THIRUVANANTHAPURAM ROAD DEVELOPMENT CO. LTD, ORRISSA V. DCIT 14(3)(1), MUMBAI

ITA 622/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6970 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 29-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M SWAMY
• Assessee Lawyers: DILIP LAKHANI
• Keywords: Capital asset; Depreciation; Business expenditure; Bonafide belief; Scheme of amalgamation; Revenue expenditure; Capital expenditure
• Section: 32; 263

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.622/MUM/2015 ASSESSMENT YEAR: 2010-11 THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. THE IL & FS FINANCIAL CENTRE, PLOT NO.C-22, G BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 / VS. DCIT-14(3)(1), (EARLIER DCIT-10(1), ROOM NO.455, 4 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 ( '# $ /ASSESSEE) ( % / REVENUE) P.A. NO. AACCT0547J ITA NO.636/MUM/2015 ASSESSMENT YEAR: 2010-11 DCIT-14(3)(1), (EARLIER DCIT-10(1), ROOM NO.455, 4 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 / VS. THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. THE IL & FS FINANCIAL CENTRE, PLOT NO.C-22, G BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 ( % / REVENUE) ( '# $ /ASSESSEE) P.A. NO. AACCT0547J THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 2 ITA NO.4346/MUM/2015 ASSESSMENT YEAR: 2011-12 DCIT-14(3)(1), (EARLIER DCIT-10(1), ROOM NO.455, 4 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 / VS. THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. THE IL & FS FINANCIAL CENTRE, PLOT NO.C-22, G BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 ( % / REVENUE) ( '# $ /ASSESSEE) P.A. NO. AACCT0547J C.O. NO.25/MUM/2017 (ARISING OUT OF ITA NO.622/MUM/2015) ASSESSMENT YEAR: 2011-12 THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. THE IL & FS FINANCIAL CENTRE, PLOT NO.C-22, G BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 / VS. DCIT-14(3)(1), (EARLIER DCIT-10(1), ROOM NO.455, 4 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 ( '# $ /ASSESSEE) ( % / REVENUE) P.A. NO. AACCT0547J '# $ / ASSESSEE BY SHRI DILIP LAKHANI % / REVENUE BY SHRI M. SWAMY, CIT-DR & SHRI V. JUSTIN-DR & % ' $ ( / DATE OF HEARING : 23/05/2018 ' $ ( / DATE OF ORDER: 23/05/2018 THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 3 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE AS WELL AS THE REVENUE IS IN CROSS AP PEAL FOR THE ASSESSMENT YEAR 2010-11 AGAINST THE IMPUGNE D ORDER DATED 07/11/2014, WHEREAS, THE REVENUE IS IN APPEAL FOR ASSESSMENT YEAR 2011-12 AGAINST THE IMPU GNED ORDER DATED 27/04/2015 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI AND THE ASSESSEE HAS PREFERRED CR OSS OBJECTION. 2. FIRST, WE SHALL TAKE UP THE APPEAL IN ITA NO.622/MUM/2015, WHEREIN, THE ASSESSEE HAS RAISED ADDITIONAL GROUND ALONG WITH MAIN GROUNDS. BEFORE U S, THE LD. COUNSEL FOR THE ASSESSEE, SHRI DILIP LAKHANI, A RGUED THE ADDITIONAL GROUND WITH RESPECT TO GRANTING DEPRECIA TION TREATING THE ROAD UNDER THE CATEGORY ALLOWED AS IN TANGIBLE ASSET. IT WAS CONTENDED THAT THE ISSUE IN HAND IS COVERED BY THE DECISION IN THE CASES OF ASHOKA INFO PVT. L TD. (ITA NO.44/PN/2007) FROM THE PUNE BENCH OF THE TRIBUNAL, ACIT VS ASHOKA BUILDCON LTD. (ITA NO.2317/PN/2012), THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 4 WEST GUJARAT EXPRESSWAY LTD. (ITA NO.5904 & 6244/MUM/2012), ORDER DATED 15/04/2012, THIRUVANANTPURAM ROAD DEVELOPMENT CORPORATION LTD. (ITA NO.6798 AND 6837/MUM /2011), ORDER DATED 23/12/2016 AND ACIT VS M/S ANDRAPRADESH EXPRESSWAY LTD. (ITA NO.655/MUM/2015 & CO. NO. 146/MUM2016) ORDER DATED 28/02/2018. ON THE OTHER HAND, SHRI M. SWAMY, LD. CIT-DR AND SHRI V. JUSTIN, LD. DR, INVIT ED OUR ATTENTION TO THE PROVISION OF SECTION 32 OF THE ACT BY CONTENDING THAT THE ASSESSEE IS NOT THE OWNER OF TH E ASSET, THEREFORE, THE DEPRECIATION WAS RIGHTLY DENIED TO T HE ASSESSEE. RELIANCE WAS PLACED UPON THE DECISION IN DINESH KUMAR GULABCHAND AGARWAL VS CIT (2004) 267 ITR 768 (BOM.). 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE ORDER OF TH E TRIBUNAL DATED 28/02/2018 IN THE CASE OF M/S ANDRA THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 5 PRADESH EXPRESSWAY LTD. ((SUPRA)) FOR READY REFEREN CE AND ANALYSIS:- 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF THE INCOME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER LD. CIT(A)-21, MUMBAI DATED 06.11.2014 FOR ASSESSMENT Y EAR (AY) 2010-11, THE ASSESSEE HAS FILED CROSS OBJECTIO N THEREIN. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS ENGAGED IN THE BUSINESS OF DEVELOPING, OPERATION AND MAINTENANCE OF ROAD INFRASTRUCTURE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010 -11 ON 24 SEPTEMBER 2010 DECLARING TOTAL LOSS AT RS. 118,89,65,269 /-. THE A SSESSMENT WAS COMPLETED ON 21 ST MARCH 2013 UNDER SECTION 143 (3) OF THE ACT. THE ASSESSEE ENTERED INTO AGREEMENT DATED 21 ST OCT 2006 WITH THE NATIONAL HIGHWAY AUTHORITY FOR CONSTR UCTION, OPERATION AND MAINTENANCE OF ROAD PROJECT IN THE ST ATE OF ANDHRA PRADESH. THE NATIONAL HIGHWAY AUTHORITY GRAN TED CONCESSION UNDER THE SAID AGREEMENT FOR A PERIOD OF 20 YEARS COMMENCING FROM 15 TH SEPTEMBER 2006. THE ASSESSEE MADE A CLAIM OF DEPRECIATION IN THE RETURN OF INCOME, ON TOLL ROAD FOR RS. 129,43,68,083 /-BY TREATING THE ROAD AS P LANT AND MACHINERY. THE ASSESSING OFFICER WHILE PASSING ASS ESSMENT ORDER DISALLOWED THE CLAIM OF DEPRECIATION HOLDING THAT THE OWNERSHIP OF THE ROAD IS WITH THE GOVERNMENT OF IN DIA, HOWEVER, THE ASSESSEE WAS ALLOWED AMORTIZATION OF C OST AT RS. 28,58,11,556/-. ON APPEAL BEFORE COMMISSIONER (APPEALS) THE ASSESSEE WAS ALLOWED DEPRECIATION ON THE BASIS OF DECISION OF TRIBUNAL IN CASE OF MUMBAI TRI BUNAL IN WEST GUJARAT EXPRESSWAY LTD. DATED 27 TH FEBRUARY, 2013. HENCE, AGGRIEVED, THE REVENUE HAS FILED THE PRESENT APPEAL UNDER SECTION 253 OF INCOME TAX ACT, BEFORE THIS T RIBUNAL RAISING THE FOLLOWING GROUNDS OF APPEAL. 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING FACT THAT THE CLAIM OF DEPRECIATION ON TOLL ROAD AMOUNTING TO RS. 129,47,9 9,193/- IS NOT ALLOWABLE AS THE ASSESSEE IS NOT THE OWNER OF THAT ASSET AND THAT THE CONDITIONS LAID DOWN IN SECTION 32 ARE NOT BEIN G FULFILLED.' THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 6 1.1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING FACT THAT THE CLAIM OF DEPRECIATION ON LOLL ROAD IS NOT ALLOWABLE SINCE THE ASSESSEE CONSTRUCTED AND MAINTAINED THE TOLL ROAD ON BUILD, OPERATE AND TRANSFER (BOT) BASIS.' 1.2 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND ID LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF DEPRECIATION ON TOLL ROAD UNDER THE HEAD PLANT AND MACHINERY TO THE EXTENT OF RS. 129,47,99,193/-.' 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMIT OR SUBSTITUTE ANY OR THE AFORESAID GROUNDS OF APPEAL A T ANY TIME BEFORE OR AT THE TIME OR HEARING OF APPEAL. 3. ON SERVICE OF THE NOTICE OF APPEAL THE ASSESSEE HAS FILED CROSS OBJECTION RAISING THE FOLLOWING GROUNDS OF OBJECTIONS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPE LLANT PRAYS THAT THE ENTIRE COST INCURRED FOR CONSTRUCTIO N OF 'PROJECT ROAD' AMOUNTING TO RS. 862,91,20,551/- MAY BE ALLOW ED AS DEDUCTION TREATING THE SAME AS REVENUE EXPENDITURE WHILE COMPUTING THE TOTAL INCOME. 2. WITHOUT PREJUDICE TO GROUND NO. 1, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT PRAYS THAT , THE DEPRECIATION MAY BE GRANTED TREATING THE RIGHT TO S ET UP INFRASTRUCTURE FACILITY BEING LICENSE/BUSINESS OF C OMMERCIAL RIGHTS, AS INTANGIBLE ASSET IN TERMS OF THE PROVISI ONS OF SECTION- 32(1)(II) AND THE APPELLANT MAY BE GRANTED THE DEPR ECIATION TREATING THE SAID RIGHT AS INTANGIBLE RIGHT AT THE APPLICABLE RATE. THE APPELLANT PRAYS THAT THE APPELLANT BE GRANTED D EPRECIATION OF RS. 215,72,80,138/-. 3. WITHOUT PREJUDICE TO GROUND NO. 1 & 2, ON T HE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT PRAYS THAT , IF THE ROAD IS NOT TREATED UNDER THE CATEGORY OF PLANT AND MACHINE RY FOR THE PURPOSE OF GRANTING DEPRECIATION THEN THE DEPRECIAT ION MAY BE GRANTED TREATING THE SAID ROAD UNDER THE CATEGORY O F 'BUILDING'. THE APPELLANT PRAYS THAT THE APPELLANT BE GRANTED D EPRECIATION OF RS. 86,29,12,055/- . 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT PRAYS THAT THE LEARNED ASSESSING OFFICER ALLOWED AM ORTIZATION OF RS. 21,58,11,556/- CONSIDERING THE COST OF ROAD AT RS. 733,76,43,914/- INSTEAD OF ACTUAL COST INCURRED BY THE APPELLANT AT RS. 862,91,20,551/-. THE APPELLANT PRAYS THAT TH E AMORTIZED THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 7 COST TO BE MODIFIED TO RS. 50,75,95,326/- IN PLACE OF RS. 21,58,11,556/-. 