M/s. Deepak & Company Infra Pvt. Ltd. , Sri Ganganagar V. ITO, Ward-1, Sriganagnagar

ITA 36/JODH/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7281 (ITAT-JODHPUR)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 07-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANCHITA KUMAR
• Keywords: Revision of order; Depreciation; Business expenditure; Principle of natural justice; Additional depreciation; Tangible material; Competent authority; Revised return; Set aside
• Section: 147; 263; 143(3); 142(1); 80IA; 13; 119; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH , JODHPUR BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM ITA. NO. 36/JODH/2021 ASSESSMENT YEARS : 2015-16 M/S DEEPAK & COMPANY INFRA PVT. LTD. H. NO. 450, AGGARSAIN NAGAR, SRI GANGANAGAR VS. ITO, WARD -1, SRI GANGANAGAR PAN/GIR NO.: AAECD7124R APPELLANT RESPONDENT ASSESSEE BY : SH. RAJENDRA JAIN (ADV.) & SH. MOHIT SONI (CA) REVENUE BY : SMT. SANCHITA KUMAR (CIT) DATE OF HEARING : 12/08/2021 DATE OF PRONOUNCEMENT : 07/09/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF LD. PR. CIT-1, JODHPUR PASSED U/S 263 OF THE ACT DA TED 11.03.2021 FOR A.Y 2015-16. 2. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE ASSESSEE COMPANY DERIVES INCOME FROM EXECUTION OF C ONTRACT WORK AND IS ALSO ENGAGED IN THE BUSINESS OF CONSTRUCTION OF ROADS, HIGHWAYS ON BOT AGREEMENT. THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 29/09/2015 AND SUBSEQUENTLY ON 24.06.2016 HAD FILED REVISED RETURN OF INCOME. THE CASE OF ASSESSEE WAS SELECTED UNDER LIM ITED SCRUTINY TO EXAMINE FOLLOWING ISSUES:- ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 2 A] DEPRECIATION CLAIMED AT HIGHER RATE/HIGHER ADDITIO NAL DEPRECIATION CLAIMED. B] MISMATCH IN SALES TURNOVER REPORTED IN AUDIT REPOR T & ITR. C] MISMATCH IN AMOUNT PAID TO RELATED PERSON U/S 40A( 2)(B) REPORTED IN AUDIT REPORT & ITR. 3. DURING THE ASSESSMENT PROCEEDINGS, THE AO HAD RA ISED THE QUERIES IN RESPECT OF ISSUES FOR WHICH THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY. THE ASSESSEE HAD FURNISHED T HE EXPLANATION AND DOCUMENTARY EVIDENCES AS REQUIRED BY THE AO AND THE AO AFTER DUE VERIFICATION OF ISSUES FROM THE DOCUMENTA RY EVIDENCES AND SUPPORTING JUDGMENTS AND CBDT CIRCULARS HAD PASSED THE ASSESSMENT ORDER IN A JUDICIAL MANNER. 4. IT WAS SUBMITTED THAT THE LD PCIT THEREAFTER HAD ISSUED A NOTICE U/S 263 OF THE ACT ON TWO ISSUES NAMELY, DED UCTION CLAIM U/S 80IA AND EXCESS CLAIM OF DEPRECIATION ON CONSTRUCTI ON OF ROAD (AS PER BOT AGREEMENT). DURING THE REVISION PROCEEDINGS, T HE ASSESSEE HAD EXPLAINED THAT ITS CASE WAS SELECTED FOR LIMITED SC RUTINY ON THE ISSUES AS MENTIONED ABOVE. THEREFORE THE ISSUE OF DEDUCTION C LAIMED U/S 80IA OF THE ACT IS BEYOND THE JURISDICTION OF PCIT U/S 263 OF THE ACT. FURTHER THE DEPRECIATION (AMORTIZATION) CLAIMED ON ROAD CON STRUCTION AS PER THE CBDT CIRCULAR NO. 9/2014 DATED 23/04/2014 AND THESE FACTS WERE DULY VERIFIED BY THE LD AO DURING THE ASSESSMENT PROCEED INGS. THE LD PCIT IN THE IMPUGNED ORDER U/S 263 OF THE ACT HOWEVER HE LD THAT THE ASSESSMENT ORDER PASSED BY THE LD AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 3 5. IT WAS SUBMITTED THAT THE ORDER PASSED BY THE LD PCIT IS NOT ONLY CONTRARY TO THE PROVISIONS OF THE LAW BUT ALSO CONTRARY TO THE DECISION OF VARIOUS COURTS. IT WAS SUBMITTED THAT AS REGARDS TO THE CLAIM OF DEDUCTION U/S 80IA, THE ISSUE RAISED BY TH E PCIT IS BEYOND THE SCOPE OF LIMITED SCRUTINY AND THEREFORE THE SAI D REASON ON WHICH THE LD PCIT HAD ISSUED THE NOTICE U/S 263 AND ACQUI RED THE JURISDICTION IS NOT ONLY ILLEGAL BUT ALSO AGAINST T HE CIRCULAR ISSUED BY THE CBDT AND IN SUPPORT, RELIANCE WAS PLACED ON DEC ISIONS OF JAIPUR BENCH IN THE CASE OF MAHENDRA SINGH DHANKHAR (HUF) VS ACIT REPORTED IN (2021) 35 NYPTTJ 458 (JP) AND PUNE BENC H IN THE CASE OF M/S STOREWELL CONSTRUCTION & ENGINEERS, V/S PR. CIT IN ITA NO. 768/PUN/2019 DATED 05.12.2019. IT WAS ACCORDINGLY S UBMITTED THAT CONSEQUENT DIRECTION ISSUED BY THE LD PCIT IS BEYON D HIS JURISDICTION AND AS SUCH SAME MAY KINDLY BE QUASHED. 