THE DCIT, CIRCLE3(1), VISAKHAPATNAM., Visakhapatnam V. M/s Godavari Toll Bridge Pvt. Ltd., Visakhapatnam

ITA 337/VIZ/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6482 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C DAS; B C S NAIK
• Assessee Lawyers: C V S MURTHY
• Keywords: Capital asset; Depreciation; Wholly owned subsidiary; Capital expenditure
• Section: 143(3); 32; 148; 11

Judgement Text

ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . # % , ' BEFORE SHRI D. MANMOHAN, VICE PRESIDENT & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NOS.337, 338 & 339/VIZAG/2012 ( / ASSESSMENT YEARS: 2007-08 TO 2009-10) DCIT, CIRCLE - 3(1), VISAKHAPATNAM GODAVARI TOLL BRIDGE PVT. LTD., VISAKHAPATNAM [PAN NO. AACCG7208D ] ( ) / APPELLANT) ( *+) / RESPONDENT) C.O. NOS.37, 38 & 39/VIZAG/2016 (ARISING OUT OF I.T.A.NOS.337, 338 & 339/VIZAG/2012 ) ( / ASSESSMENT YEARS: 2007-08 TO 2009-10) GODAVARI TOLL BRIDGE PVT. LTD., VISAKHAPATNAM ACIT, CIRCLE - 3(1), VISAKHAPATNAM ( ) / APPELLANT) ( *+) / RESPONDENT) / APPELLANT BY : SHRI B.C.S. NAIK, DR & SHRI K.C. DAS, DR / RESPONDENT BY : SHRI C.V.S. MURTHY, AR / DATE OF HEARING : 04.12.2017 / DATE OF PRONOUNCEMENT : 08.12.2017 ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 2 / O R D E R PER D. MANMOHAN, VICE PRESIDENT: THESE CROSS APPEALS PERTAIN TO THE ASSESSMENT YEAR S 2007-08 TO 2009-10 AND THEY ARE DIRECTED AGAINST THE COMMON OR DER PASSED BY THE CIT(A), VISAKHAPATNAM. SINCE THE ISSUE INVOLVED IN ALL THESE APPEALS IS IDENTICAL, WE PROCEED TO DISPOSE OF THESE APPEALS B Y A COMBINED ORDER, FOR THE SAKE OF CONVENIENCE. 2. ASSESSEE COMPANY IS BEING RUN IN THE NAME AND ST YLE OF GODAVARI TOLL BRIDGE PRIVATE LIMITED AND IT WAS INCORPORATE D IN THE YEAR 2006 AS A WHOLLY OWNED SUBSIDIARY OF NAVAYUGA ENGINEERING C OMPANY LIMITED (NECL). A BRIDGE WAS CONSTRUCTED ACROSS THE GAUTAM I BRANCH OF THE RIVER GODAVARI BETWEEN YANAM AND YEDURLANKA ON BOT CONTRACT BASIS BY NECL, THE HOLDING COMPANY OF THE ASSESSEE. NECL CO MPLETED THE CONSTRUCTION DURING THE YEAR 2002-03 AND STARTED CO LLECTING TOLL FEE. IT HAS SHOWN IT AS A CAPITAL ASSET IN ITS BALANCE SHEE T AND IT WAS CLAIMING DEPRECIATION FROM YEAR TO YEAR, WHICH WAS ALLOWED B Y THE DEPARTMENT. 