4. WE HAVE HEARD THE LD. DEPARTMENT REPRESENTATIVE (DR) FOR REVENUE AND THE LD. AUTHORIZED REPRESENTAT IVE (AR) FOR THE ASSESSEE AND PERUSED THE MATERIAL AVAI LABLE ON RECORD. THE LD DR FOR THE REVENUE SUBMITS THE LD COMMISSIONER (APPEALS) ALLOWED THE DEPRECIATION ON THE BASIS OF DECISION OF TRIBUNAL IN WEST GUJARAT EXPRE SSWAY LTD DATED 27 TH FEBRUARY, 2013 , HOWEVER, THE DECISION OF TRIBUNAL HAS BEEN REVERSED BY HONBLE JURISDICTIONA L HIGH COURT IN AN APPEAL BY THE REVENUE IN CIT VERSUS WES T GUJARAT EXPRESSWAY LTD (2017) 82 TAXMAN.COM 224 (BOMBAY) VIDE ORDER DATED 5 TH APRIL 2016 IN ITA NO. 2357 OF 2013. THE LD. DR FURTHER SUBMITS THAT ONCE THE B OMBAY HIGH COURT HELD THAT THE OWNER SHIP IS ALWAYS VESTE D WITH GOVERNMENT THE ASSESSEE HAS IS NOT ENTITLED FOR THE DEPRECIATION. THE LD. AR FOR THE ASSESSEE CONCEDED THE SUBMISSIONS OF LF DR FOR THE REVENUE. HOWEVER, THE LD. AR FOR THE ASSESSEE FURTHER SUBMITS THAT THE ASSESSEE IS STILL ENTITLED FOR DEPRECIATION ON INTANGIBLE RIGHT. THE ASSESSEE HAS FILED CROSS OBJECTION RAISING THE GROUNDS OF CR OSS OBJECTION FOR CLAIMING DEPRECIATION ON INTANGIBLE A SSET. IT WAS FURTHER SUBMITS THAT THE NATIONAL HIGHWAY AUTHO RITY VIDE AGREEMENT DATED 20.03.2006 GRANTED CONCESSION FOR A PERIOD OF 20 YEARS COMMENCING FORM 15 TH SEPTEMBER 2006. THE ASSESSEE BEFORE THE ASSESSING OFFICER HAS CATEG ORICALLY CONTENDED THAT THE ASSESSEE IS ALSO ENTITLED FOR DE PRECIATION BEING INTANGIBLE RIGHTS. IN SUPPORT OF HIS SUBMISSI ON THE LD AR OF THE ASSESSEE RELIED UPON THE DECISION OF COOR DINATE BENCH IN ITA NO. 5904/M/2012 & 6244/M/2012 IN ACIT VERSUS WEST GUJARAT EXPRESSWAY LTD DATED 15 APRIL 2 015, WHEREIN THE DEPRECIATION WAS ALLOWED ON TOLL ROAD A S A INTANGIBLE RIGHTS. THE LD AR SUBMITS THAT THE DECIS ION OF WEST GUJARAT EXPRESSWAY LTD WAS FOLLOWED BY ANOTHER BENCH OF TRIBUNAL IN THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD VERSUS ACIT IN ITA NO.(S) 6798/M/2011& 6 837/M/2011 DATED 23.12.2016. THE LD. AR FOR THE ASSESSEE SUBMITS THAT HIS IS NOT PRESSING G ROUND NO.1 OF CROSS OBJECTION. THE LD. DR NOT DISPUTED THE SUB SEQUENT THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 8 DECISION OF THE COORDINATE BENCH IN ALLOWING THE DEPRECIATION ON TOLL ROAD ON THE BASIS OF INTANGIBL E ASSETS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF BOTH THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORI TIES BELOW. CONSIDERING THE DECISION OF HONBLE JURISDIC TIONAL HIGH COURT IN CIT VERSUS WEST GUJARAT EXPRESSWAY LT D (2017) 82 TAXMAN.COM 224 (BOMBAY), WHEREIN IT WAS H ELD THAT THE OWNER SHIP IS ALWAYS VESTED WITH GOVERNMEN T THE ASSESSEE IS NOT ENTITLED FOR THE DEPRECIATION IN TH E MANNER IN WHICH IT HAS BEEN ALLOWED BY LD CIT(A) IN THIS CASE . THUS, THE GROUND OF APPEAL RAISED BY REVENUE DESERVES TO BE ALLOWED TO THAT EXTENT. HOWEVER, THE CLAIM OF DEPRE CIATION HAS BEEN SUPPORTED BY THE ASSESSEE ON THE OTHER GRO UND, WHICH IS PART OF CROSS OBJECTION BEING DEALT HEREIN AFTER. 6. NOW WE SHALL DISCUSS THE GROUNDS OF CROSS OBJECTION S RAISED BY THE ASSESSEE IN ITS CROSS OBJECTIONS. DU RING THE SUBMISSION, THE LD. AR OF THE ASSESSEE SUBMITS THAT HIS NOT PRESSING GROUND NO.1 OF HIS CROSS OBJECTION. HENCE, GROUND NO.1 OF THE CROSS OBJECTION IS DISMISSED AS NOT PRESSED. GROUND NO.2 OF CROSS OBJECTION BY ASSESSEE RELATES TO DEPRECIATION ON LICENSE/ BUSINESS OF COMMERCIAL RIGHT AS INTANGIBLE RIGHTS. THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF SETTING OF INFRASTRUCTURE FACILITY, INC LUDING OF DEVELOPMENT OPERATION AND MAINTENANCE OF ROAD PROJE CT. THE ASSESSEE WAS ASSIGNED THE WORK OF WIDENING THE EXISTING 2 LANE HIGHWAY FROM 135 KM TO 211 KM (KOTA KATTA BY PASS ROAD), COVERING 74.65 KM ON NATIONAL HIGHWA Y NO.7 TO 4 LANE IN STATE OF ANDHRA PRADESH, VIDE AGR EEMENT DATED 20.03.2006 BY NATIONAL HIGHWAY AUTHORITY OF I NDIA (NHAI). AS PER THE CONDITION OF THE AGREEMENT, THE ASSESSEE HAS TO BUILT, MAINTAIN, OPERATE AND TO HANDOVER THE PROJECT TO NHAI IN THE YEAR 2026. THE ASSESSEE IS ENTITLED TO BUILD, OPERATE AND TRANSFER (BOT) ANNUITY BASIS UNDER THE AGREEMENT. THUS, THE ASSESSEE HAS LICENSE/ COMMERCI AL RIGHT. THIS RIGHT IS CLAIMED AS INTANGIBLE RIGHT BY THE AS SESSEE. THE CO-ORDINATE BENCH OF TRIBUNAL WHILE DEALING WITH DEPRECIATION ON INTANGIBLE ASSET IN ACIT VS. WEST GU JARAT EXPRESSWAY LTD. IN ITA NO.5904/M/2012, ITA NO. 6244/M/2012 DATED 15.04.2015 AFTER CONSIDERING THE DECISION THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 9 OF HONBLE BOMBAY HIGH COURT IN CIT VS. WEST GUJARA T EXPRESSWAY LTD. (SUPRA) ALLOWED DEPRECIATION IN RESPE CT OF TOLL ROAD BEING AN INTANGIBLE ASSET FALLING WITHIN PURVI EW OF SECTION 32(1)(II). THE RELEVANT PORTION OF THE DECI SION OF CO- ORDINATE BENCH IS EXTRACTED BELOW. 17. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. SO FAR A S THE RELIANCE OF THE LD. A.R. ON THE ARTICLE/CLAUSE 38.4 OF THE C ONCESSION AGREEMENT BETWEEN THE ASSESSEE AND THE NHAI IS CONCERNED, WE FIND THAT THE IDENTICAL CLAUSE WAS ALSO THERE AND RELIED UPON IN THE CASE OF NORTH KARNATAKA EXPRESSWAY LTD. ( SUPRA ) WHICH HAS ALSO BEEN REPRODUCED IN PARA 8 OF THE ORDER OF THE HON'BLE BOMBAY HIGH C OURT (SUPRA). THE RELEVANT PART OF THE ORDER FOR THE SAKE OF CONVENIE NCE IS REPRODUCED AS UNDER: '8. THE APPELLANT CLAIMED THAT IT WAS THE OWNER OF THE TOLL ROAD AND THE ENTIRE COST INCURRED FOR CONSTRUCTION THEREOF WAS CAPITALI ZED BY THE APPELLANT IN ITS BOOKS IN THE ASSESSMENT YEAR 2005-06 DURING WHICH T HE CONSTRUCTION OF THE TOLL ROAD WAS COMPLETED. AS THE ASSESSMENT YEAR UND ER CONSIDERATION WAS THE FIRST YEAR WHEN THE ROAD BECAME OPERATIONAL, THE AP PELLANT CLAIMED DEPRECIATION OF RS.59.92 CRORES AT THE RATE OF 10% ON THE CAPITALIZED COST OF THE TOLL ROAD. THE APPELLANT ALSO FILED NECESSARY D ETAILS OF THE CLAIM OF DEPRECIATION AND A NOTE WAS APPENDED TO THE DEPRECI ATION SCHEDULE STATING THAT THOUGH THE APPELLANT WAS ENTITLED TO HIGHER CL AIM OF DEPRECIATION ON TOLL ROAD, THE CLAIM IS MADE AT THE RATE OF 10%. THE RIG HT TO CLAIM HIGHER DEPRECIATION IS RESERVED. THE APPELLANT RELIED UPON THE STANDARD CONCESSION DOCUMENT OF THE NATIONAL HIGHWAY AUTHORITY OF INDIA AND THE CLAUSE THEREIN THAT 'FOR THE PURPOSE OF CLAIMING TAX DEPRECIATION, THE PROPERTY REPRESENTING THE CAPITAL INVESTMENT MADE BY THE CONCESSIONAIRE S HALL BE DEEMED TO BE ACQUIRED AND OWNED BY THE CONCESSIONAIRE'.' 18. THE HON'BLE BOMBAY HIGH COURT, HOWEVER, AFTER DISC USSING THE PROVISIONS OF NATIONAL HIGHWAY ACT, 1956 AND NATION AL HIGHWAY AUTHORITIES OF INDIA ACT, 1988 AND VARIOUS CASE LAW S INCLUDING THAT ARE STRONGLY RELIED UPON BY THE LD. A.R. E.G. MYSORE MINERALS LTD. V. CIT [1999] 239 ITR 775/106 TAXMAN 166 (SC) , CIT V. PODAR CEMENT (P.) LTD. [1997] 226 ITR 625/92 TAXMAN 541 (SC) AND NOIDA TOLL BRIDGE CO. LTD. ( SUPRA ), HAS HELD THAT THE NATIONAL HIGHWAYS VEST IN THE UNION OF INDIA AND IF THE GOVERNMENT FOR THE PURPOSE OF D EVELOPMENT AND MAINTENANCE OF THE WHOLE OR ANY PART OF THE NATIONA L HIGHWAYS ENTERS INTO AN AGREEMENT WITH PRIVATE PARTIES OR THAT MERE LY BECAUSE THE NATIONAL HIGHWAY IS BUILT, MAINTAINED, MANAGED AND OPERATED BY PRIVATE ENTITIES, IN NO WAY AFFECTS THE VESTING OF THE NATIONAL HIGHWAY IN THE UNION AND THAT DOES NOT DILUTE OR TAKE AWAY THE OWNERSHIP OF THE HIGHWAY OR ITS VESTING IN THE UNION. AFTER DISC USSING THE VARIOUS DECISIONS OF THE HON'BLE SUPREME COURT AND OF THE H ON'BLE HIGH COURTS, THE CONTENTION OF THE ASSESSEE IN THAT CASE THAT IT WAS THE OWNER THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 10 OF THE TOLL ROAD HAS BEEN REJECTED BY THE HON'BLE S UPREME COURT. HENCE, THE CLAUSE 38.4 RELIED UPON BY THE ASSESSEE IN THE PRESENT CASE WILL NOT BE OF ANY HELP TO THE ASSESSEE IN THIS REG ARD. 19. HOWEVER, SO FAR AS THE ALTERNATIVE CLAIM OF THE AS SESSEE THAT IF THE ASSESSEE IS NOT FOUND AS OWNER OF THE TOLL ROAD, HI S CLAIM OF DEPRECIATION BE CONSIDERED IN RELATION TO INVESTMEN TS MADE AS FALLING UNDER THE OTHER CATEGORIES OF ASSETS, IS CONCERNED, WE WOULD LIKE TO REVERT TO THE DECISION OF THE HON'BLE BOMBAY HIGH C OURT IN NORTH KARNATAKA EXPRESSWAY LTD. ( SUPRA ). IN THIS RESPECT. WE FIND THE HON'BLE BOMBAY HIGH COURT, IN PARA 24 OF THE SAID D ECISION, HAS CATEGORICALLY OBSERVED THAT THE CLAIM OF DEPRECIATI ON IN THE SAID CASE WAS NOT BASED ON TREATING IT AS AN INTANGIBLE ASSET WITH A RIGHT TO USE THE ASSET WITHOUT BEING ACTUAL OWNER THEREOF. THE I SSUE UNDER CONSIDERATION WAS THAT WHETHER THE TOLL ROADS ARE N OT OWNED BY THE ASSESSEE AND THAT HE CANNOT CLAIM ANY DEPRECIATION THEREUPON. HENCE, THE HON'BLE BOMBAY HIGH COURT HAS NOT DISCUSSED THE ISSUE RELATING TO THE CLAIM OF DEPRECIATION ON THE LICENSE FOR RIGHT TO COLLECT THE TOLL AS INTANGIBLE ASSET. FURTHER, THE HON'BLE BOMBAY HIGH COURT IN PARA 39 OF THE DECISION (SUPRA) HAS OBSERVED THAT AS PER TH E PROVISIONS OF NATIONAL HIGHWAY ACT, 1956 AND NATIONAL HIGHWAY AUT HORITIES OF INDIA ACT, 1988, THE OWNERSHIP OF THE TOLL ROAD VES TS IN UNION , HOWEVER, THE TERM OWNER AS APPEARING IN THE INCOME TAX ACT, 1961 HAS BEEN DEFINED WIDELY AND BROADLY FOR THE PURPOSE OF THE PROVISIONS OF THE INCOME TAX ACT SO AS NOT TO ALLOW ANYBODY TO ESCAPE THE PROVISIONS THEREOF BY URGING THAT HE HAS A LIMITED RIGHT OR WHICH IS NOT AKIN TO OWNERSHIP, THEREFORE HIS INCOME SHOULD NOT BE BROUGHT TO TAX; SIMILARLY, IF HE CAN CLAIM ANY DEDUCTIONS FROM HIS INCOME WHICH IS COMPRISING OF PROFIT AND GAIN FROM HIS BUSINESS, TH EN, THAT DEDUCTION CAN BE AVAILED BY HIM. IT IS FOR THAT LIMITED PURPO SE THAT THE TERM 'OWNER' IS DEFINED IN THIS MANNER IN INCOME TAX ACT , 1961. THE ABOVE OBSERVATIONS OF THE HON'BLE BOMBAY HIGH C OURT REVEAL THAT FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER INCOME TAX ACT, THE TERM 'OWNER' AS DEFINED UNDER THE INCOME TAX ACT CAN BE LOOKED INTO. HOWEVER, THAT CANNOT CONTROL, LEAVE ALONE OR OVERRE ACH THE NATIONAL HIGHWAY ACT, 1956 OR THE NATIONAL HIGHWAY AUTHORITI ES OF INDIA ACT, 1988. THE HON'BLE BOMBAY HIGH COURT FURTHER, IN PAR A 47 OF THE SAID ORDER, HAS OBSERVED THAT THE ASSESSEE CAN DEFINITEL Y CLAIM DEPRECIATION ON THE INVESTMENTS. HE HAS DEFINITELY INVESTED IN T HE PROJECTS OF CONSTRUCTION DEVELOPMENT AND MAINTENANCE OF THE NAT IONAL HIGHWAYS AND SUCH OF THE ASSETS IN THE FORM OF BUILDING, PLA NT & MACHINERY ETC. THE CLAIM FOR DEPRECIATION CAN BE VALIDLY RAISED AN D GRANTED. THAT THE HON'BLE HIGH COURT IN THE SAID CASE WAS ONLY CONCER NED WITH THE CLAIM ON THE LAND OR A ROAD ITSELF. FURTHER, IN CON CLUDING PARA 52 OF THE ORDER, THE HON'BLE BOMBAY HIGH COURT HAS CATEGORICA LLY CLARIFIED THAT THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 11 THE ASSESSEE'S CLAIM FOR DEPRECIATION IN RESPECT OF THE BUILDING, PLANT & MACHINERY AND FALLING WITHIN THE PURVIEW OF SUB SEC TION (1) OF SECTION 32 OF THE INCOME TAX ACT, 1961, IF CONSIDERED AND G RANTED, SHALL NOT BE AFFECTED BY THE DECISION OF THE HON'BLE BOMBAY H IGH COURT. 20. A CAREFUL READING OF THE ENTIRE DECISION OF THE HON'BLE BOMBAY HIGH COURT AND IN THE LIGHT OF THE VARIOUS OBSERVAT IONS MADE IN JUDGMENT AS DISCUSSED ABOVE, IT IS VERY CLEAR THAT THE HON'BLE BOMBAY HIGH COURT WAS CONCERNED ABOUT THE ISSUE AS TO WHET HER THE ASSESSEE CAN CLAIM ITSELF AS THE OWNER OF THE TOLL ROAD AND THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT IN VIEW OF THE EXPRESS PRO VISIONS OF THE NATIONAL HIGHWAY ACT, 1956 AND NATIONAL HIGHWAY AUT HORITIES OF INDIA ACT, 1988 THE UNION IS THE ABSOLUTE OWNER OF THE NATIONAL HIGHWAYS AS WELL AS THE TOLL ROADS BUILT UPON THE L AND/NATIONAL HIGHWAYS IN AGREEMENT AND THROUGH THE PRIVATE PARTI ES AND SUCH PRIVATE PARTIES CANNOT CLAIM THEMSELVES TO BE THE O WNER OF THE TOLL ROAD. HOWEVER, THE HON'BLE BOMBAY HIGH COURT HAS LE FT UPON THE ISSUE RELATING TO THE CLAIM OF DEPRECIATION, IF OTH ERWISE ELIGIBLE UNDER THE OTHER PROVISIONS OF THE INCOME TAX ACT. 21. THE LD. A.R., BEFORE US, HAS PUT THE ALTERNATIV E CLAIM THAT IN VIEW OF THE OBSERVATIONS OF THE HON'BLE BOMBAY HIGH COUR T EITHER THE INVESTMENTS MADE BY THE ASSESSEE BE TREATED UNDER T HE ASSET BUILDING, PLANT & MACHINERY AND DEPRECIATION BE GRANTED ACCOR DINGLY OR THE SAME BE TREATED AS INTANGIBLE ASSET ON THE GROUND T HAT THE ASSESSEE HAS BEEN GRANTED LICENSE FOR RIGHT TO COLLECT THE TOLL TAX FOR A FIXED PERIOD. NOW THE QUESTION BEFORE US IS WHETHER THE ASSESSEE AT THIS STAGE THE CAN RAISE THE ALTERNATIVE CONTENTION FOR CLAIM OF A LLOWANCE OF DEPRECIATION ON THE LICENSE AUTHORIZING HIM TO COLL ECT THE TOLL BEING AN INTANGIBLE ASSET OR TREATING THE PROJECT AS PLANT & MACHINERY? 22. WE MAY OBSERVE THAT THE HON'BLE BOMBAY HIGH COU RT IN THE CASE OF CIT V. PRUTHVI BROKERS & SHAREHOLDERS (P.) LTD. [2012] 349 ITR 336/208 TAXMAN 498/23 TAXMANN.COM 23 , WHILE RELYING UPON THE VARIOUS DECISIONS OF THE HON'BLE SUPREME COURT AND OTHER HON'BLE HIGH COURTS, HAS HELD THAT EVEN IF A CLAIM IS NOT M ADE BEFORE THE AO IT CAN BE MADE BEFORE THE APPELLATE AUTHORITIES. THE J URISDICTION OF THE APPELLATE AUTHORITIES TO ENTERTAIN SUCH A CLAIM IS NOT BARRED. THE HON'BLE BOMBAY HIGH COURT WHILE RELYING UPON THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF JUTE CORPN. OF INDIA LTD. V. CIT [1991] 187 ITR 688/[1990] 53 TAXMAN 85 HAS OBSERVED THAT THE POWER OF THE APPELLATE COMMISSIONER IS COTERMINOUS WITH THAT OF THE INCOME TAX OFFICER AND AN APPELLATE AUTHORITY WHILE HEARING APPEAL AGAINST THE ORDER OF THE SUBORDINATE AUTHORITY, HAS ALL THE POWERS WHICH THE ORIGINAL AUTHORITY MAY HAVE IN DECIDING T HE QUESTIONS BEFORE IT, SUBJECT TO THE RESTRICTIONS OR LIMITATIONS, IF ANY, PRESCRIBED BY THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 12 STATUTORY PROVISIONS. IN THE ABSENCE OF ANY STATUTO RY PROVISION, THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHICH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. AN AS SESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BE FORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTITLED TO RAISE ADDITIONA L CLAIMS BEFORE THEM. THE APPELLATE AUTHORITIES HAVE THE DISCRETION WHETH ER OR NOT TO PERMIT SUCH ADDITIONAL CLAIMS TO BE RAISED. IT CANNOT, HOW EVER, BE SAID THAT THEY HAVE NO JURISDICTION TO CONSIDER THE SAME. THE APPELLATE AUTHORITIES HAVE JURISDICTION TO DEAL NOT MERELY WI TH ADDITIONAL GROUNDS WHICH BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW, BUT WITH ADDITIONAL GROUNDS W HICH WERE AVAILABLE WHEN THE RETURN WAS FILED BUT COULD NOT H AVE BEEN RAISED AT THAT STAGE. THE WORDS 'COULD NOT HAVE BEEN' RAISED MUST BE CONSTRUED LIBERALLY AND NOT STRICTLY. IT IS OPEN TO THE ASSES SEE TO CLAIM A DEDUCTION BEFORE THE APPELLATE AUTHORITY WHICH COULD NOT HAVE BEEN CLAIMED BEFORE THE AO. THE HON'BLE BOMBAY HIGH COURT HAS FU RTHER OBSERVED THAT THE DECISION OF HON'BLE SUPREME COURT IN THE C ASE OF ' GOETZE (INDIA) LTD. V. CIT ' [2006] 284 ITR 323/157 TAXMAN 1 REGARDING THE RESTRICTION OF MAKING THE CLAIM THROUGH A REVISED R ETURN WAS LIMITED TO THE POWERS OF THE ASSESSING AUTHORITY AND THE SAID JUDGMENT DOES NOT IMPINGE ON THE POWER OR NEGATE THE POWERS OF THE AP PELLATE AUTHORITIES TO ENTERTAIN SUCH CLAIM BY WAY OF ADDITIONAL GROUND . RELIANCE CAN ALSO BE PLACED IN THIS REGARD ON THE DECISIONS OF THE TR IBUNAL IN THE CASE OF PV. ANANTHKRISHNAN V. ACIT [IT APPEAL NO.1820/M/2011 DATED 05.05.2014] AND IN THE CASE OF PRESIDENCY CO-OPERATIVE HOUSING SOCIETY LTD. V. ACIT [IT APPEAL NO.4051/M/2011, DATED 16.05.2014]. THE PRESENT CASE IS NOT A CASE WHERE THE ASSESSEE H AD NOT CLAIMED ANY DEDUCTION ON ACCOUNT OF DEPRECIATION. THE ASSESSEE HAS VERY MUCH CLAIMED THE DEDUCTION OF DEPRECIATION. HOWEVER, HE HAS CLAIMED THE SAME TREATING ITSELF TO BE THE OWNER OF THE TOLL RO AD. SUCH A CLAIM OF THE ASSESSEE HAS BEEN ALLOWED IN THE PREVIOUS ASSES SMENT YEARS. THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT HE HAS CORR ECTLY CLAIMED THE DEDUCTION OF DEPRECIATION ON THE TOLL ROAD IN VIEW OF THE CONSISTENT FINDINGS OF THE TRIBUNAL ON THIS ISSUE. HOWEVER, DU E TO THE CHANGE OF LEGAL POSITION IN VIEW OF THE LAW LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT (SUPRA), THE ASSESSEE CANNOT BE TREATED AS THE OWNER OF THE TOLL ROAD. BUT IT IS NOT DISPUTED THAT THE ASSESSEE HAS MADE INVESTMENTS ON THE PROJECT AND HE IS ENTITLED TO CLAIM DEDUCTIO NS IN THIS RESPECT. THE CLAIM OF DEDUCTION HAS BEEN VERY MUCH PUT BY TH E ASSESSEE IN THE RETURN OF INCOME BUT WRONGLY TREATING ITSELF AS OWN ER OF THE ROAD WHICH CLAIM AS OBSERVED ABOVE WAS UNDER BONAFIDE BE LIEF AND IN VIEW OF THE SETTLED LEGAL POSITION AS WAS THERE AT THE T IME OF PUTTING THE CLAIM. EVEN THE AO HAS ALSO OBSERVED IN THE ASSESSM ENT ORDER THAT IT IS A FACT THAT THE ASSESSEE COMPANY HAS INCURRED HUGE EXPENDITURE ON THE SAID PROJECT WHICH CANNOT BE TREATED AS REVENUE EXP ENDITURE ALLOWABLE THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 13 IN ONE YEAR AS THE SAME HAS RESULTED INTO PROVIDING ENDURING BENEFIT TO THE ASSESSEE COMPANY, HENCE, THE SAID AMOUNT WOULD BE ELIGIBLE FOR AMORTIZATION FOR THE PERIOD OF THE CONCESSION AGREE MENT AS IT WAS ALLOWED IN THE A.Y. 2007-08 AND 2008-09. IT IS ALSO A FACT THAT THE SAID AMORTIZATION OF THE EXPENSES HAS NOT BEEN ACCEPTED BY THE TRIBUNAL AND THE ASSESSEE IN THE EARLIER ASSESSMENT YEARS HA S BEEN GRANTED DEDUCTION AS DEPRECIATION TREATING THE ROAD AS A CA PITAL ASSET. 