6. AS REGARDS CLAIM OF DEPRECIATION (AMORTIZATION) ON ROAD, IT WAS SUBMITTED THAT THE ASSESSEE HAD CONSTRUCTED THE ROA DS UNDER BOT AGREEMENT AND THEREFORE CLAIMED AMORTIZATION ON THE BASIS OF REMAINING PERIOD PRESCRIBED UNDER SUCH AGREEMENT IN THE RETUR N OF INCOME. IT WAS SUBMITTED THAT THE CIRCULAR NO. 09/2014 ISSUED BY C BDT SPECIFICALLY PROVIDES THE TREATMENT OF EXPENDITURE INCURRED FOR DEVELOPMENT OF ROADS/ HIGHWAYS IN BOT AGREEMENTS UNDER INCOME TAX ACT. IT WAS SUBMITTED THAT THE LETTER OF ACCEPTANCE FOR BOT PRO JECTS AND THE RETURN OF INCOME, AUDIT REPORT ETC. WHEREIN THE ASS ESSEE HAD CLAIMED AMORTIZATION ON THE ROAD EXPENSES ARE AVAILABLE ON RECORD. FURTHER THE AMORTIZATION OF ASSETS CLAIMED BY THE ASSESSEE WAS WITHIN THE PURVIEW OF CIRCULAR NO. 9/2014 ISSUED BY CBDT WHICH SPECIFICALLY PROVIDES THAT THE AMORTIZATION ALLOWABLE MAY BE COM PUTED AT THE RATE WHICH ENSURES THAT THE WHOLE OF THE COST INCURRED I N CREATION OF ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 4 INFRASTRUCTURAL FACILITY OF ROAD/HIGHWAY IS AMORTIZ ED EVENLY OVER THE PERIOD OF CONCESSIONAIRE AGREEMENT AFTER EXCLUDING THE TIME TAKEN FOR CREATION OF SUCH FACILITY. 7. IT WAS SUBMITTED THAT DURING THE YEAR UNDER CONS IDERATION, THE ASSESSEE HAS CLAIMED AMORTIZATION FOR TWO ROADS (I. E. LAXMANGARH - SALASAR ROAD AND SRIGANGANAGAR - PADAMPUR ROAD) AND AS REQUIRED BY THE BENCH, THE RECONCILIATION STATEMENT OF THE C LAIM OF AMORTIZATION ON CONSTRUCTION OF ROADS UNDER BOT AGR EEMENTS IN THE AUDIT REPORT AND IN THE REPLY FILED BEFORE LD AO IS AS FOLLOWS: AS PER REPLY DATED 27/11/2017 BEFORE LD. AO 4,01,84,929 AS PER AUDIT REPORT: 1. LAXMANGARH- SALASAR ROAD 1,39,79,176 2. SRIGANGANAGAR- PADAMPUR ROAD 2,62,05,753 4,01,84,929 8. IT WAS SUBMITTED THAT THE ASSESSEE IN RESPONSE T O THE NOTICE ISSUED BY LD AO U/S 142(1) HAD BROUGHT ON RECORD T HAT THE ASSESSEE COMPANY WAS INCORPORATED ON 12/06/2013 I.E. IN AY 2 014-15 AND THE ASSESSEE HAS CLAIMED AMORTIZATION IN AY 2014-15 & A Y 2015-16 AS PER THE CBDT CIRCULAR NO. 9/2014 DATED 23/04/2014. IT W AS SUBMITTED THAT THE CLAIM MADE BY THE ASSESSEE WAS DULY CERTIFIED B Y C.A. AND WAS IN ACCORDANCE WITH THE CIRCULAR AND DECISIONS OF HONOR ABLE COURT. IT WAS ACCORDINGLY SUBMITTED THAT THE OBSERVATIONS OF LD P CIT THAT 'AS PER CBDT CIRCULAR NO. 09/2014 DATED 23.04.2014, DEPRECI ATION IS TO BE ALLOWED TO THE ASSESSEE ENGAGED IN DEVELOPING OF RO AD AND HIGHWAYS IN BOT AGREEMENTS ON THE BASIS OF PROVISIONS OF SEC TION 32(1)(II) OF THE ACT.' IS CLEARLY ARBITRARY AND CONTRARY TO THE CBDT CIRCULAR. ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 5 9. IT WAS SUBMITTED THAT THE AO AFTER DUE CONSIDERA TION THE CIRCULAR ISSUED BY THE CBDT AND THE SUBMISSION OF THE ASSESS EE HAD REACHED THE JUDICIAL DECISION WHICH CANNOT BE BRANDED AS ERRONE OUS. FURTHER, ON THE SIMILAR ISSUES, THE VARIOUS HON'BLE COURTS AND TRIB UNALS HAD CONSIDERED THE CIRCULAR AND ALLOWED THE CLAIM. IN LIGHT OF ABO VE, THE DIRECTION ISSUED BY THE PCIT IS NOT ONLY CONTRARY TO THE PRINCIPLE O F LAW BUT ALSO AGAINST THE PRINCIPLE OF NATURAL JUSTICE. THEREFORE THE ORD ER PASSED BY THE LD PCIT MAY KINDLY BE QUASHED. 10. PER CONTRA, THE LD. CIT/DR SUBMITTED THAT DURIN G THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN GROSS RECEIPT S OF RS.5,73,49,487/- FROM CONTRACTORSHIP BUSINESS, TOLL COLLECTION OF RS.4,12,69,020/- FROM SHRIGANGANAGAR-PADAMPUR ROAD AND RS.3,72,66,473/- FROM LAXMANGARH-SALASAR ROAD. APAR T FROM THESE RECEIPTS, THE ASSESSEE HAS ALSO SHOWN OTHER RECEIPT S OF RS.8,73,575/-. ON THE GROSS RECEIPTS OF RS.13,67,58,558/-, GROSS P ROFIT OF RS.62,15,997/- WAS SHOWN AND AFTER CLAIMING DEDUCTI ON OF RS.35,92,846/- U/S 80IA, THE ASSESSEE HAS SHOWN TAX ABLE INCOME OF RS.26,23,150/-. 