DCIT, Nashik V. ASHOK BRIGEWAYS, Nashik

ITA 686/PUN/2012

• Counselvise Citation: 68624514 RSA 2012
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 03-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: SHEETAL M GADIYA
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER, AND SHRI R.S.PADVEKAR, JUDICIAL MEMBER. ITA.NO.686/PN/2012 (ASSTT. YEAR : 2007-08) DCIT, CIRCLE-1, NASHIK. .. APPELLANT VS. ASHOKA BRIDGEWAYS, ASHOKA HOUSE, ASHOKA MARG, WADALA, NASHIK. .. RESPONDENT PAN: AAOFA2643K ASSESSEE BY : SMT. SHEETAL M.GADIYA DEPARTMENT BY : SHRI S.K.SINGH DATE OF HEARING : 17.04.2013 DATE OF PRONOUNCEMENT : 29.04.2013 ORDER PER G.S.PANNU, AM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, NASHIK, DATED 20.01.2012 WHICH, IN TURN, HAS ARISEN FROM THE ASSESSMENT ORDER DATED 29.12.2009 PASSED BY THE ASSESSING OFFICER U/S.143(3) R.W.S. 115WE(3) OF THE INCOME TA X ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE A.Y. 2007-08. 2. ALTHOUGH THE REVENUE HAS RAISED MULTIPLE GROUNDS OF APPEAL, BUT THE SOLITARY ISSUE IS WITH REGARD TO ASSESSEES CLAIM FOR DEPRECIATION IN RESPECT OF INTANGIBLE ASSET NAMELY LICENSE TO COLLECT TOLL. 2 3. IN BRIEF THE FACTS ARE THAT THE RESPONDENT ASSES SEE IS A CONSORTIUM OF TWO COMPANIES IN THE FORM OF A PARTNE RSHIP, WITH THE OBJECT OF DEVELOPING THE INFRASTRUCTURE PROJECT OF CONSTRUCTION OF TAKLI-KASEGAON-ANAWALI ROAD ON BUILD, OPERATE AND T RANSFER (BOT) BASIS FOR THE GOVERNMENT OF MAHARASTHRA. THE ASSES SEE CAPITALISED THE COST INCURRED ON THE DEVELOPMENT AND CONSTRUCTI ON OF THE SAID INFRASTRUCTURE PROJECT UNDER THE HEAD LICENSE TO C OLLECT TOLL, AMOUNTING TO RS.7,31,23,467/-. IN THE RETURN OF IN COME, ASSESSEE CLAIMED DEPRECIATION ON THE AFORESAID @ 25% FOLLOWI NG SECTION 32(1)(II) OF THE ACT ON THE GROUND THAT THE LICEN SE OR RIGHT TO COLLECT TOLL WAS AN INTANGIBLE ASSET WITHIN THE MEANING OF SECTION 32(1)(II) OF THE ACT. THE ASSESSEE EXPLAINED BEFORE THE ASSE SSING OFFICER THAT IT WAS IN THE BUSINESS OF INFRASTRUCTURE DEVELOPMEN T, MAINTENANCE AND OPERATION OF INFRASTRUCTURE FACILITIES AND IN T ERMS OF SUCH BUSINESS, IT HAD DEVELOPED, OPERATED AND MAINTAINED NEW TAKLI- KASEGAON-ANAWALI DIVERSION ROAD ON BOT BASIS. IN C ONSIDERATION THE ASSESSEE WAS AWARDED RIGHT TO COLLECT TOLL FR OM THE MOTORISTS USING THE SAID INFRASTRUCTURE FACILITY FOR THE PERI OD FROM MARCH, 2004 TO MAY, 2018. THE ASSESSING OFFICER DENIED TH E CLAIM OF DEPRECIATION ON THE GROUND THAT THE SAID LICENSE/R IGHT TO COLLECT TOLL WAS NOT AN INTANGIBLE ASSET WITHIN THE MEAN ING OF SECTION 32(1)(II) OF THE ACT. THE ASSESSING OFFICER ALSO D ID NOT FOLLOW THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF RELIANCE PORTS AND TERMINALS LTD. (ITA NO.1743 TO 1745/MUM/2007 DATED 26.11.2007) AND THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ASHOKA INFOWAY S (P) LTD. VS. ACIT (123 TTJ 77). AS PER THE ASSESSING OFFICER, T HE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TECHNO SHARES & STOCKS LTD. VS. CIT (327 ITR 323) SUPPORTED THE STA ND OF THE REVENUE. 4. ON AN APPEAL BY THE ASSESSEE, THE CIT(A) HAS ALL OWED THE CLAIM OF THE ASSESSEE NOTICING THAT THE MUMBAI BENCH OF T HE TRIBUNAL IN THE CASE OF RELIANCE PORTS AND TERMINALS (SUPRA) AN D THE PUNE BENCH OF THE TRIBUNAL IN ASHOKA INFOWAY (P) LTD. (S UPRA), HAD 3 CONSIDERED AN IDENTICAL ISSUE HOLDING THAT THE IMPU GNED RIGHT/LICENSE TO COLLECT TOLL WAS AN INTANGIBLE A SSET ELIGIBLE FOR DEPRECIATION U/S.32(1)(II) OF THE ACT. REGARDING T HE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TECHNO SHA RES & STOCKS LTD. (SUPRA) RELIED UPON BY THE ASSESSING OFFICER, THE CIT(A) NOTED THAT THE SAID JUDGMENT STOOD OVERRULED BY THE HON'B LE SUPREME COURT IN A DECISION REPORTED AT 193 TAXMAN 248 (SC) . AGAINST THE AFORESAID DECISION, REVENUE IS IN FURTHER APPEAL BE FORE US. 5. AT THE TIME OF HEARING, IT WAS A COMMON POINT BE TWEEN THE PARTIES THAT IDENTICAL ISSUE