT10(2015) 272 IT R 145 (Bom). A perusal of the order reveals, that the Hon‟ble ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 9 - High Court had af ter exhaustively deliberating on the provisions of the National High way Act, 1956, had therein observed, that though the Central Government as per Sec. 8-A of the National High way Act, 1956 is empowered to enter into an agreement with any person in relation to the development and maintenance of the whole or any part of a National High way, but that in no way would aff ect the vesting of the National High ways in the Union. It was observed, that the o wnership of the National High way as stands vested with the Central Government under Sec.4 of the National High way Act, 1956, would not be diluted for the reason that the Central Government as per Sec.8-A (supra) had entered into an agreement with any person for development and maintenance of the whole or any part of the National High way. To sum up, the Hon‟ble High Court had concluded that an Inf rastructure Development Company which had cons truc ted a „toll road‟ on build, operate and transfer (BOT) basis on the land owned by the Government, not being the owner of the said road would thus not be entitled f or depreciation on the same. At this s tage, we may herein observe, that the Hon‟ble High Court while concluding as hereinabove, had also observed, that as the assessee had invested in the project of construction, development and maintenance of the National High way, theref ore, claim f or depreciation on the assets in the f orm of building and plant & machinery etc. can be validly raised and granted. Also, the Hon‟ble High Court in its order had ref erred to the observations recorded by the C IT in his under passed under Sec.263 of the Act, wherein he had while declining the assesses claim for depreciation on „toll road‟ had categorically stated, that it was not the case of the assessee that the claim of depreciation was being raised in respec t of its intangible rights i.e right to use the asset wi thout being the actual owner of the same. ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 10 - 9. As observed by us hereinabove, the view taken by the Hon‟ble High Court of Bombay in its order passed in the case of North Karnataka Express way Ltd.(supra), was thereaf ter once again reiterated by the Hon‟ble Court in the case of CIT-10, Vs. M/s West Gujarat Express way Ltd. ( ITA No. 2357 of 2013, dated 05.04.2016). We find that both of the af orementioned judgements of the Hon‟ble jurisdictional High Court were rendered in context of the issue, as to whether an Inf rastructure Development Company which had cons truc ted a „toll road‟ on BOT basis on the land owned by Central Government would be entitled f or depreciation on such “toll road”, or not. We f ind that the Hon‟ble High Court had observed that in the absence of ownership of the „toll road‟, which belonged to the Central Government, the assessee would not be entitled to claim depreciation on the same. The issue as to wheth er an Inf rastructure Development Company which had cons truc ted a „toll road‟ on BOT basis on the land owned by Central Government would be entitled to claim depreciation under Sec.32(1)(ii) in respect of its “right to collect toll” i.e an intangible asset, was not raised in both of the af oresaid cases. Our aforesaid view stands f ortif ied f rom a perusal of the order of the Hon‟ble High Court in the case of North Karnataka Express way Ltd. Vs. C IT-10(2015) 272 ITR 145 (Bom), wh erein at Para 20 the Hon‟ble High Court had observed, that the question bef ore them was as to when a person who is in the business of Inf rastruc ture Development constructs a road on build, operate and transf er (BOT) basis on the land owned by the Government, can it claim depreciation on such „toll road‟. We f ind that the Hon‟ble High Court had observed that though an Inf rastructure Development company which had constructed a road on BOT basis on land o wned by the Central Government, was not entitled to claim ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 11 - depreciation on the „‟toll roads” as it was not owner of the same, ho wever, it could def initely claim depreciation on its investments made in the project and such other asset in the f orm of building and plant and machinery etc. Accordingly, it was observed by the Hon‟ble High Court at Para 47 of its order, that the claim f or depreciation could be validly raised and granted to the extent stated hereinabove. Also, it was observed by the Hon‟ble High Court that it was concerned only wi th the claim of the assessee as regards depreciation on the road itself. To sum up, the Hon‟ble High Court in its af oresaid judgment, had confined its adjudication to the issue as to wh ether an Inf rastructure Development Company which had constructed a road on BOT basis on land o wned by the Central Government would be eligible to claim