11. IT WAS SUBMITTED THAT AS PER PROVISIONS OF SECT ION 80IA(6) OF THE ACT AND RULE 18BBE OF THE INCOME-TAX RULES, DEDUCTI ON IS AVAILABLE ON THE PROFIT OF HOUSING OR OTHER ACTIVITIES, WHICH AR E INTEGRAL PART OF A HIGHWAY PROJECT AND FOR CLAIMING DEDUCTION, THE ASS ESSEE HAS TO MAINTAIN SEPARATE ACCOUNTS FOR THE SAID ACTIVITIES AND SUBMIT A REPORT FOR EACH UNDERTAKING OR ENTERPRISE ACCOMPANIED BY PROFI T AND LOSS ACCOUNT AND BALANCE SHEET OF THE UNDERTAKING OR ENTERPRISE. FURTHER, AS PER RULE 18BBB OF THE INCOME-TAX RULES, IN CASE OF AN ENTERP RISE CARRYING ON THE BUSINESS OF DEVELOPING OR OPERATING AND MAINTAINING OR DEVELOPING, ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 6 OPERATING AND MAINTAINING AN INFRASTRUCTURE FACILIT Y, THE FORM SHALL BE ACCOMPANIED BY A COPY OF THE AGREEMENT OF THE ENTER PRISE WITH THE CENTRAL OR STATE GOVERNMENT OR THE LOCAL AUTHORITY FOR CARRYING ON BUSINESS OF DEVELOPING OR OPERATING AND MAINTAINING OR DEVELOPING, OPERATING AND MAINTAINING AN INFRASTRUCTURE FACILIT Y. 12. IT WAS SUBMITTED THAT IN THE INSTANT CASE, NO S EPARATE BOOKS OF ACCOUNT, PROFIT & LOSS ACCOUNT, BALANCE SHEET AS PE R RULE 18BBB WAS MAINTAINED BY THE ASSESSEE FOR WHICH SEPARATE FORM 10CCB WAS REQUIRED TO BE FILED. THE ASSESSEE HAS FILED A SING LE FORM 10CCB FOR ITS ENTIRE BUSINESS. APART FROM THIS, IN COLUMN NO. 13 OF THE FORM L0CCB, THE ASSESSEE HAS CLAIMED TO HAVE ATTACHED AGREEMENT AS REQUIRED UNDER RULE 18BBB, BUT NO SUCH AGREEMENT WAS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR CALLED FOR BY THE AO. THE AO HAS FAILED TO VERIFY THE CLAIM OF THE ASSESSEE VIZ-A-VIZ THE COND ITIONS LAID DOWN IN INCOME-AX ACT AND IN INCOME-TAX RULES AS MENTIONED ABOVE. THE AO WAS THEREFORE RIGHTLY DIRECTED BY LD PCIT TO EXAMIN E THE CLAIM OF THE ASSESSEE AS PER THE CONDITIONS LAID DOWN U/S 80IA R EAD WITH RULE 18BBB AND RULE 18BBE OF THE INCOME-TAX RULES. 13. IT WAS SUBMITTED THAT AS PER DEPRECIATION AND A MORTIZATION CHART OF THE AUDIT REPORT, THE ASSESSEE HAS CLAIMED THE V ALUE OF PADAMPUR TOLL ROAD AT RS. 15,32,47,295/- AS ON 05.09.2012, WRITTE N DOWN VALUE OF WHICH WAS SHOWN AT RS. 15,20,30,334/- ON 31.03.2014 . THE ASSESSEE HAS CLAIMED DEPRECIATION AND AMORTIZATION AT THE RA TE OF 9.12% ON THIS TOLL ROAD WHICH COMES TO RS. 1,39,79,176/- IN THE P & L ACCOUNT,. SIMILARLY, THE ASSESSEE HAS SHOWN THE VALUE OF SALA SAR TOLL ROAD AT RS. 10,68,69,665/- AS ON 09.08.2012, WDV OF WHICH AS ON 31.03.2014 WAS SHOWN AT RS. 8,58,54,355/-. IN THE YEAR UNDER REFER ENCE, THE ASSESSEE ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 7 HAS CLAIMED DEPRECIATION AND AMORTIZATION OF RS. 2, 62,05,753/- AT THE RATE OF 24.52% ON THIS TOLL ROAD. AS PER NOTE 20 GI VEN FOR DEPRECIATION AND AMORTIZATION EXPENSES, THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS. 4,16,44,363/- UNDER THIS HEAD. 14. IT WAS SUBMITTED THAT AS PER THE CBDT CIRCULAR NO. 09/2014 DATED 23.04.2014, DEPRECIATION IS TO BE ALLOWED TO THE AS SESSEE ENGAGED IN DEVELOPING OF ROAD AND HIGHWAYS IN BOT AGREEMENTS O N THE BASIS OF PROVISIONS OF SECTION 32(1)(II) OF THE ACT. BUT IN THE INSTANT CASE, THE ASSESSEE HAS CLAIMED DEPRECIATION AND AMORTIZATION AT HIGHER RATE. IN RESPECT OF SUCH CLAIM NO DETAIL/EXPLANATION WAS OFF ERED BY THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. TH E AO ALSO DID NOT VERIFY THE CLAIM OF DEPRECIATION AS PER THE PROVISI ONS OF SECTION 32(1)(II) AND ALLOWED THE SAME AS CLAIMED BY THE ASSESSEE. TH E AO WAS THEREFORE RIGHTLY DIRECTED BY LD PCIT TO VERIFY THE CLAIM OF DEPRECIATION AND AMORTIZATION EXPENSES OF THE ASSESSEE AS PER PR OVISIONS OF SECTION 32(1)(II) OF THE ACT AFTER SEEKING RELEVANT DETAILS AND DOCUMENTS FROM THE ASSESSEE. FURTHER, RELIANCE WAS PLACED ON EXPLA NATION (2) TO SECTION 263(1) OF THE ACT. IT WAS SUBMITTED THAT THE ASSESS MENT ORDER PASSED U/S 143(3) HAS BEEN RIGHTLY HELD TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT WAS ACCORDINGLY SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER SO PASSED B Y THE LD. PR. CIT AND THE SAME SHOULD BE CONFIRMED AND APPEAL OF THE ASSE SSEE BE DISMISSED. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. BROADLY, TWO ISSUES HAVE BEEN RAISED BY THE LD. PR. CIT WHILE ISSUING THE SHOW CAUSE U/S 263 OF THE ACT. THE FIRST ISSUE RELATES TO CLAIM OF DEDUCTION OF RS 35,92,846 /- U/S 8OIA OF THE ACT IN RESPECT OF WHICH NO SEPARATE BOOKS OF ACCOUN TS HAVE BEEN ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 8 MAINTAINED BY THE ASSESSEE AS REQUIRED U/S 80IA(6) R/W RULE 18BBB, NO SEPARATE FORM 10CCB HAS BEEN FILED AND THE AO HA S FAILED TO VERIFY THE SAID CLAIM OF THE ASSESSEE. IN THIS REG ARD, THE LIMITED CONTENTION WHICH HAS BEEN RAISED BEFORE US IS THAT THE CASE OF THE ASSESSEE WAS SELECTED FOR LIMITED SCRUTINY AND MATT ER RELATING TO CLAIM OF DEDUCTION U/S 80IA WAS NOT SUBJECT MATTER OF LIMITED SCRUTINY AND THEREFORE, THE SHOW-CAUSE BY THE LD PCIT U/S 26 3 ON SUCH A MATTER IS BEYOND THE SCOPE OF HIS JURISDICTION U/S 263 OF THE ACT. WE HAD AN OCCASION TO EXAMINE THE JURISDICTION OF THE LD PCIT U/S 263 IN CASE OF MATTERS INITIALLY SELECTED FOR LIMITED SCRU TINY IN CASE OF M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT (SUPRA) AND I T WOULD BE RELEVANT TO REPRODUCE OUR FINDINGS THEREIN AS THE S AME ARE EQUALLY RELEVANT IN THE CONTEXT OF THE CONTENTIONS ADVANCED BY THE LD AR IN THE PRESENT CASE. IN THE SAID CASE, WE HAVE HELD AS UN DER: 17. THERE IS NO DISPUTE THAT SCOPE OF ENQUIRY IN C ASE OF LIMITED SCRUTINY IS ONLY TO THE EXTENT OF THE ISSUES FOR WH ICH CASE WAS SELECTED FOR SCRUTINY UNDER CASS. THE CBDT HAS ISSU ED INSTRUCTIONS FROM TIME TO TIME IN THIS RESPECT AND HAS SPECIFICALLY INSTRUCTED THE TAXING AUTHORITIES THAT SCOPE OF ENQ UIRY SHOULD BE LIMITED TO VERIFICATION OF ALL THE PARTICULARS FOR WHICH LIMITED SCRUTINY WAS TAKEN UP UNDER CASS. HOWEVER, IN CASE DURING THE ASSESSMENT PROCEEDING IF THE AO IS OF THE VIEW THAT SUBSTANTIAL VERIFICATION OF OTHER ISSUE IS ALSO REQUIRED THEN T HE CASE MAY BE TAKEN UP FOR COMPREHENSIVE SCRUTINY WITH THE APPROV AL OF THE PR.CIT/DIT CONCERNED. IT IS ALSO INSTRUCTED THAT SU CH AN APPROVAL SHALL BE ACCORDED BY THE PR.CIT/DIT IN WRITING AFTE R BEING SATISFIED ABOUT THE MERITS OF THE ISSUE(S) NECESSIT ATING WIDER AND DETAILED SCRUTINY IN THE CASE. IN THE LATEST INSTRU CTION NO. 5/ 2016 ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 9 DATED 14-07-2016, CBDT HAS AGAIN INSTRUCTED THE TAX ING AUTHORITIES IN PARA 2 TO 4 AS UNDER:- 2. IN ORDER TO ENSURE THAT MAXIMUM OBJECTIVITY IS MAINTAINED IN CONVERTING A CASE FALLING UNDER LIMI TED SCRUTINY INTO A COMPLETE SCRUTINY CASE, THE MATT ER HAS BEEN FURTHER EXAMINED AND IN PARTIAL MODIFICATION T O PARA 3(D) OF THE EARLIER ORDER DATED 29.12.2015, BOARD H EREBY LAYS DOWN THAT WHILE PROPOSING TO TAKE UP COMPLETE SCRUTINY IN A CASE WHICH WAS ORIGINALLY EARMARKED FOR LIMITED SCRUTINY, THE ASSESSING OFFICER (AO) SH ALL BE REQUIRED TO FORM A REASONABLE VIEW THAT THERE IS PO SSIBILITY OF UNDER ASSESSMENT OF INCOME IF THE CASE IS NOT EX AMINED UNDER COMPLETE SCRUTINY. IN THIS REGARD, THE MONE TARY LIMITS AND REQUIREMENT OF ADMINISTRATIVE APPROVAL F ROM PR. CIT/CIT/PR. DIT/DIT, AS PRESCRIBED IN PARA 3(D) OF EARLIER INSTRUCTION DATED 29.12.2015, SHALL CONTINUE TO REM AIN APPLICABLE. 3. FURTHER, WHILE FORMING THE REASONABLE VIEW, THE ASSESSING OFFICER WOULD ENSURE THAT: A. THERE EXISTS CREDIBLE MATERIAL OR INFORMATION AV AILABLE ON RECORD FOR FORMING SUCH VIEW; B. THIS REASONABLE VIEW SHOULD NOT BE BASED ON MERE SUSPICION, CONJECTURE OR UNRELIABLE SOURCE; AND C. THERE MUST BE A DIRECT NEXUS BETWEEN THE AVAILAB LE MATERIAL AND FORMATION OF SUCH VIEW. 4. IT IS FURTHER CLARIFIED THAT IN CASES UNDER LIM ITED SCRUTINY, THE SCRUTINY ASSESSMENT PROCEEDINGS WOUL D INITIALLY BE CONFINED ONLY TO ISSUES UNDER LIMITED SCRUTINY ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 10 AND QUESTIONNAIRES, ENQUIRY, INVESTIGATION ETC. WOU LD BE RESTRICTED TO SUCH ISSUES. ONLY UPON CONVERSION OF CASE TO COMPLETE SCRUTINY AFTER FOLLOWING THE PROCEDURE O UTLINED ABOVE, THE AO MAY EXAMINE THE ADDITIONAL ISSUES BES IDES THE ISSUE(S) INVOLVED IN LIMITED SCRUTINY. THE AO SHALL ALSO EXPEDITIOUSLY CONCERNED REGARDING CONDUCTING COMPL ETE SCRUTINY IN SUCH CASES. 18. THUS THE AO IS DUTY BOUND TO FOLLOW THE INSTRUC TIONS IN CASE LIMITED SCRUTINY ASSESSMENT PROCEEDING ARE PROPOSED TO BE CONVERTED INTO COMPLETE SCRUTINY AND WITHOUT FOLLOW ING SAID PROCEDURE AND NECESSARY APPROVAL OF THE COMPETENT A UTHORITY CONDUCTING AN ENQUIRY ON THE ISSUE WHICH IS OUTSIDE THE LIMITED SCRUTINY WOULD BE BEYOND THE JURISDICTION OF THE AO . AS A NECESSARY COROLLARY, THE PR. CIT U/S 263 CANNOT BE PERMITTED TO TRAVERSE BEYOND THE JURISDICTION THAT WAS VESTED WI TH THE A.O WHILE FRAMING THE ASSESSMENT AS WHAT CANNOT BE DONE DIRECTLY CANNOT BE DONE INDIRECTLY. THEREFORE, WHERE THE MAT TER WAS SELECTED FOR LIMITED SCRUTINY, REVISIONAL JURISDICT ION CANNOT BE EXERCISED FOR BROADENING THE SCOPE OF JURISDICTION THAT WAS ORIGINALLY VESTED WITH THE A.O WHILE FRAMING THE AS SESSMENT AS ALSO HELD CONSISTENTLY BY VARIOUS BENCHES OF THE TR IBUNAL AS REFERRED SUPRA. 