3. SINCE THE ASSESSEE COMPANY IS A WHOLLY OWNED SUB SIDIARY OF NECL AND IT WAS INCORPORATED AS A SPECIAL PURPOSE VEHICL E FOR THE PURPOSE OF EFFECTIVE ADMINISTRATION AND MANAGEMENT OF THE SAID BRIDGE, NECL DECIDED TO TRANSFER THE RIGHT OVER BOT ASSET TO THE ASSESSEE AND ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 3 PERMITTED THEM TO OPERATE, MAINTAIN AND COLLECT TOL L, VIDE A RESOLUTION PASSED IN THE MEETING OF ITS BOARD OF DIRECTORS HEL D ON 31.3.2006. THE DIRECTORS OF ASSESSEE COMPANY ALSO HAVE ACCEPTED TH E RESOLUTION PASSED BY NECL. 4. SINCE THE ASSESSEE COMPANY OWNS A RIGHT OVER BOT ASSET DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2 007-08, IT CLAIMED DEPRECIATION ON THE TOLL BRIDGE, U/S 32(1) OF THE I NCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT'). SINCE THE ASSES SEE COMPANY IS NOT THE OWNER OF THE ASSET (TOLL BRIDGE) BUT CLAIMED DEPREC IATION ON IT, THE A.O. WAS OF THE OPINION THAT THE INCOME CHARGEABLE TO TA X ESCAPED ASSESSMENT AND ACCORDINGLY ISSUED NOTICES U/S 148 O F THE ACT FOR THE YEARS UNDER CONSIDERATION AND THEREAFTER THE MATTER WAS TAKEN UP FOR SCRUTINY. ON PERUSING THE DETAILS AND THE WRITTEN SUBMISSIONS FURNISHED BY THE ASSESSEE, DURING THE COURSE OF HEARING, AND UPON DISCUSSING THE CASE WITH THE ASSESSEE AND ITS A.R., THE A.O. WAS OF THE VIEW THAT THE ASSESSEE COMPANY IS NOT ENTITLED TO CLAIM DEPRECIAT ION ON AN ASSET, WHICH IS NOT OWNED BY THE COMPANY. IN THIS REGARD, IT OBSERVED THAT THE BRIDGE WAS BUILT BY NECL UNDER BUILD, OPERATE AND T RANSFER (BOT) SCHEME OF GOVERNMENT OF ANDHRA PRADESH UNDER PUBLIC PRIVATE PARTICIPATION (PPP) MODE WITH 80% OF GOVERNMENT SUB SIDY ON THE TOTAL COST OF ` 86 CRORES, AND AN AGREEMENT DATED 6.10.1999 WITH ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 4 GOVERNMENT OF ANDHRA PRADESH. THE BRIDGE WAS ACCOR DINGLY CONSTRUCTED DURING THE YEAR 2002-03 AND IT WAS OPEN ED TO PUBLIC W.E.F. 5.10.2002 AND NECL STARTED COLLECTING THE TOLL FEES . LATER ON, THE HOLDING COMPANY TRANSFERRED THE RIGHT OVER THE BRID GE TO THE ASSESSEE COMPANY (IN THE MONTH OF MARCH, 2006) FOR A CONSIDE RATION ` 125 CRORES, THOUGH THE WRITTEN DOWN VALUE OF THE BRIDGE AS ON THE DATE OF TRANSFER IS ` 13.46 CRORES ONLY. THE CASE OF THE ASSESSEE WAS T HAT THE VALUE OF THE BRIDGE HAS BEEN FIXED ON THE BASIS OF FUTURE EARNINGS IN THE FORM OF TOLL COLLECTIONS. DURING THE REMAINING CON CESSION PERIOD, THE ASSESSEE COMPANY PAID THE CONSIDERATION IN THE FORM OF ADMISSION OF THE OUTSTANDING LOAN OF ` 10.30 CRORES, WHICH WAS SUBSEQUENTLY CONVERTED INTO SHARE APPLICATION MONEY AS THE LOAN WAS REPAID BY NECL AND THE BALANCE OF ` 114.70 CRORES PAID WAS ADJUSTED BY WAY OF ALLOTMEN T OF FULLY PAID EQUITY SHARES OF ` 10/- EACH AT A PREMIUM OF ` 990/-. 