depreciation on such „toll road‟ so constructed and operated by it, or not. Accordingly, we are of the considered view, that the issue as to whether an Inf rastructure Development company which had constructed a road on build, operate and transf er (BOT) basis on the land o wn ed by the Central Government would be entitled to claim depreciation under Sec. 32(1)(ii) in respect of its intangible rights i.e “right to collect toll”, had not been adjudicated by the Hon‟ble High Court in its af oresaid order in the case of North Karnataka Express way Ltd. (supra). We f ind that the Hon‟ble High Court of Bombay had thereaf ter once again reiterated its af oresaid view, while disposing off the appeal of the revenue in the case of CIT-10 Vs. M/s West Gujarat Express way Ltd. (ITA No. 2357 of 2013, dated 05.04.2016). As is discernible f rom the order, the only two issues which were raised by the revenue in its af oresaid appeal bef ore the High Court, were viz. (i). Whether on the f acts and in the circumstances of the case and in la w, the Tribunal was right in directing the A.O to ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 12 - grant depreciation on assets not o wned by the Respondent that goes against provisions of Section 32 of the I.T Act?; and (ii). Whether on the f acts and in the circumstances of the case and in law, the Tribunal was right in its decision of treating toll roads as plant and machinery, when this is not as per rule 5 of New Appendix of the I.T Rules?. As such, we f ind, that the revenue had only sought the adjudication of the issue as to whether the Tribunal was right in allo wing depreciation to the assessee on “toll roads” by treating the same as plant and machinery. It is in the backdrop of the af oresaid issues which were raised by the revenue, that the Hon‟ble High Court by relying on its earlier order in the case of North Karnataka Express way Ltd. Vs. CIT-10 (2015) 372 ITR 145 (Bom), had concluded, that the issue therein involved was squarely covered by the said decision. Accordingly, the Hon‟ble High Court by drawi ng support f rom the observations recorded in its earlier order in the case of North Karnataka Express way Ltd., had therein ans wered the af oresaid two substantial questions of law in the negative i.e in f avour of the appellant revenue and against the respondent assessee. In our considered view, the Hon‟ble High Court in its af oresaid order i.e CIT-10, Vs. M/s West Gujarat Express way Ltd. (ITA No. 2357 of 2013, dated 05.04.2016), had conf ined its adjudication to the af oresaid two substantial questions of la w which were raised by the revenue before it. Our aforesaid vie w is f ortif ied by the order of a coordinate bench of the Tribunal, Mumbai in the case of Thiruvanthapuram Road Development Company Ltd. Vs. DCIT-14(3)(1), Mumbai [ITA NO. 622/Mum/2015, dated 23.05.2018]. In the af oresaid case involving f acts identical to those as in the case of the assessee before us, we f ind that the assessee had claimed that it was entitled f or depreciation on “right to collect toll” u/s ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 13 - 32(1)(ii) of the Act. Relying on the judgment of the Hon‟ble High Court of Bombay in the case of CIT-10, Vs. M/s West Gujarat Express way L td. (ITA No. 2357 of 2013, dated 05.04.2016), it was the claim of the revenue that the issue was covered agains t the assessee. We f ind, that the Tribunal rejected the af oresaid claim of the revenue, f or the reason, that the issue s regards the entitlement of an Inf rastruc ture Development company which had constructed a road on build, operate and transf er (BOT) basis on the land owned by the Central Government, towards claim depreciation under Sec. 32(1)(ii) in respect of its intangible rights i.e “right to collec t toll”, had not been adjudicated by the Hon‟ble High Court in its aforesaid order. In f act, it was observed by the Tribunal, that the Hon‟ble High Court in the af oresaid case had adjudicated, that an Inf rastructure Development company which had constructed a road on build, operate and transf er (BOT) basis on the land owned by the Central Government, would not be entitled to claim depreciation on such “toll road”. The observations of the Tribunal, are as under: “The Mumbai bench of the Tribunal in the af oresaid decision in ACIT Vs. M/s Andhra Pradesh Express way by a later decision dated 28/02/2018 duly considered various decisions including the decision reversed by the Hon‟ble High Court in CIT Vs. West Gujarat Expressway Ltd. (2016) 73 taxmann.com 139; (2017) 390 ITR 400 (Bom)., order dated 05/04/2016. Before us also, the Ld. C ITDR/Ld. D.R contended that in vie w of this decision f rom the Hon‟ble High Court, the assessee is not entitled to depreciation. We have gone through this order and f ound that the issue before the Hon‟ble High Court was with respect to treating toll road as plant and machinery and if that situation decided in f avour of the revenue.” In the backdrop of the aforesaid f acts, we are of the considered ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 14 - vie w that the reliance placed by the Ld. D.R on the af oresaid judgments of the Hon‟ble High Court of Bombay i.e North Karnataka Express way Ltd. Vs. CIT-10 (2015) 372 ITR 145 (Bom) and C IT-10, Vs. M/s West Gujarat Express way Ltd. (ITA No. 2357 of 2013, dated 05.04.2016), would not assist the case of the revenue f or rebutting the claim of the assessee towards deprecation u/s 32(1)(ii) in respect of its intangible rights i.e “right to collec t toll” . 