19. A CONTENTION WHICH HAS BEEN RAISED BY THE LD CI T/DR IS THAT WHERE THERE IS A POTENTIAL ESCAPEMENT OF INCOME, TH E AO IS REQUIRED TO CONVERT THE LIMITED SCRUTINY CASE INTO A COMPREHENSIVE SCRUTINY CASE AFTER TAKING THE PRIOR APPROVAL OF LD . PCIT AND IF THE ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 11 AO DOES NOT GET THE LIMITED SCRUTINY CASE CONVERTED TO COMPREHENSIVE SCRUTINY CASE EVEN THOUGH THERE ARE M ATERIAL ON RECORD, THE ASSESSMENT ORDER BECOMES ERRONEOUS AS I T IS PREJUDICIAL TO THE INTEREST OF REVENUE AND PROVISIO NS OF SECTION 263 OF THE ACT ARE APPLICABLE. FOR THE PURPOSES OF CONVERTING LIMITED SCRUTINY TO COMPLETE SCRUTINY, WHAT IS RELE VANT IS THAT THERE MUST BE SOME CREDIBLE MATERIAL OR INFORMATION ON FACE OF THE RECORD AND BASIS REVIEW THEREOF DURING THE ASSE SSMENT PROCEEDINGS, THE AO IS REQUIRED TO FORM A REASONABL E VIEW THAT THERE IS POSSIBILITY OF UNDER ASSESSMENT OF INCOME IF THE CASE IS NOT EXAMINED UNDER COMPLETE SCRUTINY AND AFTER SE EKING APPROVAL FROM THE COMPETENT AUTHORITY, THE CASE CAN BE CONVERTED INTO COMPLETE SCRUTINY AND THAT TOO, DURI NG THE CURRENCY OF ASSESSMENT PROCEEDINGS. THEREFORE, WHA T IS ESSENTIAL IS THE EXISTENCE OF CREDIBLE MATERIAL AND BASIS EXA MINATION THEREOF AND FORMATION OF BELIEF BY THE AO AT FIRST PLACE DU RING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THERE IS A CASE OF U NDER ASSESSMENT OR ESCAPEMENT OF INCOME WHICH IS SIMILAR TO PROVISIONS OF SECTION 147 OF THE ACT. IN THE INSTAN T CASE, WE FIND THAT THE ASSESSEE, BEING IN BUSINESS OF REAL ESTATE DEVELOPMENT HAS FOLLOWED PERCENTAGE COMPLETION METHOD OF ACCOUN TING AND HAS ACCOUNTED FOR ACTUAL COSTS INCURRED THOUGH AFTE R THE END OF THE FINANCIAL YEAR AS THE PROJECT WAS SUBSTANTIALLY COMPLETED AND REVENUES HAVE BEEN RECOGNIZED. THEREFORE, WE FIND T HAT THERE IS NO INFIRMITY IN ASSESSEE FOLLOWING THE ACCEPTED MET HOD OF ACCOUNTING AND BASIS THEREOF, DETERMINATION OF INCO ME WHICH IS OFFERED TO TAX AND THUS, WE FIND THAT THERE WAS NO TANGIBLE MATERIAL OR INFORMATION AVAILABLE DURING THE COURSE OF ASSESSMENT ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 12 PROCEEDINGS BASIS WHICH REASONABLE BELIEF CAN BE FO RMED OF ESCAPEMENT OR UNDER ASSESSMENT OF INCOME AND WHICH COULD HAVE LED THE AO TO SEEK PERMISSION TO CONVERT LIMIT ED SCRUTINY INTO COMPLETE SCRUTINY. THEREFORE, THE AO NOT SEEKI NG PERMISSION TO CONVERT LIMITED SCRUTINY TO COMPLETE SCRUTINY IS NOT BORNE OUT OF FACTS ON RECORD. EVEN FOR SAKE OF ARGUMENTS, IF WE WERE TO ASSUME THAT THERE IS MATERIAL ON RECORD POINTING TO WARDS POTENTIAL ESCAPEMENT OF INCOME AND WHICH HAS ESCAPED THE ATTE NTION OF THE AO DURING LIMITED SCRUTINY ASSESSMENT PROCEEDIN GS AND NO ACTION HAS BEEN TAKEN BY HIM, IT IS NOT THAT THE RE VENUE DOESNT HAVE ANY RECOURSE AND CORRECT COURSE OF ACTION WOUL D HAVE BEEN FOR AO TO RECORD HIS SATISFACTION AND INVOKE JURISD ICTION U/S 147 OF THE ACT SUBJECT OF COURSE TO SATISFACTION OF CONDIT IONS SPECIFIED THEREIN RATHER THAN THE LD PCIT INVOKING JURISDICTI ON U/S 263 OF THE ACT. AS WE HAVE DISCUSSED EARLIER, THE REVISIONAL J URISDICTION U/S 263 CANNOT BE EXERCISED FOR BROADENING THE SCOPE OF JURISDICTION THAT WAS ORIGINALLY VESTED WITH THE A.O WHILE FRAMI NG THE ASSESSMENT AND ENLARGING HIS SCOPE OF ENQUIRY. 16. IN THE AFORESAID DECISION, WE HAVE HELD THAT TH E SCOPE OF ENQUIRY IN CASE OF LIMITED SCRUTINY IS ONLY TO THE EXTENT O F THE ISSUES FOR WHICH CASE WAS SELECTED FOR SCRUTINY UNDER CASS. THE CBDT HAS ISSUED INSTRUCTIONS FROM TIME TO TIME IN THIS RESPECT AND HAS SPECIFICALLY INSTRUCTED THE TAXING AUTHORITIES THAT SCOPE OF ENQ UIRY SHOULD BE LIMITED TO VERIFICATION OF ALL THE PARTICULARS FOR WHICH LI MITED SCRUTINY WAS TAKEN UP UNDER CASS AND THE AO IS DUTY BOUND TO FOLLOW TH E SAID INSTRUCTIONS. IT WAS FURTHER HELD IN THE SAID CASE THAT THE PR. C IT U/S 263 CANNOT BE PERMITTED TO TRAVERSE BEYOND THE JURISDICTION THAT