HAS BEEN CONSIDERED IN THE CASE OF ASHOKA INFRAWAYS PVT. LTD. VIDE ITA.NO.185 & 186/PN /12 OF EVEN DATE. THE RIVAL CONTENTIONS REMAIN THE SAME, WHICH HAVE BEEN DULY CONSIDERED IN THE AFORESAID CASES. IN ORDER TO IMP ART COMPLETENESS TO THIS ORDER, WE REPRODUCE HEREIN THE RELEVANT POR TION OF THE DECISION OF THE TRIBUNAL OF EVEN DATE IN THE CASE O F ASHOKA INFRAWAYS PVT. LTD. (SUPRA):- 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. FACTUALLY SPEAKING, THERE IS NO DISPUTE TO THE FACT THAT THE COSTS CAPITALISED BY THE ASSESSEE UNDER THE HEAD LICENSE TO COLLECT TOLL HAVE BEEN INCURRED FOR DEVELOPMENT AND CONSTR UCTION OF THE INFRASTRUCTURE FACILITY, I.E., DEWAS BY-PASS ROAD. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE WAS TO BUILD, OPERATE AND TRANSFER THE SAID INFRASTRUCTURE FACILITY IN TERMS OF AN AGR EEMENT WITH THE GOVERNMENT OF MADHYA PRADESH. THE EXPENDITURE ON DEVELOPMENT, CONSTRUCTION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY FOR A SPECIFIED PERIOD WAS TO BE INCURRED BY THE ASSESSEE OUT OF ITS OWN FUNDS. MOREOVER, AF TER 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, CO NSTRUCTING, MAINTAINING THE FACILITY FOR A SPECIFIED PERIOD AND THEREAFTER AND TRANSFERRING IT TO THE GOVERNMENT OF MADHYA PRADESH FREE OF CHARGE, ASSESSEE WAS GRANTED A RIGHT TO COLLECT TO LL FROM THE MOTORISTS USING THE SAID INFRASTRUCTURE FACILITY DU RING THE SPECIFIED PERIOD. THE SAID RIGHT TO COLLECT THE T OLL IS EMERGING AS A RESULT OF THE COSTS INCURRED BY THE ASSESSEE O N DEVELOPMENT, CONSTRUCTION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY. SUCH A RIGHT HAS BEEN ADJ UDICATED BY THE TRIBUNAL IN THE AFORESAID PRECEDENTS TO BE IN THE N ATURE OF INTANGIBLE ASSET FALLING WITHIN THE PURVIEW OF SE CTION 32(1)(II) OF THE ACT AND HAS BEEN FOUND ELIGIBLE FOR CLAIM OF DE PRECIATION. NO DECISION TO THE CONTRARY HAS BEEN CITED BY THE LD. DR BEFORE US 4 AND, THEREFORE, WE FIND NO REASONS TO DEPART FROM T HE ACCEPTED POSITION BASED ON THE AFORESAID DECISIONS. 11. SO HOWEVER, THE PLEA OF THE LD. DR BEFORE US IS TO THE EFFECT THAT THE IMPUGNED RIGHT IS NOT OF THE NATURE REFERR ED TO IN SECTION 32(1)(II) OF THE ACT FOR THE REASON THAT THE AGREEM ENT WITH THE GOVERNMENT OF MADHYA PRADESH ONLY ALLOWED THE ASSES SEE TO RECOVER THE COSTS INCURRED FOR CONSTRUCTING THE ROA D 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 F ACTUALLY AND LEGALLY MISPLACED. FACTUALLY SPEAKING, IT IS WR ONG TO SAY THAT IMPUGNED RIGHT ACQUIRED BY THE ASSESSEE WAS WI THOUT INCURRENCE OF ANY COST. IN FACT, IT IS QUITE EVIDEN T THAT ASSESSEE GOT THE RIGHT TO COLLECT TOLL FOR THE SPECIFIED PER IOD ONLY AFTER INCURRING EXPENDITURE THROUGH ITS OWN RESOURCES ON DEVELOPMENT, CONSTRUCTION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY. SECONDLY, SECTION 32(1)(II ) PERMITS ALLOWANCE OF DEPRECIATION ON ASSETS SPECIFIED THERE IN BEING INTANGIBLE ASSETS WHICH ARE WHOLLY OR PARTLY OWNE D BY THE ASSESSEE AND USED FOR THE PURPOSES OF ITS BUSINESS. THE AFORESAID CONDITION IS FULLY SATISFIED BY THE ASSES SEE AND THEREFORE CONSIDERED IN THE AFORESAID PERSPECTIVE W E 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 RIGHT TO COLLECT TOLL, BEING AN INTANGIBLE ASSET FALLING WITHIN THE PURVIEW OF SECTION 32(1)(II) OF THE ACT FOLLOWING T HE AFORESAID PRECEDENTS. 6. FOLLOWING THE AFORESAID PRECEDENT, WE HEREBY AFF IRM THE ORDER OF THE CIT(A) ALLOWING DEPRECIATION TO THE ASSESSEE IN TERMS OF SECTION 32(1)(II) OF THE ACT ON THE INTANGIBLE ASSE T BEING THE RIGHT/LICENSE TO COLLECT TOLL. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF APRIL, 2013. SD/- SD/- ( R.S.PADVEKAR ) ( G.S.PANNU ) JUDICIAL MEMBER ACCOUNTANT MEMBER GSPS PUNE, DATED THE 29 TH APRIL, 2013 5 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DCIT, CIRCLE-1, NASHIK. 3. THE CIT(A)-I, NASHIK. 4. THE CIT-I, NASHIK. 5. THE DR B BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.