10. We f ind that the „Special bench‟ of the Tribunal in the case of ACIT, Circle 10(2), Hyderabad, Vs. Progressive Construction Ltd. (2018) 191 TTJ 549 (Hyd.) (SB), had concluded, that wh ere an Inf rastructure Development company which had constructed a road on build, operate and transf er (BOT) basis on the land owned by the Central Government, gets vested wi th a right to an intangible asset under Explanation 3(b) r.w. Sec.32(1)(ii), the assessee would be eligible to claim depreciation on such asset as per the specif ied rate. Apart there from, it was observed by the Tribunal, that where the assessee had never claimed expenditure incurred f or construction of the road on build, operate and transf er (BOT) basis, as a def erred revenue expenditure, the same could not have been amortized in terms of CBDT Circular No. 9 of 2014, dated, 23.04.2014. The observations of the „Special bench‟ of the Tribunal, which seizes the issue under consideration bef ore us, are as under: 11. Undisputedly, for executing the project, assessee has incurred expenses of Rs.214 crore. It is also not disputed that as per the terms of the C.A., the Government of India is not obliged / required to reimburse the cost incurred by the assessee to execute / implement the project f acilities. The only right / benefit allo wed to the assessee by the Government of India is to operate the project / project ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 15 - f acilities during the concession period of 11 years 7 months and to collect toll charges f rom vehicles / persons using the project / project f acilities. Thus, as could be seen, the only manner in which the assessee can recoup the cos t incurred by it in implementing the project / project f acility is to operate the road during the concession period and collect the toll charges f rom user of the project f acility by third parties. Admittedly, the assessee has taken up the projec t as a business venture wi th a prof it motive and certainly not as a work of charity. Further, by investing huge some of Rs.214 crore, the assessee has obtained a valuable business / commercial right to operate the project f acility and collect toll charges. Theref ore, in our considered opinion, right acquired by the assessee f or operating the project f acility and collecting toll charges is an intangible asset created by the assessee by incurring the expenses of Rs.214 crore. The contention of the learned Senior Standing Counsel that expenditure of Rs.214 crore has brought into existence a tangible asset in the f orm 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 wi ll lead to a situation where both Government of India and the concessionaire will claim depreciation on the asset created with the very same expenditure, in our vie w, is not borne out f rom f acts on record. At the cost of repetition we must observe, as per the terms of agreement the expenses incurred by the assessee towards construction of the roads, bridges, etc., were not going to be reimbursed by the Governmen t of India. This fact was kno wn to both the parties bef ore the execution of the agreement as the tender itself has made it clear that the project is to be executed with private sector participation on BOT basis. Thus, f rom the very inception of the project, ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 16 - assessee was aware of the f act, it has to recoup the cost incurred in implementing the project along wi th the prof it from operating the road and collecting toll charges during the concession period. Therefore, assessee has capitalized the cost incurred on the BOT project on which it has claimed depreciation. Thus, in our view, the expenditure incurred by the assessee of Rs.214 crore for creating the project or projec t f acilities has created an intangible asset in the f orm of right to operate the project f acility and collect toll charges. Further, it is the conten tion of the learned Senior Standing Counsel that if at all any right is created under the C.A. f or collecting toll, such right accrued to the assessee on the date of execution of agreement i.e., 22nd December 2005, therefore, the expenditure incurred by such date should be the value of intangible asset which can alone be considered f or depreciation under section 32(1)(ii) of the Act. We