5. THOUGH THE VALUE OF THE BRIDGE IS TAKEN AT ` 125 CRORES IN THE BOOKS OF THE ASSESSEE COMPANY, FOR THE PURPOSE OF C LAIMING DEPRECIATION UNDER THE INCOME TAX ACT, THE VALUE OF THE BRIDGE I S TAKEN AT ` 13.46 CRORES ONLY, WHICH IS THE WDV AS ON THE DATE OF TRAN SFER OF THE BRIDGE TO THE ASSESSEE COMPANY. ACCORDING TO THE ASSESSING O FFICER, THE OWNERSHIP OF THE BRIDGE AND APPROACHES CONTINUE TO VEST WITH THE GOVERNMENT SINCE NO ENTERPRISE CAN IMPOSE ANY RESTR ICTIONS WHATSOEVER ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 5 IN THIS REGARD. UNDER THESE CIRCUMSTANCES, THE A.O . CONCLUDED THAT THE OWNERSHIP OF THE BRIDGE LIES WITH THE GOVERNMENT OF ANDHRA PRADESH IN WHICH EVENT, ASSESSEE COMPANY CANNOT BE TREATED AS OWNER OF THE BRIDGE SO AS TO CLAIM DEPRECIATION U/S 32 OF THE AC T. 6. THE CLAIM OF DEPRECIATION WAS BASED UPON A DECIS ION OF THE ITAT, HYDERABAD BENCH, WHEREIN, UNDER IDENTICAL CIRCUMSTA NCES, THE ITAT, HYDERABAD BENCH DECLARED THAT DEPRECIATION IS ALLOW ABLE TO THE ASSESSEE, WHICH IS NOW MANAGING THE TOLL BRIDGE. 7. THE A.O. HAD TAKEN INTO CONSIDERATION THE CLAUSE S OF BOT AGREEMENT ENTERED INTO WITH THE OWNER OF ASSET TO H IGHLIGHT THAT THE OWNERSHIP OF THE LAND TOGETHER WITH THE BRIDGE SHAL L VEST WITH THE GOVERNMENT AND THE ENTERPRISE CANNOT IMPOSE ANY RES TRICTIONS WHATSOEVER IN THIS REGARD. ASSESSEE CAN ONLY COLLE CT TOLL FEE FOR A PERIOD OF 15 YEARS FROM THE DATE OF ITS OPERATION AND THER E AFTER, IT HAS TO HAND OVER THE ASSET TO THE GOVERNMENT OF ANDHRA PRADESH FREE OF COST. THEREFORE, DEPRECIATION CLAIMED U/S 32 OF THE ACT W AS NOT ACCEPTED BY THE A.O. THOUGH THE LD. COUNSEL RELIED UPON THE DE CISION IN THE CASE OF NECL (ITA NO.1050 TO 1053/HYD/2009), THE A.O. DISTI NGUISHED THE DECISION ON THE GROUND THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF ITAT AND FILED A REFERENCE APPEAL BEFOR E THE HONBLE HIGH ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 6 COURT OF ANDHRA PRADESH AND TILL REACHES FINALITY A ND THE MATTER NEEDS TO BE KEPT ALIVE. ACCORDINGLY, THE CLAIM OF DEPRECIAT ION BY THE ASSESSEE COMPANY WAS REJECTED. 8. AGGRIEVED, ASSESSEE PREFERRED APPEALS BEFORE THE LD. CIT(A) CONTENDING, INTER-ALIA, THAT THE SUM AND SUBSTANCE OF THE CLAUSES OF THE CONCESSIONAL AGREEMENT BETWEEN GOVERNMENT OF ANDHRA PRADESH AND NECL OUGHT TO HAVE BEEN TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER TO APPRECIATE THAT THE ASSESSEE CAN BE CONS IDERED AS A OWNER OF THE ASSET IN WHICH EVENT, CLAIM OF DEPRECIATION OUG HT TO HAVE BEEN ACCEPTED BY THE A.O. 9. LD. CIT(A) WAS OF THE OPINION THAT IN THE CASE O F NECL, DEPRECIATION ON THE SAME BRIDGE WAS ALLOWED IN THE HANDS OF NECL THOUGH THE DEPARTMENT HAS TAKEN A STAND THAT IT IS NOT THE OWNER OF THE BRIDGE. BASED ON THE SAME LOGIC, THE RIGHTS OVER T HE SAID BRIDGE HAVING BEEN TRANSFERRED TO THE ASSESSEE COMPANY, DEPRECIAT ION IS ALLOWABLE TO THE ASSESSEE COMPANY ON THE SAID BRIDGE. ACCORDING LY, THE A.O. WAS DIRECTED TO ALLOW DEPRECIATION ON THE BRIDGE, IN TH E HANDS OF THE ASSESSEE COMPANY. 