23. IN VIEW OF THE ABOVE FACTS, IT IS NOT DISPUTED OR CONTESTED BY THE REVENUE THAT THE ASSESSEE IS NOT ENTITLED TO ANY DE DUCTION. THE ONLY ISSUE IN DISPUTE IS AS TO UNDER WHAT HEAD/PROVISION THE DEDUCTION IS TO BE ALLOWED TO THE ASSESSEE. THE HON'BLE JURISDICTIO N HIGH COURT OF BOMBAY IN THE CASE OF BALMUKUND ACHARYA V. DY. CIT [2009] 310 ITR 310/176 TAXMAN 316 HAS HELD THAT THE HON'BLE APEX COURT AND THE VARIOUS HIGH COURTS HAVE RULED THAT THE AUTHORI TIES UNDER THE ACT ARE UNDER OBLIGATION TO ACT IN ACCORDANCE WITH LAW. TAX CAN BE COLLECTED ONLY AS PROVIDED UNDER THE ACT. IF THE AS SESSEE, UNDER A MISTAKE, MISCONCEPTION OR ON NOT BEING PROPERLY INS TRUCTED IS OVER ASSESSED, THE AUTHORITIES UNDER THE ACT ARE REQUIRE D TO ASSIST HIM AND ENSURE THAT ONLY LEGITIMATE TAXES DUES ARE COLLECTE D. WHILE HOLDING SO, THE HON'BLE BOMBAY HIGH COURT HAS RELIED UPON THE V ARIOUS DECISIONS E.G. S.R. KOSHTI V. CIT [2005] 276 ITR 165/146 TAXMAN 335 (GUJ) , C.P.A. YOOSUF V. ITO [1970] 77 ITR 237 (KER.) , CIT V. BHARAT GENERAL REINSURANCE CO. LTD. [1971] 81 ITR 303 (DELHI) , CIT V. SMT. ARCHANA R. DHANWATEY [1982] 136 ITR 355/[1981] 7 TAXMAN 121 (BOM.) . IN VIEW OF THE ABOVE DISCUSSED FACTUAL AND LEGAL PO SITION, WE HAVE NO HESITATION TO HOLD THAT THE ASSESSEE IS ENTITLED TO PUT HIS ALTERNATE CLAIM THAT THE DEDUCTION ALLOWABLE TO HIM MAY BE CONSIDER ED AS ALLOWABLE AS DEPRECIATION TREATING THE PROJECT/INVESTMENTS MADE UNDER THE HEAD 'PLANT & MACHINERY' OR TREATING IT AS A RIGHT/LICEN SE TO COLLECT THE TOLL TAX AS INTANGIBLE ASSET. 24. HAVING HELD THAT THE ASSESSEE IS ENTITLED TO T HE DEDUCTION ON THE INVESTMENTS MADE BY HIM, WE NOW HAVE TO DISCUSS AS TO UNDER WHAT HEAD THE SAID DEDUCTIONS CAN BE CLAIMED BY THE ASSE SSEE. IT IS UNDISPUTED THAT IN VIEW OF THE AGREEMENT WITH THE N HAI, THE ASSESSEE HAS BEEN GIVEN THE RIGHT TO DEVELOP AND MAINTAIN TH E TOLL ROAD AND ALSO THE RIGHT TO COLLECT TOLL FOR A SPECIFIED PERIOD WI THOUT HAVING ACTUAL OWNERSHIP OVER THE SAID TOLL ROAD. THE ASSESSEE HAS AN EXPRESS RIGHT/LICENSE FOR RECOVERY OF TOLL FEE TO RECOUP TH E EXPENDITURE. THE SAID RIGHT BRINGS TO THE ASSESSEE AN ENDURING BENEF IT DURING THE PERIOD OF AGREEMENT. THIS FACT HAS ALSO BEEN DISCUSSED BY THE CBDT IN CIRCULAR NO.09/2014 DATED 23.04.14. THE PARA 4 OF W HICH, FOR THE SAKE OF CONVENIENCE, IS REPRODUCED AS UNDER: THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 14 'THERE IS NO DOUBT THAT WHERE THE ASSESSEE INCURS E XPENDITURE ON A PROJECT FOR DEVELOPMENT OF ROADS/HIGHWAYS, HE IS ENTITLED T O RECOVER COST INCURRED BY HIM TOWARDS DEVELOPMENT OF SUCH FACILITY (COMPRISIN G OF CONSTRUCTION COST AND OTHER PRE-OPERATIVE EXPENSES) DURING THE CONSTR UCTION PERIOD. FURTHER, EXPENDITURE INCURRED BY THE ASSESSEE ON SUCH BOT PR OJECTS BRINGS TO IT AN ENDURING BENEFIT IN THE FORM OF RIGHT TO COLLECT TH E TOLL DURING THE PERIOD OF THE AGREEMENT. HON'BLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD . V. CIT IN 225 ITR 802 ALLOWED SPREADING OVER OF LIABILITY OVER A NUMBER OF YEARS ON THE GROUND T HAT THERE WAS CONTINUING BENEFIT TO THE COMPANY OVER A PERIOD. THEREFORE, AN ALOGOUSLY, EXPENDITURE INCURRED ON AN INFRASTRUCTURE PROJECT FOR DEVELOPME NT OF ROADS/HIGHWAYS UNDER BOT AGREEMENT MAY BE TREATED AS HAVING BEEN M ADE/INCURRED FOR THE PURPOSES OF BUSINESS OR PROFESSION OF THE ASSESSEE AND THE SAME MAY BE ALLOWED TO BE SPREAD DURING THE TENURE OF CONCESSIO NAIRE AGREEMENT.' 25. HAVING DISCUSSED THE ABOVE STATED FACTUAL POSI TION, THE CBDT HAS DIRECTED TO TREAT THE ABOVE EXPENDITURE AS REVENUE EXPENDITURE AND TO AMORTIZE THE SAME OVER THE PERIOD OF THE AGREEMENT AS ALLOWABLE BUSINESS EXPENDITURE. THE ASSESSEE, HOWEVER, HAS CL AIMED THAT THE SAME IS A CAPITAL EXPENDITURE AND IT IS ENTITLED TO DEDUCTIONS OVER THE INVESTMENTS MADE AS DEPRECIATION. A PERUSAL OF THE ABOVE REPRODUCED PARA 4 OF THE CIRCULAR REVEALS THAT IT IS NOT DISPU TED EVEN BY THE REVENUE AUTHORITIES THAT IN LIEU OF THE INVESTMENTS MADE IN THE PROJECT, THE ASSESSEE HAS BEEN GIVEN RIGHT/LICENSE TO COLLECT THE TOLL. IT HAS ALSO BEEN SPECIFICALLY MENTIONED THAT IT BRINGS AN ENDURING BENEFIT IN THE FORM OF RIGHT TO THE ASSESSEE. HAVING ADMITT ED THE ABOVE POSITION BY THE REVENUE, NOW THE QUESTION TO BE CON SIDERED IS WHETHER ANY DEPRECIATION IS ALLOWABLE ON SUCH A RIGHT? 26. AS PER SECTION 32(1)(II) DEPRECIATION IS ALLOW ABLE ON INTANGIBLE ASSETS LIKE LICENSES, FRANCHISES OR ANY OTHER BUSIN ESS OR SIMILAR COMMERCIAL RIGHTS OF SIMILAR NATURE. THE RELEVANT P ART OF THE SECTION FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: DEPRECIATION . (1) IN RESPECT OF DEPRECIATION OF 32. (1) [IN RESPECT OF DEPRECIATION OF (I) BUILDINGS, MACHINERY, PLANT OR FURNITURE, BEI NG TANGIBLE ASSETS; (II) KNOW-HOW, PATENTS, COPYRIGHTS, TRADE MARKS, LI CENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATU RE, BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1 ST DAY OF APRIL, 1988, OWNED, WHOLLY OR PARTLY BY THE ASSESSEE AND USED FOR THE PURPOSES OF THE BUSIN ESS OR PROFESSION, THE FOLLOWING DEDUCTIONS SHALL BE ALLOWED- ] .. (EMPHASIS SUPPLIED BY US) THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 15 27. IT IS NOT DISPUTED THAT THE ASSESSEE HAS BEEN GIVEN LICENSE/COMMERCIAL RIGHT OVER THE PROJECT TO RECEIV E THE TOLL. THE ASSESSEE MAY NOT BE THE OWNER OF THE TOLL ROAD, BUT HE, CERTAINLY, IS OWNER IN POSSESSION OF THE RIGHT TO COLLECT THE TOL L. THE SAID RIGHT HAS BEEN GIVEN TO THE ASSESSEE FOR A SPECIFIED PERIOD W ITH ENDURING BENEFIT. IT IS ALSO NOT DISPUTED THAT ON THE EXPIRY OF THE T IME PERIOD OF THE AGREEMENT, THE SAID RIGHT OF THE ASSESSEE WILL CEAS E TO HAVE EFFECT WHICH MEANS IT SLOWLY WILL DEPRECIATE TO THE NIL VA LUE. AS PER THE PROVISIONS OF THE INCOME TAX ACT, ESPECIALLY UNDER SECTION 32(1)(II), THE ASSESSEE IS ENTITLED TO CLAIM OF DEPRECIATION O N SUCH TYPE OF RIGHTS. SUCH RIGHTS HAVE BEEN DESCRIBED AS INTANGIBLE ASSET S UNDER THE ACT AND ARE ELIGIBLE FOR CLAIM OF DEPRECIATION. 28. IN VIEW OF THE EXPRESS PROVISIONS OF THE ACT, WE HAVE NO DOUBT TO HOLD THAT THE ASSESSEE IS ENTITLED TO COLLECT TAX B EING AN INTANGIBLE COMMERCIAL RIGHT UNDER SECTION 32(1)(II) AT THE RAT E AS HAS BEEN PRESCRIBED UNDER THE RELEVANT RULES. OUR ABOVE VIEW IS FURTHER SUPPORTED BY THE DECISION OF THE CO-ORDINATE PUNE B ENCH OF THE TRIBUNAL IN THE CASE OF ASHOKA INFRASTRUCTURE LTD. V. ITO [IT APPEAL NOS. 989 & 1105/(PN) OF 2010], WHEREIN, THE TRIBUNA L WHILE FURTHER RELYING UPON ANOTHER DECISION OF THE CO-ORDINATE BE NCH OF THE TRIBUNAL IN THE CASE OF ASSTT. CIT V. ASHOKA INFRAWAYS (P.) LTD. [2013] 58 SOT 147/33 TAXMANN.COM 499 (PUNE - TRIB.) HAS HELD IN CLEAR TERMS THAT THE CLAIM OF THE ASSESSEE FOR DEPRECIATI ON ON 'LICENCE TO COLLECT TOLL' BEING AN 'INTANGIBLE ASSET' FALLING W ITHIN THE SCOPE OF SECTION 32(1)(II) OF THE ACT IS LIABLE TO BE UPHELD . THE RELEVANT PART OF FINDINGS OF THE TRIBUNAL FOR THE SAKE OF CONVENIENC E IS REPRODUCED AS UNDER: 6. AT THE TIME OF HEARING, IT WAS A COMMON POINT B ETWEEN THE PARTIES THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE PUNE BEN CH OF THE TRIBUNAL IN THE CASE OF ASHOKA INFRAWAYS PVT. LTD. V. ACIT VIDE ITA NOS. 185 & 186/PN/2012 DATED 29.04.2013. AS PER THE TRIBUNAL F OLLOWING THE PRECEDENTS BY WAY OF VARIOUS DECISIONS OF DIFFERENT BENCHES OF THE TRIBUNAL MENTIONED THEREIN, THE CLAIM OF THE ASSESSEE FOR TR EATING THE 'LICENSE TO COLLECT TOLL' AS AN INTANGIBLE ASSET ELIGIBLE FOR T HE CLAIM OF DEPRECIATION @ 25% AS PER SECTION 32(1)(II) OF THE ACT WAS JUSTIFI ED. THE FOLLOWING DISCUSSION IN THE ORDER OF THE TRIBUNAL DATED 29.04 .2013 (SUPRA) IS RELEVANT : 7. BEFORE US, IT WAS A COMMON POINT BETWEEN THE PA RTIES THAT THE IMPUGNED ISSUE HAS BEEN ADJUDICATED IN FAVOUR OF THE ASSESSE E IN THE FOLLOWING DECISIONS OF THE TRIBUNAL: I) ASHOKA BUILDCON LTD. IN ITA NO. 1302/PN/09 DATED 20.03.2012. II) M/S. KALYAN TOLL INFRASTRUCTURE LTD. IN ITA NOS . 