are af raid, we cannot accept the above argument of the learned Senior Standing Counsel. When the C.A. conf ers a right on the assessee to operate the project f acility and collect toll charges over the concession period of 11 years and 7 months, the assessee can start operating and collecting toll charges only when the project f acility is ready for use. Theref ore, until the project is completed and ready f or use by vehicles or persons assessee cannot collect toll charges for user of the project f acilities. Thus, the right to operate the project f acility and collect toll charges is integrally connected to the completion of the project f acility which cannot be done unless the assessee invests its f und f or completing the project. Theref ore, keeping in vie w the af oresaid fact, it cannot be said that the right to collect toll has accrued to the assessee on the date of execution of the agreement. If we accept the af oresaid argument of the learned Senior Standing Counsel, in other words, it would mean that ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 17 - wi thout even executing and completing the project facility, assessee would be collec ting toll charges. Theref ore, the conten tion of the learned Senior Standing 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 intangible asset of enduring nature for the assessee, it is necessary no w to examine whether such intangible asset comes within the scope and ambit of section 32(1)(ii) of the Act. For this purpose, it is necessary to look into the said provision which is reproduced hereunder for the sake of convenience. Depreciation. 32(1)(ii) know-how, patents, copyrights, trade marks, licences, f ranchises or any other business or commercial righ ts of similar nature67, being intangible assets acquired on or after the 1st day of April, 1998, owned67, wholly or partly, by the assessee67 and used f or the purposes of the business67 or prof ession, the following deductions shall be allo we d— ] 12. Explanation 3 to section 32(1) def ines intangible asset as under:- 85[Explanation 3.—For the purposes of this sub-section, 86[the expression "assets"] shall mean— (a) tangible assets, being buildings, machinery, plant or furniture; (b) intangible assets, being know-how, patents, copyrights, trade marks, licences, f ranchises or any other business or commercial rights of similar nature87 . 13. A plain reading of the af oresaid provisions would indicate that certain kind of assets being knowhow, patents, copyrights, trademarks, license, f ranchise, or any other businesses or commercial rights of similar nature are to be treated as intangible asset and would be eligible for depreciation at the specif ied rate. It is the claim of the assessee that the right acquired under C.A. to operate the project f acility and collect toll charges is in the nature of ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 18 - license. However, the learned Senior Standing Counsel has strongly countered the af oresaid claim of the assessee by ref erring to the def inition of license as provided under the Indian Easements Act, 1882. For better appreciation, we intend to reproduce herein below the def inition of “license” as provided under sec tion 52 of the Indian Easements Act, 1882: - "License" def ined:- Where on person grants to another, or to a def inite 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 unlawf ul and such right does not amount to an easement or an interest in the property, the right is called a license.". 14. It has been the contention of the learned Senior Standing Counsel that as the term "license" has not been def ined under the Income Tax Act, 1961, the def inition of "license" under the Indian Easements Act, 1882, has to be looked into. Accepting the af oresaid conten tion of the learned Senior Standing Counsel, let us examine the def inition of "license" extracted herein above. A plain reading of section 52 of the Act makes it clear, 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 unlawful 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 f acts of the present case, vis-a- vis, the def inition of license under the Indian Easements Act, 1882, it would be clear that immovable property on which the project / project facility is executed / implemented is owned by the Government of India and it has f ull power 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 f acility during the concession ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 19 - period, on expiry of which the project / project f acility will revert back to the Government of India. What the Government of India has granted to the assessee is the right to use the project site during the concession period and in the absence of such right, it would have been unlawf ul on the part of the concessionaire to do or continue to do anything on such property. Ho wever, the right granted to the concessionaire has not created any right, title or interest over the property. 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 other wise would have been unlawf ul or not possible to do in the absence of the C.A. Thus, in our view, the right granted to the assessee under the C.A. to operate the project / project f acility and collect toll charges is a license or akin to license, hence, being an intangible asset is eligible f or 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)(ii) of the Act. In this context, it has been the conten tion of the learned Senior Standing Counsel that the intangible asset mentioned under section 32(1)(ii) of the Act are specif ically identif ied assets, except, the assets termed as “any other business or commercial rights of similarnature". He had submitted, applying the principle of ejusdem generis the rights ref erred to in the expression "any other business orcommercial rights of similar nature", should be similar to one or more of the specifically identified assets preceding such expression. The af oresaid contention of the learned Departmental Representative is unacceptable f or the reasons enumerated hereinaf ter. 16. We have already held earlier in the order that by incurring the expenditure of 'Rs.214 ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 20 - crore assessee has acquired the right to operate the project and collect toll charges. Theref ore, such right acquired by the assessee is a valuable business or commercial right because through such means, the assessee is going to recoup not only the cost incurred in executing the project but also with some amount of profit. Theref ore, there cannot be any dispute that the right to operate the project f acility and collect toll charges therefrom in lieu of the expenditure incurred in executing the project is an intangible asset created f or the enduring benef it of the assessee. Now, it has to be seen whether such intangible asset comes within the expression "any other business or commercial rights of similar nature". As could be seen f rom the def inition of intangible asset, specifically identified items like knowho w, patents, copyrights, trademarks, licenses, franchises are not of the same category, but, distinct from each other. However, one thing common amongst these assets is, they all are part of the tool of the trade and f acilitate smooth carrying on of business. Theref ore, any other intangible asset which may not be identif iable with the specified items, but, is of similar nature would come wi thin the expression “any other business or commercial rights of similar nature". The Hon'ble Supreme Court in CIT v/s Smif s Securities (supra) af ter interpreting the def inition of intangible asset as provided in Explanation 3 to section 32(1), while opining that principle of ejusdem generis would strictly apply in interpreting the def inition of intangible asset as provided by Explanation 3(b) of section 32, at the same time, held that even applying the said principle „good will' would f all under the expression "any other businessor commercial rights of similar nature". Thus, as could be seen, even though, „goodwill' is not one of the specif ically identifiable assets preceding the expressing "any other business or commercial rights ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 21 - of similar nature", ho wever, the Hon'ble Supreme Court held that „good will' will come within the expression "any other business or commercial rights of similar nature". Theref ore, the conten tion of the learned Senior Standing Counsel that to come within the expression "any otherbusiness or commercial rights of similar nature" the intangible asset should be akin to any one of the specifically identifiable assets is not a correct interpretation of the statutory provisions. Had it been the case, then „good will' would not have been treated as an intangible asset. T he Hon'ble Delhi High Court in case of Areva T and D In dia Ltd. (supra), while interpreting the af oresaid expression by applying the principles of ejusdem generis observed, the right as f inds place in the expression “business or commercial rights of similar nature” need not ans wer the description of knowhow, patents, trademarks, license or f ranchises, but must be of similar nature as the specif ied asset. The Court observed, looking at the meaning of categories of specified intangible assets ref erred to in sec tion 32(1)(ii) of the Act preceding the term “businessor commercial 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 orcommercial rights of similar nature”, af ter the specified 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 which were neither visible nor possible to exhaustively enumerate. The Hon'ble Court, theref ore observed, in the circumstances the nature of business or commercial right cannot be res tric ted only to knowho w, patents, trademarks, copyrights, licence or franchise. The Court observed, any intangible assets which are invaluable and result in smoothly carrying on ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 22 - the business as part of the tool of the trade of the assessee would come within the expression “any other business or commercial righ t of similar nature”. 