10. AGGRIEVED, REVENUE PREFERRED APPEALS BEFORE THE TRIBUNAL. SINCE THE CLAIM OF DEPRECIATION WAS ALLOWED, THE ASSESSEE DID NOT CHOSE TO ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 7 PREFER APPEALS AGAINST THE ORDERS PASSED BY THE CIT (A) BUT BY TAKING ADVANTAGE OF THE APPEALS FILED BY THE REVENUE, IT C HOSE TO FILE CROSS OBJECTIONS TO SUPPORT THE CLAIM OF DEDUCTION BY RAI SING THE FOLLOWING GROUND: ALTERNATIVELY, THE RESPONDENT ASSESSEE (ASSESSEE ) IS ELIGIBLE FOR AMORTIZATION OF THE EXPENDITURE INCURRED AS REDUCED BY THE DEPRECIATION ALLOWED IN THE EARLIER YEARS IN TERMS OF PARA 7 OF THE CIRCULAR OF CBDT NO.9 OF 2014 DATED 23.4.2014. 11. LD. D.R. STRONGLY RELIED UPON THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT TO SUBMIT THAT THIS ISSUE WAS CON SIDERED THREAD BEAR BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF NOR TH KARNATAKA EXPRESSWAY LIMITED VS. CIT 51 TAXMANN.COM 214, WHER EIN THE COURT WAS OF THE OPINION THAT THE ASSESSEE CAN NEVER BE C ONSIDERED TO BE OWNER OF THE ROADS EITHER UNDER GENERAL LAW OR UNDE R THE INCOME TAX ACT. THE HONBLE COURT ALSO REFERRED TO VARIOUS JU DGEMENTS TO HOLD THAT EVEN MUNICIPAL CORPORATION, BY LAYING ROADS, WOULD NOT BECOME OWNER OF THE LAND AS THEIR ROLE IS LIMITED TO LAYING DOWN ROADS AND NOT TO HAVE CONTROL OVER THE PUBLIC PATHWAYS. THUS, THE COURT HELD THAT THE CLAIM OF OWNERSHIP OF THE ASSESSEE CANNOT BE, BY ANY STRETCH OF IMAGINATION, BETTER THAN THE MUNICIPAL CORPORATION; IN FACT UNDE R THE NATIONAL HIGHWAYS ACT, 1956, THE CENTRAL GOVERNMENT CAN ISSU E A NOTIFICATION FROM TIME TO TIME TO ENTRUST THE NATIONAL HIGHWAY A UTHORITY, THE JOB OF LAYING DOWN THE ROADS EITHER ON THEIR OWN OR THROUG H ANY AGENCY. ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 8 THEREFORE, AT BEST, THE NATIONAL HIGH WAY VESTING I N THE UNION MAY VEST ANY SUCH AUTHORITY IN TERMS OF NOTIFICATION U/S 11 OF THE NATIONAL HIGHWAYS ACT BUT MERELY BECAUSE THE CENTRAL GOVERNM ENT OR AN AUTHORITY CAUSES DEVELOPMENT AND MAINTENANCE OF THE NATIONAL HIGHWAY BY INVOLVING A PRIVATE ENTITY OR PRIVATE PARTY DOES NOT MEAN THAT THE SAID PRIVATE PARTY CAN ENJOY OR CLAIM THE RIGHTS OF THE CENTRAL GOVERNMENT. THE COURT ALSO OBSERVED THAT THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF NOIDA TOLL BRIDGE COMPANY 213 TAXMANN 333 H AS NOT PROPERLY APPRECIATED THE MATTER AND THUS, THE HONBLE BOMBAY HIGH COURT DID NOT FOLLOW THE SAID JUDGEMENT. IN THIS REGARD, THE HON BLE BOMBAY HIGH COURT OBSERVED