Deputy Commissioner of Income Tax, Central Circle - 1, Nashik, Nashik V. Ashoka Infrastructure Limited, Nashik

ITA 593/PUN/2022

AI Insights

The case involves three appeals by the Revenue against separate orders of the Commissioner of Income Tax (Appeals)-12, Pune, which allowed depreciation on the 'License to Collect Toll' for the assessment years 2017-18 and 2018-19. The primary legal issue was whether the 'License to Collect Toll' qualifies as an intangible asset under section 32(1)(ii) of the Income-tax Act, 1961, thereby eligible for depreciation. The Tribunal noted that this issue had been previously adjudicated in favor of the assessee in earlier assessment years, and no new facts or legal arguments were presented by the Revenue to deviate from the established precedent.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136327 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-12-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 26-07-2022
• Other Referred Cases: GVK Jaipur Expressway Ltd., Moradabad Toll Road Co. Ltd., CIT v. Noida Toll Bridge Co. Ltd., CIT v. VGP Housing (P.) Ltd., CIT v. Jawahar Kala Kendra, CIT v. Mohd. Bux Shokat Ali, North Karnataka Expressway Ltd. vs. CIT, CIT vs. West Gujarat Expressway Ltd. (No.1), CIT vs. West Gujarat Expressway Ltd. (No.2)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 32; 143(3); 153A; 260A; 250; 43

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “सी” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 7 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE“C” BENCH, PUNE BEFORE HON’BLE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI,ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No.591/PUN/2022 ननधधारण वषा / Assessment Year : 2018-19 Asstt. Commissioner of Income Tax Central Circle -1, Nashik . . . . . . . अपऩलधथी / Appellant बनधम / V/s. Ashoka Dhankuni Kharagpur Tollway Ltd., S. No.861, Ashoka House, Ashoka Marg, Vadala, Nashik – 422 011 PAN :AAJCA2569C . . . . . . . प्रत्यथी / Respondent और / And आयकर अपऩल सं. / ITA No.592 & 593 /PUN/2022 ननधधारण वषा / Assessment Year : 2018-19 & 2017-18 Asstt. Commissioner of Income Tax Central Circle -1, Nashik . . . . . . . अपऩलधथी / Appellant बनधम / V/s. Ashoka Infrastructure Ltd., S. No.861, Ashoka House, Ashoka Marg, Vadala, Nashik – 422 011 PAN :AAECA5421G . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : None Revenue by : Shri Suhas Kulkarni सपनवधई की तधरऩख / Date of conclusive Hearing : 27/12/2022 घोषणध की तधरऩख / Date of Pronouncement : 18/01/2023 Ashoka Dhankuni Kharagpur Tollway Ltd., ITA No.591/PUN/2022 AY: 2018-19 & Ashoka Infrastructure Limited, ITA No.592-593/PUN/2022 AY: 2017-18& 2018-19 ITAT-Pune Page 2 of 7 आदेश / ORDER PER G. D. PADMAHSHALI, AM; The present bunch of three appeals of the Revenue defies against separate orders of Commissioner of Income Tax (Appeals)-12, Pune [for short “CIT(A)”] dt. 26/05/2022 passed u/s 250 of the Income-tax Act, 1961 [for short “the Act”], which ascended out of separate orders of assessment passed u/s 143(3) or 143(3) r.ws. 153A of the Act by the Asstt. Commissioner of Income Tax, Circle-1, Nashik [for short “AO”] for assessment years [for short “AY”] 2017-18 to 2018-19. 2. The solitary issue involved in this bunch of appeals is identical i.e. claim of depreciation on intangible asset being “License to Collect Toll”, hence with the agreement of parties present, the matter is heard together for a consolidated order, resultantly the adjudication in lead case ITA/591/PUN/2022 positioned in succeeding paragraphs, shall mutatis mutandis apply to ITA/592 to 593/PUN/2022. Ashoka Dhankuni Kharagpur Tollway Ltd., ITA No.591/PUN/2022 AY: 2018-19 & Ashoka Infrastructure Limited, ITA No.592-593/PUN/2022 AY: 2017-18& 2018-19 ITAT-Pune Page 3 of 7 3. In advancing the matter for adjudication, it is essential to reproduce grounds challenged by the appellant in lead case ITA No.591 /PUN/2022 are; “1 On the facts and circumstances of the case and in law the ld.CIT(A) was erred in allowing the depreciation at 25% on „License to collect toll‟. 2. On the facts and circumstances of the case and in law the ld.CIT(A) was erred in holding that assessee was eligible to claim depreciation on „License to collect toll‟ considering it as an intangible asset in terms of section 32(1)(ii) of the Act. 3. On the facts and circumstances of the case and in law the ld.CIT(A) has failed to appreciate that the department has not accepted the decision of the ITAT, Pune and an appeal for AY 2010-11 & 2011-12 has been filed under Section 260A of the Act before the Hon‟ble Bombay High Court. 4. The appellant craves to add, amend or delete any of the above”. 4. Without articulating the facts of the case, it shall suffice to voice that, the Revenue’s sole and substantive grievance raised in the instant appeal challenges correctness of the Ld. CIT(A)’s action of reversing the findings of Ld. AO in disallowing the claim of depreciation u/s 32(1)(ii) of the Act on intangible assets being “License To Collect Toll”. Ashoka Dhankuni Kharagpur Tollway Ltd., ITA No.591/PUN/2022 AY: 2018-19 & Ashoka Infrastructure Limited, ITA No.592-593/PUN/2022 AY: 2017-18& 2018-19 ITAT-Pune Page 4 of 7 Whereas the Ld. AO following the direction issued by the CBDT’s vide its circular 09/2014 dt. 23/04/2014 appears to have amortized the assessee’s corresponding cost of construction of development of infrastructure facility over the period of concessionaire agreement. Per contra, the Ld. CIT(A) in deciding the issue in favour of the respondent assessee has adopted judicial consistency by placing reliance on the Tribunal’s earlier years decisions. 5. In the absence of assessee we proceeded ex-parte and heard the learned representative of the department; and subject to the provisions of rule 18 ITAT, Rules, 1963 perused case records, case laws relied upon by the appellant as well the respondent and duly considered the facts of the case in the light of settled legal position which are forewarned to parties present. 6. After giving our thoughtful consideration to vehement rival contentions and we find no merit in Ashoka Dhankuni Kharagpur Tollway Ltd., ITA No.591/PUN/2022 AY: 2018-19 & Ashoka Infrastructure Limited, ITA No.592-593/PUN/2022 AY: 2017-18& 2018-19 ITAT-Pune Page 5 of 7 the Revenue’s stand as the very same issue had arisen between these parties in earlier AYs, more particularly in Revenue’s appeal number ITA/157/PUN/2019 & ITA/187&188/PUN/2019, wherein vide para 7-9, the Co-ordinate bench has adjudicated the matter against the Revenue and in favour of the assessee as under; “7. We have heard the rival contentions and perused material on record. The only issue in the present appeal relates to whether or not the cost of “Right to Collect Toll” qualifies as “intangible asset” as defined under clause (ii) of sub-section (1) of section 32 of the Act. There is no dispute about the cost of acquisition. The only dispute is with regard to the true nature of the rights acquired in terms of the contract awarded by the NHAI. The relevant provisions of section 32(1)(ii) are extracted herein below for ready reference:- “Depreciation. 32. (1) In respect of depreciation of— (i) .......... (ii) know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, [not being goodwill of a business or profession,]” 8. Now the question that comes up for our consideration is whether the “Right to Collect Toll” falls within the definition of commercial right or “intangible asset”? There can be no doubt that as result of developing this project, the respondent-assessee had acquired a commercial right to collect the toll in terms of Ashoka Dhankuni Kharagpur Tollway Ltd., ITA No.591/PUN/2022 AY: 2018-19 & Ashoka Infrastructure Limited, ITA No.592-593/PUN/2022 AY: 2017-18& 2018-19 ITAT-Pune Page 6 of 7 the contract awarded by NHAI. This right definitely falls within the meaning of “commercial right” or “intangible asset”. This definitely would qualify for depreciation @ 25%. To the same effect is the decisions of the Hon‟ble Rajasthan High Court in the case of GVK Jaipur Expressway Ltd., the High Court has taken into consideration all the decisions and more particularly the decisions of (i) Hon‟ble Delhi High Court in the case of Moradabad Toll Road Co. Ltd.; (ii) Hon‟ble Allahabad High Court in the case of CIT v. Noida Toll Bridge Co. Ltd. [reported in [2013] 30 taxmann.com 207]; (iii) Hon‟ble Madras High Court in the case of CIT v. VGP Housing (P.) Ltd. [reported in [2016] 66 taxmann.com 354]; (iv) Hon‟ble Rajasthan High Court in the case of CIT v. Jawahar Kala Kendra [reported in [2014] 43 taxmann.com 159]; (v) Hon‟ble Rajasthan High Court in the case of CIT v. Mohd. Bux Shokat Ali [reported in [2001] 118 Taxman 712]. 9. The decisions of the Hon‟ble Jurisdictional High Court in the case of North Karnataka Expressway Ltd. vs. CIT, 372 ITR 145; (vii) CIT vs. West Gujarat Expressway Ltd. (No.1), 390 ITR 398 and (viii) CIT vs. West Gujarat Expressway Ltd. (No.2), 390 ITR 400 have no application to the facts of the present case, inasmuch as, the decision in the said two cases relates to the allowability of depreciation on roads treating as “building”. In the circumstances, we do not find any illegality in the order of the ld. CIT(A). Accordingly, we do not find any merit in the appeal filed by the Revenue. Hence, the grounds of appeal raised by the Revenue are dismissed.” Ashoka Dhankuni Kharagpur Tollway Ltd., ITA No.591/PUN/2022 AY: 2018-19 & Ashoka Infrastructure Limited, ITA No.592-593/PUN/2022 AY: 2017-18& 2018-19 ITAT-Pune Page 7 of 7 7. As we note that, the Revenue is fair enough in its pleadings and not pin-pointing any distinctive facts or law in all these assessment years so far as the assessee’s treatment of its right to collect toll as an intangible asset u/s 32(1)(ii) is concerned, consequently we see no reason to deviate from the aforesaid decision of the Co-ordinate bench. 8. For the aforestated reasons, we uphold the findings of the Ld. CIT(A) in reversing the action of Ld. AO and therefore dismiss the appeal of the Revenue. 9. Resultantly, the bunch of appeals of the Revenue is DISMISSED in above terms. In terms of rule 34 of ITAT Rules, 1963 the order ispronounced in the open court on this Wednesday 18 th day of January, 2023. -S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 18 th day of January, 2023. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1. अपऩलधथी / The Appellant. 2.प्रत्यथी / The Respondent. 3. The Pr. CIT, Central, Nagpur (Mh-India) 4. The CIT(A) - Pune (Mh.-India) 5. DR, ITAT, Pune “C” Bench, Pune. 6. गधर्ाफ़धइल / Guard File. आदेशधनपसधर / by order, वररष्ठ ननजऩ सनिव / Sr. Private Secretary आयकर अपऩलऩय न्यधयधनधकरण, पपणे / ITAT, Pune.