201 & 247/IND/2008 DATED 14.12.2010 THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 16 III) DIMENSION CONSTRUCTION PVT. LTD. IN ITA NO. 22 2, 223, 233 & 857/PN/2009 DATED 18.03.2011. IV) ASHOKA INFO (P) LTD. (SUPRA) V) RELIANCE PORTS AND TERMINALS LTD. (SUPRA). 8. THE LD. CIT(DR) APPEARING FOR THE REVENUE, HAS S UBMITTED THAT THE 'INTANGIBLE ASSETS' ELIGIBLE FOR DEPRECIATION IN SE CTION 32(1)(II) OF THE ACT, ARE ONLY THOSE WHICH ARE OWNED BY THE ASSESSEE AND HAVE BEEN ACQUIRED AFTER SPENDING MONEY. IN THE CASE OF THE ASSESSEE, BY WAY OF AN AGREEMENT, ASSESSEE WAS AWARDED A WORK TO CONSTRUCT A ROAD BY USING OWN FUNDS AND THE EXPENDITURE INCURRED WAS ALLOWED TO BE REIMBURSED B Y PERMITTING THE ASSESSEE A CONCESSION TO COLLECT TOLL/FEES FROM THE MOTORISTS USING THE ROAD. THEREFORE, IT COULD NOT BE SAID THAT SUCH A RIGHT W AS WITHIN THE PURVIEW OF SECTION 32(1)(II) OF THE ACT. HOWEVER, THE LD. CIT( DR) HAS NOT CONTESTED THE FACTUAL MATRIX THAT IDENTICAL ISSUE HAS BEEN CONSID ERED BY OUR COORDINATE BENCHES IN THE CASE OF ASHOKA BUILDCON LTD . ( SUPRA ), KALYAN TOLL INFRASTRUCTURE LTD . ( SUPRA ), DIMENSION CONSTRUCTION PVT. LTD . ( SUPRA ) AND ASHOKA INFO (P) LTD . ( SUPRA ). 9. ON THE OTHER HAND, THE LD. REPRESENTATIVE FOR T HE RESPONDENT ASSESSEE POINTED OUT THAT THE AFORESAID ARGUMENT SET UP BY T HE REVENUE HAS ALSO BEEN CONSIDERED IN THE AFORESAID PRECEDENTS BEFORE CONCL UDING THAT THE IMPUGNED 'RIGHT TO COLLECT TOLL' WAS AN 'INTANGIBLE ASSET' E LIGIBLE FOR CLAIM OF DEPRECIATION @ 25% AS PER SEC. 32(1)01) OF THE ACT. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. FACTUALLY SPEAKING, THERE IS NO DISPUTE TO THE FACT THAT THE COSTS CAPI TALISED BY THE ASSESSEE UNDER THE HEAD 'LICENSE TO COLLECT TOLL' HAVE BEEN INCURR ED FOR DEVELOPMENT AND CONSTRUCTION OF THE INFRASTRUCTURE FACILITY, I.E., DEWAS BY-PASS ROAD. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE WAS TO BUILD, OPER ATE AND TRANSFER THE SAID INFRASTRUCTURE FACILITY IN TERMS OF AN AGREEMENT WI TH THE GOVERNMENT OF MADHYA PRADESH. THE EXPENDITURE ON DEVELOPMENT, CON STRUCTION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY FOR A SP ECIFIED PERIOD WAS TO BE INCURRED BY THE ASSESSEE OUT OF ITS OWN FUNDS. MORE OVER, AFTER THE END OF THE SPECIFIED PERIOD, ASSESSEE WAS TO TRANSFER THE SAID INFRASTRUCTURE FACILITY TO THE GOVERNMENT OF MADHYA PRADESH FREE OF CHARGE. IN CONSIDERATION OF DEVELOPING, CONSTRUCTING, MAINTAINING THE FACILITY FOR A SPECIFIED PERIOD AND THEREAFTER TRANSFERRING IT TO THE GOVERNMENT OF MAD HYA PRADESH FREE OF CHARGE, ASSESSEE WAS GRANTED A RIGHT TO COLLECT TOL L' FROM THE MOTORISTS USING THE SAID INFRASTRUCTURE FACILITY DURING THE SPECIFI ED PERIOD. THE SAID RIGHT TO COLLECT THE TOLL' IS EMERGING AS A RESULT OF THE CO STS INCURRED BY THE ASSESSEE ON DEVELOPMENT, CONSTRUCTION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY. SUCH A RIGHT HAS BEEN ADJUDICATED BY THE TRIBUNAL I N THE AFORESAID PRECEDENTS TO BE IN THE NATURE OF 'INTANGIBLE ASSET' FALLING W ITHIN THE PURVIEW OF SECTION 32(1)(I/) OF THE ACT AND HAS BEEN FOUND ELIGIBLE FO R CLAIM OF DEPRECIATION. NO DECISION TO THE CONTRARY HAS BEEN CITED BY THE LD. DR BEFORE US AND, THEREFORE, WE FIND NO REASONS TO DEPART FROM THE AC CEPTED POSITION BASED ON THE AFORESAID DECISIONS. THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 17 11. SO HOWEVER, THE PLEA OF THE LD. DR BEFORE US I S TO THE EFFECT THAT THE IMPUGNED RIGHT IS NOT OF THE NATURE REFERRED TO IN SECTION 32(1)(II) OF THE ACT FOR THE REASON THAT THE AGREEMENT WITH THE GOVERNME NT OF MADHYA PRADESH ONLY ALLOWED THE ASSESSEE TO RECOVER THE COSTS INCU RRED FOR CONSTRUCTING THE ROAD FACILITY WHEREAS SECTION 32(1)(II) OF THE ACT REQUIRED THAT THE ASSETS MENTIONED THEREIN SHOULD BE ACQUIRED BY THE ASSESSE E AFTER SPENDING MONEY. THE SAID ARGUMENT IN OUR VIEW IS FACTUALLY AND LEGA LLY MISPLACED. FACTUALLY SPEAKING, IT IS WRONG TO SAY THAT IMPUGNED RIGHT AC QUIRED BY THE ASSESSEE WAS WITHOUT INCURRENCE OF ANY COST. IN FACT, IT IS QUIT E EVIDENT THAT ASSESSEE GOT THE RIGHT TO COLLECT TOLL FOR THE SPECIFIED PERIOD ONLY AFTER INCURRING EXPENDITURE THROUGH ITS OWN RESOURCES ON DEVELOPMEN T, CONSTRUCTION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY. SECONDL Y, SECTION 32(1)(I1) PERMITS ALLOWANCE OF DEPRECIATION ON ASSETS SPECIFI ED THEREIN BEING 'INTANGIBLE ASSETS' WHICH ARE WHOLLY OR PARTLY OWNE D BY THE ASSESSEE AND USED FOR THE PURPOSES OF ITS BUSINESS. THE AFORESAID CON DITION IS FULLY SATISFIED BY THE ASSESSEE AND THEREFORE CONSIDERED IN THE AFORES AID PERSPECTIVE WE FIND NO JUSTIFICATION FOR THE PLEA RAISED BY THE REVENUE BE FORE US. 12. IN THE RESULT, WE AFFIRM THE ORDER OF THE CIT( A) IN HOLDING THAT THE ASSESSEE WAS ELIGIBLE FOR DEPRECIATION ON THE 'RIGH T TO COLLECT TOLL', BEING AN 'INTANGIBLE ASSET' FALLING WITHIN THE PURVIEW OF SE CTION 32(1)(I1) OF THE ACT FOLLOWING THE AFORESAID PRECEDENTS.' 7. IN TERMS OF THE AFORESAID PRECEDENT, THE CLAIM OF THE ASSESSEE IN THE PRESENT CASE FOR DEPRECIATION ON 'LICENSE TO COLLEC T TOLL', BEING AN 'INTANGIBLE ASSET' FALLING WITH THE SCOPE OF SECTIO N 32(1)(II) OF THE ACT IS LIABLE TO BE UPHELD. WE HOLD SO. 8. IN SO FAR AS THE RELIANCE PLACED BY THE CIT(A) ON THE JUDGEMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TECHNO SHARES AND STOCKS LTD. (SUPRA) IS CONCERNED IT MAY ONLY BE NOT ED THAT THE SAID JUDGEMENT HAS SINCE BEEN ALTERED BY THE HON'BLE SUP REME COURT VIDE ITS ORDER REPORTED AT (2010) 327 ITR 323 (SC). ACCO RDINGLY, IN VIEW OF THE AFORESAID DISCUSSION, WE HEREBY ALLOW THE GROUN D OF APPEAL NO. 1.1 RAISED BY THE ASSESSEE.' 29. IN VIEW OF OUR OBSERVATIONS MADE IN THE PRECED ING PARAS AND ALSO AGREEING WITH THE ABOVE REPRODUCED FINDINGS OF THE TRIBUNAL, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEPRE CIATION ON THE ROAD TO COLLECT TOLL BEING AN INTANGIBLE ASSET FALLING WITH IN THE PURVIEW OF SECTION 32(1) (II) OF THE ACT. 30. SO FAR AS THE OTHER ALTERNATIVE CONTENTION OF THE ASSESSEE THAT THE PROJECT BE TREATED AS PLANT & MACHINERY AND THE DEP RECIATION BE ACCORDINGLY ALLOWED TO IT, WE DO NOT FIND THAT THE SAID LICENSE OF RIGHT TO COLLECT TOLL IN ANY WAY FALLS IN THE DEFINITION OF PLANT & MACHINERY. AS HELD BY THE HON'BLE BOMBAY HIGH COURT, EVEN THE ASSESSEE IS NOT THE OWNER OF THE TOLL ROAD. THE ASSESSEE HAS BEEN G IVEN ONLY THE RIGHT THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 18 TO DEVELOP, MAINTAIN AND OPERATE THE TOLL ROAD AND FURTHER TO COLLECT THE TOLL FOR THE SPECIFIED PERIOD. THIS RIGHT AS DISCUS SED ABOVE IS AN INTANGIBLE ASSET FALLING UNDER SECTION 32(1)(II) OF THE ACT. 31. SO FAR AS THE CONTENTION OF THE REVENUE THAT T HE INVESTMENT MADE BY THE ASSESSEE BE TREATED AS A REVENUE EXPENDITURE AND BE AMORTIZED FOR THE PERIOD OF THE AGREEMENT, IS CONCERNED, WE D O NOT FIND ANY FORCE IN THE SAME ON THE GROUND THAT NOT ONLY THE AO BUT ALSO THE CBDT IN THE CIRCULAR (SUPRA) AS DISCUSSED ABOVE HAS ADMITTE D THAT THE LICENSE OF RIGHT TO COLLECT TOLL FREE HAS BEEN GIVEN TO THE AS SESSEE IN LIEU OF THE INVESTMENTS MADE AND THAT SUCH A RIGHT BRINGS TO TH E ASSESSEE AN ENDURING BENEFIT. THE INVESTMENTS MADE UNDER SUCH C IRCUMSTANCES CANNOT BE SAID TO BE OF REVENUE IN NATURE BUT, AS D ISCUSSED ABOVE, ARE OF CAPITAL IN NATURE. THE ASSESSEE, THUS, IS ENTITL ED TO CLAIM DEPRECIATION ON SUCH TYPE OF CAPITAL ASSET. 32. IN VIEW OF OUR ABOVE FINDINGS, THIS GROUND OF THE REVENUE IS HEREBY DISMISSED BUT ON A DIFFERENT FOOTING AS DISC USSED ABOVE AND IN TERMS OF OUR OBSERVATIONS MADE ABOVE. 7. CONSIDERING THE DECISION OF CO-ORDINATE BENCH REFER RED ABOVE AND RESPECTFULLY FOLLOWING THE SAME, THE ASSE SSEE IS ALLOWED DEPRECIATION ON ROAD CONSTRUCTED BY IT UNDE R BOT BASIS AS AN INTANGIBLE ASSET FALLS WITHIN THE SCOPE OF SECTION 32(1)(II) OF THE ACT. NO CONTRARY DECISION OR MATER IAL BROUGHT TO OUR NOTICE. IN THE RESULT, GROUND NO.2 O F CROSS OBJECTION RAISED BY ASSESSEE IS ALLOWED. THE ASSESS EE HAS RAISED GROUND NO.3 IN CROSS OBJECTION IN ALTERNATIV E TO GROUND NO.2. SINCE, WE HAVE ALLOWED THE GROUND NO.2 OF THE CROSS OBJECTION. HENCE, DISCUSSIONS ON GROUND NO.3 HAVE BECOME ACADEMIC. GROUND NO.4 OF CROSS OBJECTION TO AMORTIZATION OF COST, AS WE HAVE ALREADY ALLOWED TH E DEPRECIATION TO THE ASSESSEE, THE DISCUSSIONS ON TH IS GROUND HAVE ALSO BECOME ACADEMIC. IN THE RESULT, THE APPEAL FILED BY REVENUE IS ALLOW ED FOR STATISTICAL PURPOSE ONLY SINCE THE CLAIM OF DEPRECI ATION IS ULTIMATELY ALLOWED IN THE CROSS OBJECTION FILED BY ASSESSEE. THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 19 2.2. IN THE LIGHT OF THE ABOVE ORDER, NOW, WE SHAL L EXAMINE SECTION 32 OF THE ACT, WHICH DEALS WITH DEPRECIATION. IT IS REPRODUCED HEREUNDER:- 32. (1) IN RESPECT OF DEPRECIATION OF ( I ) BUILDINGS, MACHINERY, PLANT OR FURNITURE, BEING T ANGIBLE ASSETS; ( II ) KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENC ES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGH TS OF SIMILAR NATURE, BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1ST DAY OF APRIL, 1998, OWNED, WHOLLY OR PARTLY, BY THE ASSESSEE AND USED F OR THE PURPOSES OF THE BUSINESS OR PROFESSION, THE FOLLOWING DEDUCTION S SHALL BE ALLOWED ( I ) IN THE CASE OF ASSETS OF AN UNDERTAKING ENGAGED I N GENERATION OR GENERATION AND DISTRIBUTION OF POWER, SUCH PERCENTA GE ON THE ACTUAL COST THEREOF TO THE ASSESSEE AS MAY BE PRESCRIBED 31 ; ( II ) IN THE CASE OF ANY BLOCK OF ASSETS, SUCH PERCENTA GE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED 32 : PROVIDED THAT NO DEDUCTION SHALL BE ALLOWED UNDER THIS CLAU SE IN RESPECT OF ( A ) ANY MOTOR CAR MANUFACTURED OUTSIDE INDIA, WHERE S UCH MOTOR CAR IS ACQUIRED BY THE ASSESSEE AFTER THE 28TH DAY OF F EBRUARY, 1975 BUT BEFORE THE 1ST DAY OF APRIL, 2001, UNLESS IT IS USE D ( I ) IN A BUSINESS OF RUNNING IT ON HIRE FOR TOURISTS ; OR ( II ) OUTSIDE INDIA IN HIS BUSINESS OR PROFESSION IN AN OTHER COUNTRY ; AND ( B ) ANY MACHINERY OR PLANT IF THE ACTUAL COST THEREOF IS ALLOWED AS A DEDUCTION IN ONE OR MORE YEARS UNDER AN AGREEMENT E NTERED INTO BY THE CENTRAL GOVERNMENT UNDER SECTION 42 : PROVIDED FURTHER THAT WHERE AN ASSET REFERRED TO IN CLAUSE ( I ) OR CLAUSE ( II ) OR CLAUSE ( IIA ) OR THE FIRST PROVISO TO CLAUSE ( IIA ), AS THE CASE MAY BE, IS ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS OR PROFE SSION FOR A PERIOD OF LESS THAN ONE HUNDRED AND EIGHTY DAYS IN THAT PREVI OUS YEAR, THE DEDUCTION UNDER THIS SUB-SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTED TO FIFTY PER CENT OF THE AMOUNT CALCULAT ED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET UNDER CLAUSE ( I ) OR CLAUSE ( II ) OR CLAUSE ( IIA ), AS THE CASE MAY BE : THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 20 PROVIDED ALSO THAT WHERE AN ASSET REFERRED TO IN CLAUSE ( IIA )OR THE FIRST PROVISO TO CLAUSE ( IIA ) , AS THE CASE MAY BE, IS ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS FOR A PERIOD OF LESS THAN ONE HUNDRED AND EIGHTY DAYS IN THAT PREVIOUS YEAR, AND THE DEDUCTION UNDER THIS SUB-SEC TION IN RESPECT OF SUCH ASSET IS RESTRICTED TO FIFTY PER CENT OF THE A MOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET UNDER CLAUSE ( IIA )FOR THAT PREVIOUS YEAR, THEN, THE DEDUCTION FOR THE BALANCE FIFTY PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR SUCH AS SET UNDER CLAUSE ( IIA )SHALL BE ALLOWED UNDER THIS SUB-SECTION IN THE IMM EDIATELY SUCCEEDING PREVIOUS YEAR IN RESPECT OF SUCH ASSET: PROVIDED ALSO THAT WHERE AN ASSET BEING COMMERCIAL VEHICLE IS ACQUIRED BY THE ASSESSEE ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 BUT BEFORE THE 1ST DAY OF APRIL, 1999 AND IS PUT TO USE BEFORE THE 1ST DAY OF APRIL, 1999 FOR THE PURPOSES OF BUSINESS OR PROF ESSION, THE DEDUCTION IN RESPECT OF SUCH ASSET SHALL BE ALLOWED ON SUCH PERCENTAGE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED. EXPLANATION. FOR THE PURPOSES OF THIS PROVISO, ( A ) THE EXPRESSION 'COMMERCIAL VEHICLE' MEANS 'HEAVY GOODS VEHICLE', 'HEAVY PASSENGER MOTOR VEHICLE', 'LIGHT M OTOR VEHICLE', 'MEDIUM GOODS VEHICLE' AND 'MEDIUM PASSENGER MOTOR VEHICLE' BUT DOES NOT INCLUDE 'MAXI-CAB', 'MOTOR-CAB', 'TRACTOR' AND 'ROAD- ROLLER'; ( B ) THE EXPRESSIONS 'HEAVY GOODS VEHICLE', 'HEAVY PAS SENGER MOTOR VEHICLE', 'LIGHT MOTOR VEHICLE', 'MEDIUM GOODS VEHI CLE', 'MEDIUM PASSENGER MOTOR VEHICLE', 'MAXI-CAB', 'MOTOR-CAB', 'TRACTOR' AND 'ROAD ROLLER' SHALL HAVE THE MEANINGS RESPECTIVELY AS ASSIGNED TO THEM IN SECTION 2 OF THE MOTOR VEHICLES ACT, 1988 ( 59 OF 1988): PROVIDED ALSO THAT, IN RESPECT OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1991, THE DEDUCTION IN RELATION TO ANY BLOCK OF ASSETS UNDER THIS CLAUSE SHALL, IN THE CASE OF A COMPANY, BE RESTRICTED TO SEVENTY-FIV E PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE, ON THE WRITTEN DOWN VALUE OF SUCH ASSETS, PRESCRIBED UNDER THIS ACT IMMEDIATELY BEFORE THE COMMENCEMENT OF THE TAXATION LAWS (AMENDMENT) ACT, 1991: PROVIDED ALSO THAT THE AGGREGATE DEDUCTION, IN RESPECT OF DEPRECIATION OF BUILDINGS, MACHINERY, PLANT OR FURN ITURE, BEING TANGIBLE ASSETS OR KNOW-HOW, PATENTS, COPYRIGHTS, T RADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMME RCIAL RIGHTS OF SIMILAR NATURE, BEING INTANGIBLE ASSETS ALLOWABLE T O THE PREDECESSOR AND THE SUCCESSOR IN THE CASE OF SUCCESSION REFERRE D TO IN CLAUSE ( XIII ), CLAUSE ( XIIIB ) AND CLAUSE ( XIV )OF SECTION 47 OR SECTION 170 OR TO THE AMALGAMATING COMPANY AND THE AMALGAMATED COMPANY IN THE CASE OF AMALGAMATION, OR TO THE DEMERGED COMPANY AND THE RE SULTING THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 21 COMPANY IN THE CASE OF DEMERGER, AS THE CASE MAY BE , SHALL NOT EXCEED IN ANY PREVIOUS YEAR THE DEDUCTION CALCULATE D AT THE PRESCRIBED RATES AS IF THE SUCCESSION OR THE AMALGA MATION OR THE DEMERGER, AS THE CASE MAY BE, HAD NOT TAKEN PLACE, AND SUCH DEDUCTION SHALL BE APPORTIONED BETWEEN THE PREDECES SOR AND THE SUCCESSOR, OR THE AMALGAMATING COMPANY AND THE AMAL GAMATED COMPANY, OR THE DEMERGED COMPANY AND THE RESULTING COMPANY, AS THE CASE MAY BE, IN THE RATIO OF THE NUMBER OF DAYS FOR WHICH THE ASSETS WERE USED BY THEM. EXPLANATION 1. WHERE THE BUSINESS OR PROFESSION OF THE ASSESSEE I S CARRIED ON IN A BUILDING NOT OWNED BY HIM BUT IN RE SPECT OF WHICH THE ASSESSEE HOLDS A LEASE OR OTHER RIGHT OF OCCUPANCY AND ANY CAPITAL EXPENDITURE IS INCURRED BY THE ASSESSEE FOR THE PUR POSES OF THE BUSINESS OR PROFESSION ON THE CONSTRUCTION OF ANY S TRUCTURE OR DOING OF ANY WORK IN OR IN RELATION TO, AND BY WAY OF REN OVATION OR EXTENSION OF, OR IMPROVEMENT TO, THE BUILDING, THEN , THE PROVISIONS OF THIS CLAUSE SHALL APPLY AS IF THE SAID STRUCTURE OR WORK IS A BUILDING OWNED BY THE ASSESSEE. EXPLANATION 2. FOR THE PURPOSES OF THIS SUB-SECTION 'WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS' SHALL HAVE THE SAME M EANING AS IN CLAUSE* ( C ) OF SUB-SECTION ( 6 ) OF SECTION 43 . EXPLANATION 3. FOR THE PURPOSES OF THIS SUB-SECTION, THE EXPRESSIO N 'ASSETS' SHALL MEAN ( A ) TANGIBLE ASSETS, BEING BUILDINGS, MACHINERY, PLAN T OR FURNITURE; ( B ) INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COPYR IGHTS, TRADE MARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS O R COMMERCIAL RIGHTS OF SIMILAR NATURE. EXPLANATION 4. FOR THE PURPOSES OF THIS SUB-SECTION, THE EXPRESSIO N 'KNOW-HOW' MEANS ANY INDUSTRIAL INFORMATION OR TECH NIQUE LIKELY TO ASSIST IN THE MANUFACTURE OR PROCESSING OF GOODS OR IN THE WORKING OF A MINE, OIL-WELL OR OTHER SOURCES OF MINERAL DEPOSI TS (INCLUDING SEARCHING FOR DISCOVERY OR TESTING OF DEPOSITS FOR THE WINNING OF ACCESS THERETO). EXPLANATION 5. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED TH AT THE PROVISIONS OF THIS SUB-SECTION SHALL APPLY WHET HER OR NOT THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF DE PRECIATION IN COMPUTING HIS TOTAL INCOME; ( IIA ) IN THE CASE OF ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AF TER THE 31ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING 33 [OR IN THE BUSINESS OF GENERATION, TRANSMISSION OR DISTRIBUTION] OF POWER, A FURTHER SUM THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 22 EQUAL TO TWENTY PER CENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE ( II ) : PROVIDED THAT WHERE AN ASSESSEE, SETS UP AN UNDERTAKING OR E NTERPRISE FOR MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THI NG, ON OR AFTER THE 1ST DAY OF APRIL, 2015 IN ANY BACKWARD AREA NOTIFIE D BY THE CENTRAL GOVERNMENT IN THIS BEHALF, IN THE STATE OF ANDHRA P RADESH OR IN THE STATE OF BIHAR OR IN THE STATE OF TELANGANA OR IN T HE STATE OF WEST BENGAL, AND ACQUIRES AND INSTALLS ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT) FOR THE PURPOSES OF THE SA ID UNDERTAKING OR ENTERPRISE DURING THE PERIOD BEGINNING ON THE 1ST D AY OF APRIL, 2015 AND ENDING BEFORE THE 1ST DAY OF APRIL, 2020 IN THE SAID BACKWARD AREA, THEN, THE PROVISIONS OF CLAUSE ( IIA )SHALL HAVE EFFECT, AS IF FOR THE WORDS 'TWENTY PER CENT', THE WORDS 'THIRTY-FIVE PER CENT' HAD BEEN SUBSTITUTED : PROVIDED FURTHER THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF ( A ) ANY MACHINERY OR PLANT WHICH, BEFORE ITS INSTALLA TION BY THE ASSESSEE, WAS USED EITHER WITHIN OR OUTSIDE INDIA B Y ANY OTHER PERSON; OR ( B ) ANY MACHINERY OR PLANT INSTALLED IN ANY OFFICE PR EMISES OR ANY RESIDENTIAL ACCOMMODATION, INCLUDING ACCOMMODATION IN THE NATURE OF A GUEST-HOUSE; OR ( C ) ANY OFFICE APPLIANCES OR ROAD TRANSPORT VEHICLES; OR ( D ) ANY MACHINERY OR PLANT, THE WHOLE OF THE ACTUAL C OST OF WHICH IS ALLOWED AS A DEDUCTION (WHETHER BY WAY OF DEPRECIAT ION OR OTHERWISE) IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD ' PROFITS AND GAINS OF BUSINESS OR PROFESSION' OF ANY ONE PREVIOU S YEAR; ( III ) IN THE CASE OF ANY BUILDING, MACHINERY, PLANT OR FURNITURE IN RESPECT OF WHICH DEPRECIATION IS CLAIMED AND ALLOWE D UNDER CLAUSE ( I ) AND WHICH IS SOLD, DISCARDED, DEMOLISHED OR DESTROY ED IN THE PREVIOUS YEAR (OTHER THAN THE PREVIOUS YEAR IN WHICH IT IS F IRST BROUGHT INTO USE), THE AMOUNT BY WHICH THE MONEYS PAYABLE IN RES PECT OF SUCH BUILDING, MACHINERY, PLANT OR FURNITURE, TOGETHER W ITH THE AMOUNT OF SCRAP VALUE, IF ANY, FALL SHORT OF THE WRITTEN DOWN VALUE THEREOF : PROVIDED THAT SUCH DEFICIENCY IS ACTUALLY WRITTEN OFF IN THE BOOKS OF THE ASSESSEE. EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, ( 1 ) 'MONEYS PAYABLE' IN RESPECT OF ANY BUILDING, MACH INERY, PLANT OR FURNITURE INCLUDES ( A ) ANY INSURANCE, SALVAGE OR COMPENSATION MONEYS PAY ABLE IN RESPECT THEREOF; ( B ) WHERE THE BUILDING, MACHINERY, PLANT OR FURNITURE IS SOLD, THE PRICE FOR WHICH IT IS SOLD, THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 23 SO, HOWEVER, THAT WHERE THE ACTUAL COST OF A MOTOR CAR IS, IN ACCORDANCE WITH THE PROVISO TO CLAUSE ( 1 ) OF SECTION 43 , TAKEN TO BE TWENTY-FIVE THOUSAND RUPEES, THE MONEYS PAYABLE IN RESPECT OF SUCH MOTOR CAR SHALL BE TAKEN TO BE A SUM WHICH BEARS TO THE AMOUNT FOR WHICH THE MOTOR CAR IS SOLD OR, AS THE CASE MAY BE, THE AMOUNT OF ANY INSURANCE, SALVAGE OR COMPENSATION MONEYS PAYABLE I N RESPECT THEREOF (INCLUDING THE AMOUNT OF SCRAP VALUE, IF AN Y) THE SAME PROPORTION AS THE AMOUNT OF TWENTY-FIVE THOUSAND RU PEES BEARS TO THE ACTUAL COST OF THE MOTOR CAR TO THE ASSESSEE AS IT WOULD HAVE BEEN COMPUTED BEFORE APPLYING THE SAID PROVISO; ( 2 ) 'SOLD' INCLUDES A TRANSFER BY WAY OF EXCHANGE OR A COMPULSORY ACQUISITION UNDER ANY LAW FOR THE TIME BEING IN FOR CE BUT DOES NOT INCLUDE A TRANSFER, IN A SCHEME OF AMALGAMATION, OF ANY ASSET BY THE AMALGAMATING COMPANY TO THE AMALGAMATED COMPANY WHE RE THE AMALGAMATED COMPANY IS AN INDIAN COMPANY OR IN A SC HEME OF AMALGAMATION OF A BANKING COMPANY, AS REFERRED TO I N CLAUSE ( C ) OF SECTION 5 OF THE BANKING REGULATION ACT, 1949 (10 O F 1949) WITH A BANKING INSTITUTION AS REFERRED TO IN SUB-SECTION ( 15) OF SECTION 45 OF THE SAID ACT, SANCTIONED AND BROUGHT INTO FORCE BY THE CENTRAL GOVERNMENT UNDER SUB-SECTION (7) OF SECTION 45 OF THAT ACT, OF ANY ASSET BY THE BANKING COMPANY TO THE BANKING INSTITU TION. ( IV ) [***] ( V ) [***] ( VI ) [***] (1A) [***] (2) WHERE, IN THE ASSESSMENT OF THE ASSESSEE, FULL EFFECT CANNOT BE GIVEN TO ANY ALLOWANCE UNDER SUB-SECTION (1) IN ANY PREVI OUS YEAR, OWING TO THERE BEING NO PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR, OR OWING TO THE PROFITS OR GAINS CHARGEABLE BEING LESS THAN THE ALLOWANCE, THEN, SUBJECT TO THE PROVISIONS OF SUB-SECTION (2) OF SECTION 72 AND SUB- SECTION (3) OF SECTION 73 , THE ALLOWANCE OR THE PART OF THE ALLOWANCE TO WHICH EFFECT HAS NOT BEEN GIVEN, AS THE CASE MAY BE , SHALL BE ADDED TO THE AMOUNT OF THE ALLOWANCE FOR DEPRECIATION FOR TH E FOLLOWING PREVIOUS YEAR AND DEEMED TO BE PART OF THAT ALLOWANCE, OR IF THERE IS NO SUCH ALLOWANCE FOR THAT PREVIOUS YEAR, BE DEEMED TO BE T HE ALLOWANCE FOR THAT PREVIOUS YEAR, AND SO ON FOR THE SUCCEEDING PR EVIOUS YEARS. 2.3. IF THE AFORESAID SECTION IS ANALYZED THOUGH I T SPEAKS ABOUT DEPRECIATION ON THE BUILDING, MACHINER Y, PLANT OR FURNITURE OWNED BY THE ASSESSEE, WHOLLY OR THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 24 PARTIALLY AND USED FOR THE PURPOSES OF BUSINESS OR PROFESSION, AS CLAIMED BY THE LD. CIT-DR/DR. HOWEVE R, SUB-CLAUSE (II) SPEAKS ABOUT KNOWHOW, PATENTS, COPY RIGHTS, TRADEMARKS, LICENSES, FRANCHISES OR ANY OTHER BUSIN ESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE, BEING INTANGIBLE ASSET ACQUIRED ON OR AFTER 1 ST DAY OF APRIL 1998. THE CASE OF THE ASSESSEE FALLS WITHIN THIS CATEGORY AS PROVI DED IN SUB-SECTION (II) OF SECTION 32(1) OF THE ACT. IT IS FURTHER NOTED THAT THE SPECIAL BENCH OF THE HYDERABAD TRIBUNAL IN THE CASE OF ACIT VS M/S PROGRESSIVE CONSTRUCTION LTD. ( ITA NO.1845/HYD/2012), ORDER DATED 14/02/2017 HAS DELIBERATED UPON THIS ISSUE, WHEREIN, THE ASSESSEE ACQUIRED THE RIGHT TO OPERATE THE TOLL ROAD/BRIDGE AND COLLE CT TOLL CHARGES IN LIEU OF INVESTMENT MADE BY IT IN IMPLEME NTING THE PROJECT FOR CERTAIN PERIOD. THUS, SUCH COMMERC IAL RIGHTS AS ENVISAGED U/S 32(1)(II) READ WITH EXPLANA TION-3(B) OF THE SAID PROVISION, CONSEQUENTLY, BROADLY WE ARE OF THE VIEW THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEPRECI ATION ON WDV AS AN INTANGIBLE ASSET. THE MUMBAI BENCH OF THE THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 25 TRIBUNAL IN THE AFORESAID DECISION IN ACIT VS M/S A NDHRA PRADESH EXPRESSWAY BY A LATER DECISION DATED 28/02/ 2018 DULY CONSIDERED VARIOUS DECISION INCLUDING THE DECI SION REVERSED BY HON'BLE HIGH COURT IN CIT VS WEST GUJAR AT EXPRESSWAY LTD. (2016) 73 TAXMANN.COM 139; (2017) 3 90 ITR 400 (BOM.), ORDER DATED 05/04/2016. BEFORE US A LSO, THE LD. CIT-DR/LD. DR CONTENDED THAT IN VIEW OF THI S DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT, TH E ASSESSEE IS NOT ENTITLED TO DEPRECIATION. WE HAVE GONE THROUGH THIS ORDER AND FOUND THAT THE ISSUE BEFORE THE HON'BLE HIGH COURT WAS WITH RESPECT TO TREATING TOL L ROAD AS PLANT AND MACHINERY AND IF THAT SITUATION DECIDED I N FAVOUR OF THE REVENUE. SO FAR AS, THE DECISION IN THE CAS E OF DINESH KUMAR GULABCHAND AGARWAL VS CIT ((SUPRA)), R ELIED UPON BY THE LD. DR, IS CONCERNED, THE ISSUE BEFORE HON'BLE HIGH COURT WAS WITH RESPECT TO ACTUAL USE OF THE VE HICLE, KEPT READY FOR USE IN THAT SITUATION, THE HON'BLE H IGH COURT HELD THAT THE ASSESSEE WAS NOT ENTITLE TO CLAIM DEP RECIATION. THEREFORE, THIS DECISION MAY NOT HELP THE REVENUE B EING ON THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 26 DIFFERENT ISSUE/FACTS. SO FAR AS, THE DECISION FRO M HON'BLE BOMBAY HIGH COURT IN NORTH KARNATAKA EXPRESSWAY LTD . VS CIT (2014) 51 TAXMANN.COM 214 (BOM.); (2015) 372 ITR 145(BOM.) IS CONCERNED, THE ISSUE WAS DECIDED ON TH E ISSUE OF OWNERSHIP OF ASSET AND ON INVOCATION OF REVISION AL JURISDICTION U/S 263 OF THE ACT. THE RELEVANT PARA IS REPRODUCED HEREUNDER:- 20 . IT IS IN THIS BACKDROP THAT WE HAVE TO NOTICE THE FACTS AND CIRCUMSTANCES IN WHICH THE CLAIM WAS RAISED. ADMITT EDLY, THE ASSESSEE IS IN THE BUSINESS OF INFRASTRACTURE DEVEL OPMENT AND IN THE COURSE OF WHICH IT HAD CONSTRUCTED THE ABOVE REFERRED TOLL ROAD. THERE IS A CONCESSION AGREEMENT WITH THE NATI ONAL HIGHWAY AUTHORITY OF INDIA. THE QUESTION, THEREFORE , IS THAT WHEN A PERSON LIKE THE ASSESSEE WHO IS IN THE BUSIN ESS OF INFRASTRUCTURE DEVELOPMENT IN EXECUTION OF SUCH AGR EEMENT CONSTRUCTS A ROAD AND ON BUILD, OPERATE AND TRANSFE R (BOT) BASIS ON THE LAND OWNED BY THE GOVERNMENT, CAN IT C LAIM DEPRECIATION ON THE TOLL ROAD. 21. WHEN THIS LARGER QUESTION WAS POSED BEFORE THE AUTHORITIES, WHAT THEY HAVE HELD IS THAT THE ASSESS ING OFFICER IN ALLOWING SUCH A CLAIM HAS NOT EVEN CONSIDERED THE B ASIC FACTS RATHER THERE IS NO CONSIDERATION OF THE CLAIM AT AL L AND BEFORE GRANTING IT. THE COMMISSIONER CAME TO THE CONCLUSIO N THAT THE DEPRECIATION IS ALLOWABLE ON SPECIFIC ASSETS OWNED BY THE ASSESSEE AND USED FOR THE ABOVE PURPOSE. THE TOLL R OAD BELONGS TO THE GOVERNMENT AND THE ASSESSEE IS NOT T HE OWNER OF THE SAID ROAD. THEREFORE, THE DEPRECIATION IS NO T ALLOWABLE ON TOLL ROAD. 22 . WE DO NOT FIND THAT WHEN THIS NOTICE WAS ISSUED B Y THE COMMISSIONER TO THE ASSESSEE UNDER SECTION 263 OF T HE INCOME TAX ACT, THERE HAS BEEN ANY DIVERGENCE OR CONTRADIC TION AS COMPLAINED BY SHRI IRANI. WE DO NOT FIND ANY BASIS FOR THE COMPLAINT THAT THE NOTICE AND THE ORDER PASSED BY T HE COMMISSIONER OF INCOME TAX ARE AT VARIANCE OR THAT THE ORDER TRAVELS BEYOND THE NOTICE. THE ESSENTIAL FOUNDATION FOR THE THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 27 NOTICE IS AS NOTED ABOVE. THE COMMISSIONER ISSUED A NOTHER SHOW CAUSE NOTICE ON 2ND DECEMBER, 2009 AND IN WHIC H ALSO HE ALLEGED THAT THE CLAIM OF DEPRECIATION HAS BEEN ERRONEOUSLY GRANTED AND THE ORDER OF THE ASSESSING OFFICER TO T HAT EXTENT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THE ASSESSEE REPLIED TO THE SHOW CAUSE NOTICE AND GAVE DETAILED EXPLANATION ON HOW THE CLAIM ARISES. HENCE, THERE W AS NO PREJUDICE NOR CAN IT BE SAID THAT THE ASSESSEE WAS IN ANY MANNER HANDICAPPED IN DEALING WITH THE SHOW CAUSE N OTICE. 23 . THE ORDER OF THE COMMISSIONER DEALS WITH THE STAN D OF THE ASSESSEE AND IN DETAIL. THE COMMISSIONER HELD THAT THE ASSESSING OFFICER HAD NOT DISCUSSED THIS CLAIM AT A LL. HE HAS GRANTED IT WITHOUT ANY APPLICATION OF MIND AND MECH ANICALLY. THERE IS JUSTIFICATION FOR SUCH A CONCLUSION BY THE COMMISSIONER. 24 . THEN, THE COMMISSIONER DISCUSSED THE CLAIM ON MER ITS. HE FOUND THAT THE OWNERSHIP OF THE ROAD CANNOT BE CLAI MED BY THE ASSESSEE. THE CLAIM OF DEPRECIATION IS NOT BASED ON TREATING IT AS AN INTANGIBLE ASSET WITH A RIGHT TO USE THE ASSE T WITHOUT BEING ACTUAL OWNER THEREOF. IN THAT REGARD, THE COM MISSIONER REFERRED TO THE ORDERS PASSED BY THE BOMBAY BENCH O F THE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF RELIAN CE PORT AND TERMINALS LTD. AND THAT OF THE DELHI BENCH OF THE T RIBUNAL DATED 19TH DECEMBER, 2008 IN THE CASE OF NOIDA TOLL BRIDGE COMPANY AND HELD THAT FIRSTLY, THE ASSESSING OFFICE R DID NOT APPLY HIS MIND AT ALL AND SECONDLY, THE TOLL ROADS ARE NOT OWNED BY THE ASSESSEE AND HE CANNOT CLAIM ANY DEPRECIATIO N THEREON. THE HON'BLE APEX COURT IN THE CASE OF ICDS LTD. VS CIT (2013) 350 ITR 527 (SUPREME COURT) WHILE DEALIN G WITH INTERPRETATION OF SECTION 32 OF THE ACT HELD AS UND ER:- '10. DEPRECIATION IS THE MONETARY EQUIVALENT OF TH E WEAR AND TEAR SUFFERED BY A CAPITAL ASSET THAT IS SET AS IDE TO FACILITATE ITS REPLACEMENT WHEN THE ASSET BECOMES D YS- FUNCTIONAL. IN P.K. BADIANI V. COMMISSIONER OF INCO ME TAX, BOMBAY, THIS COURT HAS OBSERVED THAT ALLOWANCE FOR DEPRECIATION IS TO REPLACE THE VALUE OF AN ASSET TO THE EXTENT IT HAS DEPRECIATED DURING THE PERIOD OF ACCOUNTING RELEVANT TO THE ASSESSMENT YEAR AND AS THE VALUE HAS, TO THA T EXTENT, THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 28 BEEN LOST, THE CORRESPONDING ALLOWANCE FOR DEPRECIA TION TAKES PLACE. 2.4. UNDOUBTEDLY, WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD. CIT-DR/DR TO THE EFFECT THAT THE ASSESSEE IS NOT THE OWNER OF THE ASSET/ROAD. HOWEV ER, THE ASSESSEE MADE A HUGE INVESTMENT FOR CREATION OF THE ASSET FOR GOVT. OF INDIA AND SIMULTANEOUSLY ACQUIRED CERT AIN RIGHTS IN THE PROPERTY ENABLING IT TO EARN INCOME B Y WAY OF COLLECTION OF TOLL FEE FOR A SPECIFIED PERIOD, THUS , IN THE PROCESS, RECOVERING OF ITS COST OF INVESTMENT WITH CERTAIN AMOUNT OF PROFIT. IN ANY WAY, FOR THE ASSESSEE, BOT ROAD, BRIDGES ETC. AS INTANGIBLE ASSET AND THE ASSESSEE I S CLAIMING DEPRECIATION ON THE VERY SAME ASSET CREATED WITH IT S OWN EXPENDITURE. THUS, SUCH AN INTANGIBLE ASSET COMES W ITHIN THE EXPRESSION OTHER BUSINESS OR COMMERCIAL RIGHTS . THUS, IN OUR VIEW IT FALLS WITHIN THE CATEGORY OF ANY OTH ER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE AS PROVIDED U/S 32(1)(II) OF THE ACT. IN THE PRESENT APPEAL, THE A SSESSEE CLAIMED DEPRECIATION ON ROAD AS PLANT AND MACHINERY FOR RS.12,99,43,225/-, WHICH WAS DISALLOWED BY THE LD. THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 29 ASSESSING OFFICER ON THE PLEA THAT THE ASSESSEE IS NOT THE OWNER OF THE TOLL ROAD, HENCE NOT ELIGIBLE FOR DEPR ECIATION. TO THIS EXTENT, THAT THE ASSESSEE IS NOT THE OWNER OF THE ASSET/ROAD, WE AGREE WITH THE CONTENTION OF THE LD. ASSESSING OFFICER AS WELL AS THE LD. CIT-DR/DR. HO WEVER, THE ISSUE BEFORE US FALLS WITHIN THE CATEGORY OF IN TANGIBLE ASSET. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) ALSO ALLOWED DEPRECIATION AS A BUILDING INSTEAD OF PLANT AND MACHINERY. WE FEEL THIS IS NEITHER BUILDING NOR A PLANT AND MACHINERY RATHER THE CLAIM OF DEPRECIATION TO THE A SSESSEE IS ALLOWABLE TO THE EXTENT OF RS.9,28,86,339/- IN T HE CATEGORY OF COMMERCIAL RIGHTS OF SIMILAR NATURE BEI NG INTANGIBLE ASSET AS PROVIDED U/S 32 (1)(II) OF THE ACT. TO THIS EXTENT, ONLY, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED AT APPLICABLE RATE OF DEPRECATI ON I.E. @ 25%. IT IS FURTHER NOTED THE PRESENT ROAD IS SINCE 2008-09 AND LICENSE WAS GRANTED TO THE ASSESSEE IN TERMS OF COLLECTING TAX/TOLLS AND THE TRIBUNAL FOR ASSESSMEN T YEAR THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 30 2008-09, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSE E. IN THE ABSENCE OF CONTRARY FACTS, NO CONTRARY DECISION IS EXPECTED. 3. SO FAR AS, LIABILITY OF INTEREST U/S 234D OF T HE ACT IS CONCERNED, IT IS CONSEQUENTIAL IN NATURE. 4. SO FAR AS, THE APPEAL OF THE REVENUE (ITA NO.636/MUM/2015), IS CONCERNED, THE FIRST GROUND RA ISED BY THE ASSESSEE PERTAINS TO INTEREST INCOME OF RS.36,25,280/- WHETHER TAXABLE UNDER THE HEAD BUSI NESS INCOME AND NOT INCOME FROM OTHER SOURCES IS CONCE RNED, WE FIND THAT THE LD. COMMISSIONER OF INCOME TAX (AP PEAL) HAS FOLLOWED THE DECISION FROM HON'BLE BOMBAY HIGH COURT IN CIT VS LOK HOLDING (308 ITR 356)(BOM.). THUS, W E FIND NO INFIRMITY IN THE ORDER. THIS GROUND OF THE REVEN UE IS DISMISSED. 4.1. THE NEXT GROUND I.E. GROUND NO.2, WAS SENT TO THE FILE OF THE LD. ASSESSING OFFICER, THEREFORE, N O GRIEVANCE IS CAUSED TO THE REVENUE. THE LD. ASSESSING OFFICER IS DIRECTED TO DECIDE THE ISSUE IN ACCORDANCE WITH LAW . THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 31 4.2. SO FAR AS, THE CLAIM OF DEPRECIATION , ON THE ISSUE OF OWNERSHIP OF ASSET IS CONCERNED, THIS HAS BEEN D ECIDED AGAINST THE ASSESSEE. THUS, IT HAS REMAINED FOR ACA DEMIC INTEREST ONLY. 4.3. SO FAR AS, GROUND NO. 3.2. ALLOWING THE CLAIM OF DEPRECIATION TO THE EXTENT OF RS.9,28,86,339/- IS CONCERNED, THIS ISSUE HAS ALREADY BEEN DECIDED BY U S IN EARLIER PARAS OF THIS ORDER. THUS, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED A ND DISPOSED IN TERMS INDICATED ABOVE. 5. NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE IN ITA NO.4346/MUM/2015, WHEREIN, THE ONLY ISSUE PERTAINS TO ALLOWING DEPRECIATION TO THE ASSESSEE B Y HOLDING THAT ASSESSEE IS THE OWNER OF THE TOLL ROAD IGNORIN G THE FACT THAT THE TOLL ROAD WAS BUILD ON BOT BASIS AND OWNER SHIP BASED WITH THE GOVERNMENT. TO THIS EXTENT, WE AGREE THAT THE ASSESSEE IS NOT THE OWNER OF THE TOLL ROAD AND MERELY ALLOWED TO TAKE COMMERCIAL RIGHTS AS INTANGIBLE ASS ETS FOR A THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 32 PARTICULAR PERIOD. THIS ISSUE HAS DELIBERATED UPON TIN EARLIER PARAS OF THIS ORDER, THUS, THIS APPEAL OF T HE ASSESSEE IS DISPOSED OF IN TERMS OF THE ORDER IN ITA NO.622/MUM/2015. 6. SO FAR S, C.O. NO.25/MUM/2017 (ARISING OUT OF I TA NO.4346/MUM/2015) IS CONCERNED, THE ASSESSEE HAS RA ISED THE GROUNDS THAT IF THE ASSESSEE IS NOT TREATED UND ER THE CATEGORY OF PLANT AND MACHINERY OR BUILDING FOR THE PURPOSES OF DEPRECIATION THEN THE ASSESSEE MAY BE A LLOWED DEPRECIATION AS INTANGIBLE ASSET AND DEPRECIATION WAS ALLOWED TO THE EXTENT OF RS.13,65,47,598/-. WE HAVE ALREADY ADJUDICATED THIS ISSUE AND ALLOWED THE DEPR ECIATION TO THE EXTENT OF RS.9,28,86,339/-, THUS, THIS C.O. OF THE ASSESSEE HAS ALREADY BEEN AUTOMATICALLY DISPOSED O FF BEING IN-FRUCTUOUS. 7. IN VIEW OF THE DECISION TAKEN IN ITA NO.622/MUM/2015, THE GROUND NO. 2 HAS REMAINED FOR THIRUVANANTHAPURAM ROAD DEVELOPMENT COMPANY LTD. ITA NOS.622, 636, 4346/MUM/2015 & C.O. NO.25/MUM/2017 33 ACADEMIC INTEREST ONLY, CONSEQUENTLY, DISMISSED AS INFRACTUOUS. FINALLY, THE APPEALS OF THE ASSESSEE AS WELL AS OF THE REVENUE ARE DISPOSED OFF IN TERMS INDICATED HEREINA BOVE. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 23/05/2018. SD/- SD/- ( N.K. PRADHAN ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & MUMBAI; * DATED : 23/05/2018 F{X~{T? P.S / +% %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 0./ / THE RESPONDENT. 3. 1 1 & 2$ ( ,- ) / THE CIT, MUMBAI. 4. 1 1 & 2$ / CIT(A)- , MUMBAI 5. 4%5 $ , 1 ,-( , 6 , & / DR, ITAT, MUMBAI 6. 7' 8 / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , & / ITAT, MUMBAI,