WAS VESTED WITH THE ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 13 A.O WHILE FRAMING THE ASSESSMENT AS WHAT CANNOT BE DONE DIRECTLY CANNOT BE DONE INDIRECTLY. THEREFORE, WHERE THE MAT TER WAS SELECTED FOR LIMITED SCRUTINY, REVISIONAL JURISDICTION CANNOT BE EXERCISED FOR BROADENING THE SCOPE OF JURISDICTION THAT WAS ORIGI NALLY VESTED WITH THE A.O WHILE FRAMING THE ASSESSMENT AS ALSO HELD CONSI STENTLY BY VARIOUS BENCHES OF THE TRIBUNAL. FURTHER, WE HAVE HELD IN THE SAID CASE THAT WHERE THERE IS MATERIAL ON RECORD POINTING TOWARDS POTENTIAL ESCAPEMENT OF INCOME AND WHICH HAS ESCAPED THE ATTE NTION OF THE AO DURING LIMITED SCRUTINY ASSESSMENT PROCEEDINGS AND NO ACTION HAS BEEN TAKEN BY HIM, IT IS NOT THAT THE REVENUE DOESNT HA VE ANY RECOURSE AND CORRECT COURSE OF ACTION WOULD HAVE BEEN FOR AO TO RECORD HIS SATISFACTION AND INVOKE JURISDICTION U/S 147 OF THE ACT SUBJECT OF COURSE TO SATISFACTION OF CONDITIONS SPECIFIED THEREIN RAT HER THAN THE LD PCIT INVOKING JURISDICTION U/S 263 OF THE ACT. 17. THE AFORESAID FINDINGS APPLIES EQUALLY IN THE I NSTANT CASE WHERE IT IS AN UNDISPUTED FACT THAT THE CASE OF THE ASSESSEE WAS SELECTED FOR LIMITED SCRUTINY FOR EXAMINING CLAIM OF DEPRECIATIO N AT HIGHER RATE/HIGHER ADDITIONAL DEPRECIATION, MISMATCH IN SA LES TURNOVER REPORTED IN AUDIT REPORT & ITR AND MISMATCH IN AMOU NT PAID TO RELATED PERSON U/S 40A(2)(B) REPORTED IN AUDIT REPO RT & ITR. THUS, THE CLAIM OF THE DEDUCTION U/S 80IA WAS CLEARLY NOT THE SUBJECT MATTER OF LIMITED SCRUTINY AND WHERE THE AO HAS FAILED TO EXA MINE AND VERIFY THE SAID CLAIM OF THE ASSESSEE, THE ORDER SO PASSED BY THE AO CANNOT BE HELD AS ERRONEOUS AS THE SAME WAS NOT WITHIN THE SC OPE OF LIMITED SCRUTINY AT FIRST PLACE AND THE AO IS DUTY BOUND TO RESTRICT HIMSELF TO THE REASONS RECORDED FOR WHICH THE CASE WAS SELECTE D FOR LIMITED SCRUTINY. WE, THEREFORE, AGREE WITH THE CONTENTION S ADVANCED BY THE LD ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 14 AR THAT ON THIS MATTER, REVISIONAL JURISDICTION U/S 263 CANNOT BE EXERCISED BY THE LD PCIT AS THE SAME WOULD TANTAMOU NT TO BROADENING THE SCOPE OF JURISDICTION THAT WAS ORIGINALLY VESTE D WITH THE A.O WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT IN CAS E OF LIMITED SCRUTINY CASE. 18. NOW, COMING TO THE SECOND ISSUE FOR WHICH THE SHOW-CAUSE WAS ISSUED BY THE LD PCIT. IT RELATES TO CLAIM OF DEPR ECIATION/AMORTIZATION RELATING TO TWO ROADS/HIGHWAY STRETCHES NAMELY, SRI GANGANAGAR PADAMPUR ROAD AND LAXMANGARH SALASAR ROAD CONSTRU CTED BY THE ASSESSEE COMPANY UNDER BOT AGREEMENT. AS PER LD PC IT, THE AO HAS FAILED TO CARRY OUT THE NECESSARY EXAMINATION AND V ERIFICATION OF SAID CLAIM OF DEPRECIATION/AMORTIZATION INSPITE OF THE F ACT THAT ONE OF THE REASONS FOR WHICH THE MATTER WAS SELECTED FOR LIMIT ED SCRUTINY WAS TO VERIFY THE CLAIM OF DEPRECIATION AT HIGHER RATES/AD DITIONAL DEPRECIATION. AS PER LD PCIT, AS PER THE CBDT CIRCULAR NO. 09/201 4 DATED 23.04.2014, DEPRECIATION IS TO BE ALLOWED TO THE ASSESSEE ENGAG ED IN DEVELOPING OF ROAD AND HIGHWAYS IN BOT AGREEMENTS ON THE BASIS OF PROVISIONS OF SECTION 32(1)(II) OF THE ACT. BUT IN THE INSTANT CA SE, THE ASSESSEE HAS CLAIMED DEPRECIATION AND AMORTIZATION AT HIGHER RAT E. IN RESPECT OF SUCH CLAIM, NO DETAIL/EXPLANATION WAS OFFERED BY THE ASS ESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE AO ALS O DID NOT VERIFY THE CLAIM OF DEPRECIATION AS PER THE PROVISIONS OF SECTION 32(1)(II) AND ALLOWED THE SAME AS CLAIMED BY THE ASSESSEE. PER CO NTRA, THE CONTENTION ADVANCED BY THE ASSESSEE IS THAT IT HAS CLAIMED AMORTIZATION OF THE COST INCURRED IN CONSTRUCTION/DEVELOPMENT OF THESE TWO STRETCHES OF THE HIGHWAYS EVENLY OVER THE PERIOD OF CONCESSIO NAIRE AGREEMENT IN ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 15 ACCORDANCE WITH THE CBDT CIRCULAR NO. 9/2014 DATED 23.04.2014 AND THE MATTER WAS ENQUIRED AND DULY EXAMINED BY THE AS SESSING OFFICER. 19. WE THEREFORE FIND THAT CONTENTIONS ADVANCED BY BOTH THE PARTIES AS TO THE CLAIM OF AMORTIZATION IS GUIDED B Y CBDT CIRCULAR NO. 9/2014 DATED 23.04.2014 AND IT WOULD THEREFORE BE A PPROPRIATE TO REFER TO THE CONTENTS OF THE SAID CIRCULAR AS UNDER : IT HAS COME TO THE NOTICE OF THE BOARD THAT DISPUT ES HAVE ARISEN AS TO WHETHER THE EXPENDITURE INCURRED ON DEVELOPMENT AND CONSTRUCTION OF INFRASTRUCTURAL FACILITIES LIKE ROADS/HIGHWAYS ON B UILD-OPERATE-TRANSFER (`BOT`) BASIS WITH RIGHT TO COLLECT TOLL IS ENTITLE D FOR DEPRECIATION UNDER SECTION 32(1)(II) OF THE ACT OR THE SAME CAN BE AMO RTIZED BY TREATING IT AS AN ALLOWABLE BUSINESS EXPENDITURE UNDER THE RELE VANT PROVISIONS OF THE INCOME-TAX ACT, 1961 ('ACT'). 2. IN SUCH PROJECTS, THE DEVELOPER (HEREINAFTER REF ERRED TO AS`ASSESSEE'), IN TERMS OF CONCESSIONAIRE AGREEMENT WITH GOVERNMENT OR ITS AGENCIES IS REQUIRED TO CONSTRUCT, DEVELOP A ND MAINTAIN THE INFRASTRUCTURAL FACILITY OF ROADS/HIGHWAYS WHICH, I NTER-ALIA, INCLUDES LAYING OF ROAD, BRIDGES, HIGHWAYS, APPROACH ROADS, CULVERTS, PUBLIC AMENITIES ETC. AT ITS OWN COST AND ITS UTILIZATION THEREOF FOR A SPECIFIED PERIOD. IN LIEU OF CONSIDERATION OF THE EXPENDITURE INCURRED ON CONSTRUCTION, OPERATION AND MAINTENANCE OF THE INFR ASTRUCTURE FACILITY COVERED BY THE PERIOD OF THE AGREEMENT, THE ASSESSE E IS ACCORDED A RIGHT TO COLLECT TOLL FROM USERS OF SUCH FACILITY. THE EXPENDITURE INCURRED BY SUCH ASSESSEE ON DEVELOPMENT AND CONSTRUCTION OF SUCH INFRASTRUCTURAL FACILITY ARE CAPITALIZED IN THE ACC OUNTS. IT IS SEEN THAT IN RETURNS-OF-INCOME, ASSESSEES ARE GENERALLY CLAIMING DEPRECIATION ON SUCH CAPITALIZED EXPENDITURE TREATING IT AS AN 'INT ANGIBLE ASSET' IN TERMS ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 16 OF SECTION 32(1)(II) OF THE ACT WHILE IN ASSESSMENT S, SUCH CLAIMS ARE BEING DISALLOWED BY THE ASSESSING OFFICER ON THE GR OUNDS THAT SUCH INFRASTRUCTURAL FACILITY IS NOT OWNED, WHOLLY OR PA RTLY, BY THE TAXPAYER WHICH IS AN ESSENTIAL CONDITION FOR CLAIMING DEPRECIATION AND F URTHER RIGHT TO COLLECT TOLL DOES NOT FALL IN ANY OF THE CATEGOR IES OF 'INTANGIBLE ASSETS' SPECIFIED IN SUB-CLAUSE(II) OF SUB-SECTION (1) OF S ECTION 32 OF THE ACT. 3. IN BOT ARRANGEMENTS FOR DEVELOPMENT OF ROADS/HIG HWAYS, AS A MATTER OF GENERAL PRACTICE, POSSESSION OF LAND IS H ANDED OVER TO THE ASSESSEE BY THE GOVERNMENT/NOTIFIED AUTHORITY FOR T HE PURPOSES OF CONSTRUCTION OF THE PROJECT WITHOUT ANY ACTUAL TRAN SFER OF OWNERSHIP AND SUCH ASSESSEE HAS ONLY A RIGHT TO DEVELOP AND M AINTAIN SUCH ASSET. IT ALSO ENJOYS THE BENEFITS ARISING FROM USE OF ASSET THROUGH COLLECTION OF TOLL FOR A SPECIFIED PERIOD WITHOUT H AVING ACTUAL OWNERSHIP OVER SUCH ASSET. THEREFORE, THE RIGHTS IN THE LAND REMAIN VESTED WITH THE GOVERNMENT OR ITS AGENCIES. THUS, A S ASSESSEE DOES NOT HOLD ANY RIGHTS IN THE PROJECT EXCEPT RECOVERY OF TOLL FREE TO RECOUP THE EXPENDITURE INCURRED, IT CANNOT THEREFORE BE TR EATED AS AN OWNER OF THE PROPERTY, EITHER WHOLLY OR PARTLY, FOR PURPO SES OF ALLOWABILITY OF DEPRECIATION UNDER SECTION 32(1)(II) OF THE ACT. TH US PRESENT PROVISIONS OF THE ACT DO NOT ALLOW CLAIM OF DEPRECI ATION ON TOLL WAYS DUE TO NON FULFILLMENT OF OWNERSHIP CRITERIA IN SUC H CASES. 4. THERE IS NO DOUBT THAT WHERE THE ASSESSEE INCUR S EXPENDITURE ON A PROJECT FOR DEVELOPMENT OF ROADS/HIGHWAYS, HE IS EN TITLED TO RECOVER COST INCURRED BY HIM TOWARDS DEVELOPMENT OF SUCH FACILIT Y (COMPRISING OF CONSTRUCTION COST AND OTHER PRE-OPERATIVE EXPENSES) DURING THE CONSTRUCTION PERIOD. FURTHER, EXPENDITURE INCURRED BY THE ASSESSEE ON SUCH BOT PROJECTS BRINGS TO IT AN ENDURING BENEFIT IN THE FORM OF RIGHT TO COLLECT THE TOLL DURING THE PERIOD OF THE AGREEMENT . HON'BLE SUPREME ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 17 COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT C ORP LTD 225 ITR 802 (SC) ALLOWED SPREADING OVER OF LIABILITY OVER A NU MBER OF YEARS ON THE GROUND THAT THERE WAS CONTINUING BENEFIT TO THE COM PANY OVER A PERIOD. THEREFORE, ANALOGOUSLY, EXPENDITURE INCURRED ON AN INFRASTRUCTURE PROJECT FOR DEVELOPMENT OF ROADS/HIGHWAYS UNDER BOT AGREEMENT MAY BE TREATED AS HAVING BEEN MADE/INCURRED FOR THE PUR POSES OF BUSINESS OR PROFESSION OF THE ASSESSEE AND SAME MAY BE ALLOW ED TO BE SPREAD DURING THE TENURE OF CONCESSIONAIRE AGREEMENT. 5. IN VIEW OF ABOVE, CENTRAL BOARD OF DIRECT TAXES , IN EXERCISE OF THE POWERS CONFERRED UNDER SECTION 119 OF THE ACT HEREB Y CLARIFIES THAT THE COST OF CONSTRUCTION ON DEVELOPMENT OF INFRASTRUCTU RE FACILITY OF ROADS/HIGHWAYS UNDER BOT PROJECTS MAY BE AMORTIZED AND CLAIMED AS ALLOWABLE BUSINESS EXPENDITURE UNDER THE ACT. 6. THE AMORTIZATION ALLOWABLE MAY BE COMPUTED AT TH E RATE WHICH ENSURES THAT THE WHOLE OF THE COST INCURRED IN CREA TION OF INFRASTRUCTURAL FACILITY OF ROAD/HIGHWAY IS AMORTIZED EVENLY OVER T HE PERIOD OF CONCESSIONAIRE AGREEMENT AFTER EXCLUDING THE TIME T AKE FOR CREATION OF SUCH FACILITY.' 20. ON PERUSAL OF THE AFORESAID CBDT CIRCULAR, WE F IND THAT THE CBDT APPRECIATING THE DISPUTES AND CONTROVERSIES AROUND CLAIM OF DEPRECIATION UNDER SECTION 32(1)(II) VIS--VIS AMORTIZATION HAS COME OUT WITH A CLARIFICATION REGARDING TREATMENT OF EXPENDITURE IN CURRED FOR DEVELOPMENT OF ROADS/HIGHWAYS IN BOT AGREEMENTS AND HAS HELD THAT THE COST OF CONSTRUCTION ON DEVELOPMENT OF INFRASTR UCTURE FACILITY OF ROADS/HIGHWAYS UNDER BOT PROJECTS MAY BE AMORTIZED AND CLAIMED AS ALLOWABLE BUSINESS EXPENDITURE UNDER THE ACT AND SU CH AMORTIZATION MAY BE COMPUTED AT THE RATE WHICH ENSURES THAT THE WHOL E OF THE COST ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 18 INCURRED IN CREATION OF INFRASTRUCTURAL FACILITY OF ROAD/HIGHWAY IS AMORTIZED EVENLY OVER THE PERIOD OF CONCESSIONAIRE AGREEMENT AFTER EXCLUDING THE TIME TAKE FOR CREATION OF SUCH FACILI TY. THEREFORE, IN THE INSTANT CASE, WHERE THERE IS NO DISPUTE THAT TWO RO ADS/HIGHWAY STRETCHES HAVE BEEN CONSTRUCTED/DEVELOPED BY THE ASSESSEE UND ER THE BOT AGREEMENTS, THE ASSESSEE SHALL BE ELIGIBLE TO CLAIM AMORTIZATION OF THE WHOLE OF THE COST INCURRED IN CREATION OF INFRASTRU CTURAL FACILITY OF ROAD/HIGHWAY EVENLY OVER THE PERIOD OF CONCESSIONAI RE AGREEMENT AFTER EXCLUDING THE TIME TAKE FOR CREATION OF SUCH FACILI TY RATHER THAN THE RATE OF DEPRECIATION AS PRESCRIBED UNDER SECTION 32(1)(I I) OF THE ACT. 21. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT IS NOTED THAT ON ENQUIRY BY THE ASSESSING OFFICER, THE ASSESSEE HAS SUBMITTED THAT THIS IS THE SECOND YEAR OF CLAIM OF AMORTIZATION WHEREIN IT HAS CLAIMED AMORTIZATION OF RS 4,01,84,929 FOR A PERIOD OF 365 DAYS AS AGAINST AMORTIZATION OF RS 3,22,32,261 FOR A PERIOD OF 293 DAYS CLAIMED IN THE PREVIOUS ASSESSMENT YEAR 2014-15 AND DETAIL STATEME NT AS PART OF THE AUDIT REPORT WAS ALSO SUBMITTED IN RESPECT OF BOTH THE ROAD/HIGHWAY STRETCHES DISCLOSING RESPECTIVE COST OF CONSTRUCTIO N/DEVELOPMENT, THE PERIOD OF CONCESSIONAIRE AGREEMENT AND THE AMOUNT O F AMORTIZATION DETERMINED FOR THE YEAR UNDER CONSIDERATION. THE SA ME WAS DULY EXAMINED BY THE ASSESSING OFFICER AND NO ADVERSE FI NDING HAS BEEN RECORDED BY HIM. WE THEREFORE FIND THAT WHERE THE ASSESSEE IS ELIGIBLE FOR CLAIM OF AMORTIZATION AS PER CBDT CIRCULAR NO. 9/2014 DATED 23.04.2014 AND THE SAME HAS ACCORDINGLY BEEN CLAIME D AND ALLOWED BY THE ASSESSING OFFICER AFTER DUE VERIFICATION AND EX AMINATION, THE ORDER SO PASSED BY THE ASSESSING OFFICER CANNOT BE HELD AS E RRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ITA NO. 36/JODH/2021 M/S DEEPAK & COMPANY INFRA PVT. LTD VS. ITO, SRI G ANGANAGAR 19 22. IN LIGHT OF AFORESAID DISCUSSIONS AND IN THE EN TIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE NECESSARY ENQUIRIES AND EXAMINATION AS REASONABLY E XPECTED HAVE BEEN CARRIED OUT BY THE ASSESSING OFFICER AND HE HA S TAKEN A PRUDENT, JUDICIOUS AND REASONABLE VIEW AFTER CONSIDERING THE ENTIRE MATERIAL AVAILABLE ON RECORD AND THE ORDER SO PASSED U/S 143 (3) CANNOT BE HELD AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTERE ST OF REVENUE. THE IMPUGNED ORDER PASSED BY THE LD PCIT U/S 263 IS ACC ORDINGLY SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER IS SUSTAINED . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 07/09/2021. SD/- SD/- ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) JUDICIAL MEMBER ACCOUNTANT MEMBER JODHPUR DATED:- 07/09/2021. *GANESH KUMAR COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S DEEPAK & COMPANY INFRA PVT. LTD. , SRI GANGANAGAR 2. THE RESPONDENT- ITO, WARD-1, SRI GANGANAGAR 3. CIT 4. CIT(A) 5. DR, ITAT, JODHPUR. 6. GUARD FILE { ITA NO. 36/JODH/2021} BY ORDER, ASST. REGISTRAR