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 assessee's claim of depreciation on BSE Membership Card, af ter interpreting the provisions of section 32(1)(ii), held that as the membership card allows a member to participate in a trading session on the floor of the exchange, such membership is a business or commercial right, hence, similar to license or f ranchise, therefore, an intangible asset. In the present case, undisputedly by virtue of C.A. the assessee has acquired the right to operate the toll road / bridge and collec t toll charges in lieu of inves tment made by it in implementing the project. Therefore, the right to operate the toll road / bridge and collect toll charges is a business or commercial right as envisaged 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 as an intangible asset. Thus, we ans wer the question f ramed by the SpecialBench as under:- The expenditure incurred by the assessee f or construction of road under BOT contract by the Government of India has given rise to an intangible asset as def ined under Explanation 3(b) r/ w section 32(1)(ii) of the Ac t. Hence, assessee is eligible to claim depreciation on such asset at the specified rate. 18. In vie w of our af oresaid conclusion, there is no need to ans wer the second part of the question f ramed. This disposes of grounds no.2, 3, 5 and 6.” We f ind that the af oresaid order of the „Special bench‟ of the Tribunal, had thereaf ter been f ollowed by the ITAT “J” bench, Mumbai, in the case of DCIT, Circle-9(1)(2),Mumbai Vs. M/s Atlanta Ltd. Mumbai (ITA No. 3415/Mum/2015, ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 23 - dated 24.01.2018). Also, a similar view had been taken by the ITAT, Chennai in the case of ACIT, cooperative circle 5(2), Chennai Vs. M/s PNG Toll Way Ltd (ITA No. 238/CHNNY/2019, dated 26.07.2019. In the backdrop of the aforesaid judicial pronouncements, we are of the considered view that the issue as to whether an Inf rastructure Development company which had constructed a road on build, operate and transf er (BOT) basis on the land o wn ed by the Central Government would be eligible for claim of depreciation in respect of its intangible rights i.e “right to collect toll” under Sec. 32(1)(ii), is squarely covered by the aforesaid order of the „Special bench‟ of the Tribunal in the case of ACIT, Circle 10(2), Hyderabad, Vs. Progressive Construc tion Ltd. (2018) 191 TTJ 549 (Hyd.) (SB), and also the orders of the coordinate benches of the Tribunal viz. (i) DCIT, Circle9(1)(2),Mumbai Vs. M/s Atlanta Ltd. Mumbai (ITA No. 3415/Mum/2015, dated 24.01.2018); and (ii) ACIT Vs. M/s PNG Tata Ltd. ( ITA No. 238/CHNNY/2019, dated 26.07.2019. We thus f inding ourselves to be in agreement wi th the view taken by the Tribunal in the af oresaid cases, respectf ully f ollow the same. Accordingly, the claim of the assessee to wards depreciation under Sec.32(1)(ii) in respect of its intangible rights i.e “right to collec t toll”, being in conf ormity with the mandate of law, is f ound to be in order. We thus concur with the view taken by the CIT(A), and not f inding any inf irmity in his order, uphold the same. 11. The appeal filed by the revenue is dismissed. C.O. No. 84/Mum/2018 A.Y. 2011-12 12. 12 As we have dismissed the appeal of the revenue, therefore, f inding no reason to advert the cross objections filed by the assessee, which are admittedly stated by the ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 24 - ld. A.R to be supportive in nature, we dismiss the same as having been rendered as academic in nature. 13. The Cross Objections f iled by the assessee are dismissed in terms of our af oresaid observations. 14. The appeal filed by the revenue and the cross objec tions f iled by the assessee, are both dismissed in terms of our af oresaid observations. 8. We find the present facts in respect of claim of depreciation on toll rights are similar to earlier assessment year. Accordingly we follow the judicial precedence and set aside the order of the CIT(A) and direct the assessing officer to allow the claim of depreciation and allow the grounds of appeal in favour of the assessee. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 29.03.2022. Sd/- Sd/- (PRASHANT MAHARISHI) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 29.03.2022 KRK, PS /Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent. ITA No. 3147/Mum/2019 Sagar Damoh Toll Roads Ltd, Mumbai. - 25 - 3. आ र आ / The CIT(A) 4. आ र आ ( ) / Concerned CIT 5. "#$ % & &' , आ र ) र*, Mumbai / DR, ITAT, Mumbai 6. % +, - . / Guard file. ान ु सार/ BY ORDER, " & //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai