Assistant Commissioner of Income-tax, V. M/s. Dimension Construction Private Ltd., Kolhapur

ITA 541/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9535 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 28-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGERWAL
• Keywords: Depreciation
• Section: 143(3); 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NOS.540 AND 541/PUN/2016 / ASSESSMENT YEARS : 2005-06 AND 2007-08 ASST. COMMISSIONER OF I NCOME TAX , CENTRAL CIRCLE, KOLHAPUR. . / APPELLANT V/S M/S.DIMENSION CONSTRUCTION PRIVATE LIMITED, 1148, E WARD, SYKES EXTENSION, KOLHAPUR. PAN : AABCD2744C . / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI. REVENUE BY : SHRI VIVEK AGGERWAL. / ORDER PER ANIL CHATURVEDI, AM : THESE TWO APPEALS FILED BY THE REVENUE U/S 143(3) R.W.S. 147 OF THE ACT ARE EMANATING OUT OF A CONSOLIDATED ORDER OF C OMMISSIONER OF INCOME TAX (A) 2, KOLHAPUR DT.05.01.2016 FOR THE ASSESSME NT YEARS 2005-06 AND 2007-08. 2. BEFORE US, AT THE OUTSET, BOTH THE PARTIES SUBMITTED T HAT THOUGH THE APPEALS FILED BY THE REVENUE ARE FOR TWO DIFFERENT ASSE SSMENT YEARS BUT THE FACTS AND ISSUES INVOLVED IN BOTH THE APPEALS AR E IDENTICAL EXCEPT FOR THE ASSESSMENT YEAR AND THE AMOUNTS INVOLVE D AND THE LD.CIT(A) HAS ALSO PASSED A CONSOLIDATED ORDER AND THEREFO RE THE / DATE OF HEARING : 19.12.2017 / DATE OF PRONOUNCEMENT: 05.01.2018 2 SUBMISSIONS MADE BY THEM WHILE ARGUING ONE APPEAL WOULD BE EQUALLY APPLICABLE TO THE OTHER APPEAL ALSO AND THUS, BOTH THE A PPEALS CAN BE HEARD TOGETHER. IN VIEW OF THE AFORESAID SUBMISSIONS OF B OTH THE PARTIES, WE, FOR THE SAKE OF CONVENIENCE, PROCEED TO DISPOS E OF BOTH THE APPEALS BY A CONSOLIDATED ORDER BUT HOWEVER, PROCEED WITH NARRATING THE FACTS FOR ASSESSMENT YEAR 2005-06. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BU SINESS OF CONSTRUCTION OF INFRASTRUCTURAL FACILITIES. ASSESSEE FILED ITS O RIGINAL RETURN OF INCOME FOR A.Y. 2005-06 ON 30.10.2009 DECLARING T OTAL LOSS OF RS.12,96,400/-. THE RETURN WAS INITIALLY PROCESSED U/S 143(1) OF THE ACT ON 28.02.2006. THEREAFTER, IT WAS NOTICED BY THE AO T HAT ASSESSEE HAD CLAIMED DEPRECIATION ON ASSET ROAD OVER BRIDGE AT RS.75,58,208/-. AO WAS OF THE VIEW THAT THERE IS NO SPECIFIC PROVISION UNDER THE I.T. ACT TO ALLOW DEPRECIATION ON SUCH ASSETS AND THEREFORE THE CLAIM MADE BY THE ASSESSEE IS ERRONEOUS. ACCORDING LY, NOTICE U/S 148 DT.06.02.2009 WAS ISSUED AND SERVED ON THE ASSESSEE . THEREAFTER, ASSESSMENT WAS FRAMED U/S 143 R.W.S. 147 OF THE ACT VIDE ORDER DT.30.10.2009 AND THE TOTAL LOSS BEFORE SETTING UP OF LOSSE S WAS DETERMINED AT RS.62,61,808/- BY INTER-ALIA DISALLOWING THE CLAIM OF DEPRECIATION. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CA RRIED THE MATTER BEFORE LD.CIT(A), WHO FOLLOWING THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.YS. 2002-03, 2003-04, 2004-05 AND 2006 -07 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER : 7. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT. I FIND THAT THE ISSUE OF DEPRECIATION ON INTANGIBLE ASSET VIZ. RIGHT TO COLLECTION OF TOLL FROM ROAD OVER BRIDGE, HAVE BEEN DECIDED BY THE HON OURABLE TRIBUNAL IN THE APPELLANTS FAVOUR. THE ORDER OF THE ITAT, PUNE BENCH, A, PUNE IN 3 ITA NO.222, 223, 233 AND 857/PN/2009 IS REPRODUCED HEREUNDER : 4. IN THIS REGARD, THE LEARNED AR POINTED OUT THA T THIS ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL PUNE BENCH, PU NE IN THE CASE OF ASHOKA INFO (P) LTD. VS. ASSTT. CIT (2009) 123 TTJ (PUNE) 77 WHEREIN WITH REGARDS TO INTANGIBLE ASSETS AND TO LL COLLECTION RIGHTS THE TRIBUNAL OBSERVED THAT THE INVESTMENT MA DE BY THE ASSESSEE TOWARDS CONSTRUCTION OF A ROAD ON BUILT, O PERATE AND TRANSFER (BOT) BASIS IN TERMS OF AN AGREEMENT WITH THE STATE GOVERNMENT AND THEREAFTER AN INDEPENDENT RIGHT IN T HE FORM OF A LICENCE OF TOLL COLLECTION WAS GRANTED TO THE ASSES SEE FOR A FIXED PERIOD OF 16 YEARS AND 9 MONTHS. APPLYING THE DOCTR INE OF EJUSDEM GENERIC FOR THE PURPOSE OF INTERPRETATION O F SEC. 32(1)(II), THE WORD LICENCE COULD BE READ ALONG WITH THE PAG E 4 OF 6 ITA NO. 222, 223, 233 & 857/PN/2009 DIMENSION CONSTRUCT ION A.Y. 2002-03, 2004-05, 2003-04 & 2006-07 WORDS COMMERCI AL RIGHTS OF SIMILAR NATURE. THEREFORE, THE LICENCE GRANTED BY THE STATE GOVERNMENT FOR COLLECTION OF TOLL WAS HELD AS AN IN TANGIBLE ASSET AND DEPRECIATION WAS HELD TO BE ALLOWABLE THEREON. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, WE HOLD THAT THE ASSE SSEE WAS ENTITLED TO CLAIM OF DEPRECIATION ON INTANGIBLE ASS ET VIZ. RIGHT TO COLLECT TOLL FROM THE ROAD OVER THE BRIDGE ON THE P ARITY OF REASONING THAT THE ASSESSEE WAS NOT THE OWNER INSPI TE OF THE FACT THAT THE COLLECTION WAS TREATED AS INCOME OF THE AS SESSEE COMPANY AND WAS ALSO APPROVED BY THE STATE GOVERNME NT. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE JU RISDICTIONAL TRIBUNAL I HEREBY DELETE THE ADDITIONS MADE ON ACCOUNT OF DEPR ECIATION IN BOTH THE YEARS UNDER CONSIDERATION. THIS GROUND OF APPEAL I S ALLOWED. 4. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN A PPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSE E WAS OWNER OF THE RIGHT TO COLLECT TOLL AS AN INTANGIBLE ASSET ELIGIBLE FOR DEPRECIATION UNDER SECTION 32(1) OF THE INCOME TAX ACT, 1961, WHEN NO PROOF REGARDING OWNERSHIP EITHER ACTIVELY O R CONSTRUCTIVELY. 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ACCEPTING OWNERSHIP OF THE A SSESSEE OVER THE RIGHT TO COLLECT TOLL WHEN THERE WAS NO PROOF P ROVIDED BY THE ASSESSEE IN SUPPORT OF THE SAME. 3. THE ORDER OF THE LD.CIT(A) MAY BE VACATED AND TH E ASSESSING OFFICER BE RESTORED. 5. BEFORE US, LD.D.R. SUPPORTED THE ORDER OF AO. LD.A.R. ON T HE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AN D LD.CIT(A) AND FURTHER SUBMITTED THAT LD.CIT(A) HAD RIGHTLY ALLOWED TH E CLAIM OF DEPRECIATION OF ASSESSEE BY FOLLOWING THE DECISION OF TRIBUNA L IN 4 ASSESSEES OWN CASE IN ITA NO.222, 223, 233 & 857/PN/20 09 FOR A.YS.2002-03, 2003-04, 2004-05 & 2006-07 DT.18.03.2011. HE PLACED ON RECORD THE COPY OF THE AFORESAID ORDER AND POINTED T O THE RELEVANT FINDING OF THE TRIBUNAL. HE FURTHER SUBMITTED THAT THE FACT S IN THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THAT OF EARLIER YEARS. HE THEREFORE SUBMITTED THAT THE GROUNDS RAISED BY THE REVENUE NEED S TO BE DISMISSED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. WE FIND THAT IDENTICAL ISSUE OF DEPRECIATION ON THE INTANGIBLE ASSET NAMELY, RIGHT TO COLLECTION OF TOLL FROM ROA D OVER BRIDGE WAS DECIDED BY THE CO-ORDINATE BENCH OF THE TRIB UNAL IN A.YS. 2002-03, 2003-04, 2004-05 AND 2006-07 IN ASSESSEES FAV OUR. WE FIND THAT CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2003-04 OBSERVED AS UNDER : 4. THE NEXT ISSUE IS REGARDING DEPRECIATION ON INT ANGIBLE ASSET NAMELY RIGHT TO COLLECTION OF TOLL FROM THE ROAD OVER BRID GE ON THE PARITY OF REASONING THAT THE ASSESSEE WAS NOT THE OWNER. IN T HIS REGARD, THE LEARNED AR POINTED OUT THAT THIS ISSUE IS COVERED B Y THE ORDER OF THE TRIBUNAL PUNE BENCH, PUNE IN THE CASE OF ASHOKA INF O (P) LTD. VS. ASSTT. CIT (2009) 123 TTJ (PUNE) 77 WHEREIN WITH REGARDS T O INTANGIBLE ASSETS AND TOLL COLLECTION RIGHTS THE TRIBUNAL OBSERVED TH AT THE INVESTMENT MADE BY THE ASSESSEE TOWARDS CONSTRUCTION OF A ROAD ON B UILT, OPERATE AND TRANSFER (BOT) BASIS IN TERMS OF AN AGREEMENT WITH THE STATE GOVERNMENT AND THEREAFTER AN INDEPENDENT RIGHT IN T HE FORM OF A LICENCE OF TOLL COLLECTION WAS GRANTED TO THE ASSESSEE FOR A FIXED PERIOD OF 16 YEARS AND 9 MONTHS. APPLYING THE DOCTRINE OF EJUSDE M GENERIC FOR THE PURPOSE OF INTERPRETATION OF SEC. 32(1)(II), THE WO RD LICENCE COULD BE READ ALONG WITH THE WORDS COMMERCIAL RIGHTS OF SIM ILAR NATURE. THEREFORE, THE LICENCE GRANTED BY THE STATE GOVERNM ENT FOR COLLECTION OF TOLL WAS HELD AS AN INTANGIBLE ASSET AND DEPRECIATI ON WAS HELD TO BE ALLOWABLE THEREON. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONIN G, WE HOLD THAT THE ASSESSEE WAS ENTITLED TO CLAIM OF DEPRECIATION ON I NTANGIBLE ASSET VIZ. RIGHT TO COLLECT TOLL FROM THE ROAD OVER THE BRIDGE ON THE PARITY OF REASONING THAT THE ASSESSEE WAS NOT THE OWNER INSPI TE OF THE FACT THAT THE COLLECTION WAS TREATED AS INCOME OF THE ASSESSE E COMPANY AND WAS ALSO APPROVED BY THE STATE GOVERNMENT. 7. THE AFORESAID DECISION OF THE TRIBUNAL HAS NOT BEEN S ET ASIDE, STAYED OR OVER-RULED BY HIGHER JUDICIAL AUTHORITIES. BEFO RE US, 5 REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO POINT OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THE CASE IN THE YEAR UNDER CONSIDERATION AND THAT OF EARLIER YEARS NOR HAS PLACED AN Y CONTRARY BINDING DECISION IN ITS SUPPORT. IN VIEW OF THE AFORESAID FAC TS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A). THUS, T HE GROUNDS OF REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.540/PUN/2016 FOR A.Y. 2005-06 IS DISMISSED. 9. AS FAR AS THE GROUNDS RAISED IN APPEAL IN ITA NOS.541/PUN/2016 FOR A.Y. 2007-08 IS CONCERNED, IN VIEW OF THE SUBMISSION OF BOTH THE PARTIES THAT THE FACTS OF THE CAS E IN THE YEARS BEING IDENTICAL TO THE FACTS AND ISSUE OF THE CASE IN ITA NO.540/PUN/2016 FOR A.Y. 2005-06, WE THEREFORE FOR THE R EASONS STATED HEREIN WHILE DISPOSING OF THE APPEAL IN ITA NO.540/P UN/2016 FOR A.Y. 2005-06 AND FOR SIMILAR REASONS, DISMISS THE GROUNDS OF APPEAL OF REVENUE. THUS, THE GROUNDS OF THE REVENUE ARE DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON 5 TH DAY OF JANUARY, 2018. SD/- SD /- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 5 TH JANUARY, 2018. YAMINI 6 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-2, KOLHAPUR. THE CIT-I/II, KOLHAPUR / CIT(CENTRAL), PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER , / / TRUE COPY / / //T// TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.