AS UNDER: 50. NONE OF THE ABOVE MATERIAL WAS PLACED BEFORE T HE DIVISION BENCH OF ALLAHABAD HIGH COURT WHICH DECIDED CIT V. NOIDA TOLL BRIDGE CO. LTD. [2013] 213 TAXMAN 333/30 TAXMANN.COM207. WITH GREATEST RESPECT, THE CONCLUSION OF THE DIVISION BENCH RESTS ONLY ON SECTION 32 OF THE INCOME TAX ACT, 1961. IT FOLLOWED THE HONBLE SUPRE ME COURTS JUDGEMENT IN MYSORE MINERAL LTD. (SUPRA) BUT WITH G REAT RESPECT, FAILED TO REFER TO THE PROVISIONS OF THE NATIONAL HIGHWAYS AC T, 1956 OR THE NATIONAL HIGHWAYS AUTHORITY OF INDIA ACT, 1988. APART THERE FROM THE CLAIM OF DEPRECIATION ON TOLL ROADS/BRIDGE WAS ALLOWED BY TH E COMMISSIONER OF INCOME TAX (APPEALS) AND REVENUES APPEAL BEFORE THE DIVISION BENCH MET WITH SIMILAR FATE. WE ARE UNABLE TO AGREE WITH THE OBSERVATIONS AND CONCLUSIONS OF THE DIVISION BENCH IN PARA 25 OF THE JUDGEMENT IN INCOME TAX APPEAL NO.316 OF 2011. 12. THE LD. D.R. VEHEMENTLY ARGUED THAT THE EARLIER DECISION OF THE HONBLE ALLAHABAD HIGH COURT CANNOT BE TREATED AS P RECEDENT ON ACCOUNT OF THE FACT THAT THE PROVISIONS UNDER THE N ATIONAL HIGHWAYS AUTHORITY ACT WERE NOT AT ALL CONSIDERED BY THE HON BLE HIGH COURT AND ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 9 THUS THE LATEST STATEMENT OF THE HONBLE BOMBAY HIG H COURT, WHICH IS A WELL REASONED JUDGEMENT AND THE ONLY JUDGEMENT ON T HIS ISSUE, DESERVES TO BE FOLLOWED. 13. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ASSESSEE IS A WHOLLY OWNED SUBSIDIARY OF M /S. NAVAYUGA ENGINEERING COMPANY, WHICH HAS ORIGINALLY INCURRED THE EXPENDITURE FOR LAYING DOWN THE BRIDGE ON BOT BASIS. IN FACT, NECL CLAIMED DEPRECIATION ON THE TOLL BRIDGE IN THE EARLIER YEAR S, WHICH WAS REJECTED BY THE A.O. BUT ULTIMATELY ACCEPTED BY THE ITAT. S INCE THE SAME ASSET HAS BEEN TRANSFERRED TO THE PRESENT ASSESSEE, THE D ECISION OF THE HYDERABAD BENCH OF ITAT IS BINDING AND NEEDS TO BE FOLLOWED. IT WAS FURTHER CONTENDED THAT THE A.O. IS DUTY BOUND TO FO LLOW THE DECISION OF SUPERIOR AUTHORITY AND CANNOT IGNORE THE SAID JUDGE MENT MERELY BECAUSE IT IS NOT ACCEPTING THE VIEW TAKEN BY THE I TAT. IT WAS ALSO CONTENDED THAT IDENTICAL ISSUE HAD COME UP BEFORE T HE ITAT SPECIAL BENCH, HYDERABAD IN THE CASE OF PROGRESSIVE CONSTRU CTIONS LIMITED IN ITA NO.1845/HYD/2014 DATED 14.2.2017. THE DECISION OF THE SPECIAL BENCH WAS RENDERED ON 14.2.2017 AND THEREFORE, IT D ESERVES TO BE FOLLOWED, PARTICULARLY WHEN THERE ARE TWO VIEWS POS SIBLE IN THE MATTER, HAVING REGARD TO THE DECISION OF THE HONBLE ALLAHA BAD HIGH COURT IN FAVOUR OF THE ASSESSEE. ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 10 14. LD. COUNSEL ALSO SUBMITTED THAT THOUGH THE ASSE SSEE CANNOT BE TREATED AS OWNER IN STRICT TECHNICAL SENSE, IT CAN ALWAYS CLAIM DEPRECIATION U/S 32 OF THE ACT EVEN ON AN INTANGIBL E ASSET; SINCE THE RIGHT IS VESTED IN THE ASSESSEE TO BUILD, OPERATE A ND MAINTAIN ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION. THOUGH HE SOUGHT T O DISTINGUISH THE DECISION OF THE HONBLE BOMBAY HIGH COURT ON THE GR OUND THAT THE ISSUE WAS LIMITED TO THE APPLICABILITY OF SECTION 32 OF T HE ACT, NOTHING SPECIFIC WAS POINTED OUT AS TO HOW THE JUDGEMENT IS DISTINGU ISHABLE. THE LD. COUNSEL HAS MAINLY FOCUSED ON THE POINT THAT IT IS AN INTANGIBLE ASSET IN THE FORM OF TOLL BRIDGE PROJECT AND IT WOULD COME W ITHIN THE EXPRESSION ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF SIMILAR NATURE. HE ALSO POINTED OUT THAT THE CLAIM OF THE ASSESSEE IS ALSO SUPPORTED BY THE CIRCULAR ISSUED BY CBDT (CIRCULAR NO.9/2014 DATED 2 3.4.2014), WHEREIN THE CENTRAL BOARD VIRTUALLY ACCEPTED THAT IT IS A C APITAL EXPENDITURE ON WHICH THE ASSESSEE IS ENTITLED TO THE CLAIM OF AMOR TISATION. IN THE SAID CIRCULAR, IT WAS MENTIONED THAT IN A CASE WHERE AN ASSESSEE CLAIMED ANY DEDUCTION OUT OF INITIAL COST OF DEVELOPMENT OF INF RASTRUCTURE FACILITY IN THE EARLIER YEARS, THE TOTAL DEDUCTIONS CLAIMED IN THE ASSESSMENT YEARS UNDER CONSIDERATION MAY BE DEDUCTED FROM THE INITIA L COST OF THE PROJECT AND THE COST SO REDUCED SHALL BE AMORTISED EQUALLY OVER THE REMAINING PERIOD OF TOLL CONCESSIONAIRE AGREEMENT. LD. COUNS EL SUBMITS THAT THE ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 11 SPIRIT OF THE CIRCULAR IS THAT THE RIGHT TO OPERATE THE TOLL BRIDGE GIVES THE ASSESSEE A RIGHT TO CLAIM AMORTISATION BY TREATING THE EXPENDITURE AS CAPITAL EXPENDITURE. IN OTHER WORDS, IT IS AN INT ANGIBLE ASSET ON WHICH ASSESSEE IS ENTITLED TO CLAIM DEDUCTION. IT WAS AL SO CONTENDED THAT EVEN IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2011-12, THE A.O. ACCEPTED THE CLAIM OF DEPRECIATION IN THE ORDER PAS SED U/S 143(3). FROM ASSESSMENT YEAR 2014-15 ONWARDS, ASSESSEE AMOR TISED THE EXPENDITURE, AS PER THE BOARDS CIRCULAR AND THE CL AIM WAS ACCEPTED BY THE TAX AUTHORITIES. IT WAS THUS CONTENDED THAT WH EN THERE IS NO DECISION OF THE JURISDICTIONAL HIGH COURT AND WHEN THERE ARE TWO VIEWS POSSIBLE ON THE ISSUE, THE ONE WHICH IS IN FAVOUR O F THE ASSESSEE SHOULD BE ADOPTED. 15. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RECORD. WE HAVE ALSO CAREFULLY PERUSED THE JUD GEMENT OF THE HONBLE BOMBAY HIGH COURT AS WELL AS THE ALLAHABAD HIGH COURT REFERRED TO THEREIN. IT IS NO DOUBT TRUE THAT THE HONBLE B OMBAY HIGH COURT HAS CONSIDERED THE ISSUE ELABORATELY BY REFERRING TO TH E PROVISIONS UNDER THE NATIONAL HIGHWAY ACT BUT THE FACT REMAINS THAT UNDE R SIMILAR CIRCUMSTANCES NOT ONLY THE HONBLE ALLAHABAD HIGH C OURT HAD TAKEN A VIEW IN FAVOUR OF THE ASSESSEE BUT EVEN THE SPECIAL BENCH OF THE ITAT HAD TAKEN A VIEW THAT ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION AND THE ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 12 ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2011-12 H AD ACCEPTED THE CLAIM OF THE ASSESSEE. IN FACT CIRCULAR NO.9 OF 20 14 ISSUED BY THE BOARD PERMITTING THE ASSESSEE TO CLAIM AMORTISATION OF TH E EXPENDITURE ALSO SHOWS THAT THE EXPENDITURE INCURRED BY THE ASSESSEE HAS TO BE TREATED AS A CAPITAL EXPENDITURE AND BY TREATING IT AS INTA NGIBLE ASSET THE EXPENDITURE HAS TO BE ALLOWED AS DEDUCTION IN EACH YEAR, SO AS TO ARRIVE AT REAL PROFIT. THE PROVISIONS OF DEPRECIATION OR AMORTISATION ARE ONLY AIMED AT ARRIVING AT THE TRUE PROFIT, THOUGH THE ME THODOLOGY IS DIFFERENT. SINCE THE TAX AUTHORITIES HAVE ACCEPTED THE CLAIM O F AMORTISATION FROM 2014 ONWARDS AND EVEN IN 2011-12, IT HAS ALLOWED DE PRECIATION, UNDER PROCEEDINGS U/S 143(3) OF THE ACT, APART FROM THE F ACT THAT IN THE CASE OF THE HOLDING COMPANY, THE CLAIM OF DEPRECIATION W AS CONSISTENTLY BEING ALLOWED, IN WHICH EVENT, IT MAY NOT BE PROPER , FOR THE INTERREGNUM PERIOD TO DISALLOW THE CLAIM OF DEPRECIATION. SINC E THERE ARE TWO JUDGEMENTS OF TWO DIFFERENT HIGH COURTS, WE ADOPT T HE VIEW, WHICH IS IN FAVOUR OF THE ASSESSEE, IN THE BACKDROP OF THE FACT S AND CIRCUMSTANCES OF THE CASE AND HOLD THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION IN THE YEARS UNDER CONSIDERATION. 16. SINCE THE ORDER OF THE LD. CIT(A) IS UPHELD BY DISMISSING THE APPEALS OF THE REVENUE, IT IS NOT NECESSARY FOR US TO GO INTO THE MERITS OF THE CLAIM OF THE ASSESSEE, URGED BY WAY OF CROSS OB JECTIONS. ITA NOS.337, 338 & 339/VIZAG/2012 & CO NOS.37, 38 & 39/VIZAG/2016 GODAVARI TOLL BRIDGE PVT. LTD., VSKP 13 17. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALSO DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 8 TH DEC17. SD/- SD/- ( . . # % ) ( . ) (D.S. SUNDER SINGH) (D. MANMOHAN) ' /ACCOUNTANT MEMBER /VICE PRESIDENT $ /VISAKHAPATNAM: ( /DATED : 08.12.2017 VG/SPS *$ +$ /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE DCIT, CIRCLE-3(1), VISAKHAPA TNAM 2. / THE RESPONDENTS (1) M/S. GODAVARI TOLL BRIDGE PVT. LTD., 48-9-17, DWARAKANAGAR, VISAKHAPATNAM (2) THE ACIT, CIRCLE-3( 1), VISAKHAPATNAM 3. , / THE CIT-1, VISAKHAPATNAM 4. , ( ) / THE CIT (A), VISAKHAPATNAM 5. $ / , / , $ / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM