Assistant Commissioner of Income-tax,, v. M/s. Jaora Nayagaon Toll Road Co. Pvt. Ltd.,,

ITA 379/PUN/2016 | 2010-2011
Pronouncement Date: 29-11-2017 | Result: Dismissed

Appeal Details

RSA Number 37924514 RSA 2016
Assessee PAN AABCJ8790J
Bench Pune
Appeal Number ITA 379/PUN/2016
Duration Of Justice 1 year(s) 8 month(s) 21 day(s)
Appellant Assistant Commissioner of Income-tax,,
Respondent M/s. Jaora Nayagaon Toll Road Co. Pvt. Ltd.,,
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-11-2017
Date Of Final Hearing 27-11-2017
Next Hearing Date 27-11-2017
Assessment Year 2010-2011
Appeal Filed On 09-03-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH PUNE BEFORE MS. SUSHMA CHOWLA JM AND SHRI ANIL CHATURVEDI AM . / I TA NO S . 379 & 380/PUN/2016 / ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1 NASHIK. ....... / APPELLANT / V/S. M/S. JAORA NAYAGAON TOLL ROAD COMPANY PRIVATE LTD. 201 PRINCESS CENTRE 6/3 NEW PALASIA INDORE MADHYA PRADESH - 452 001. PAN : AABCJ8790J / RESPONDENT A PPELLANT BY : SMT. NIRUPAMA KOTRU R ESPONDENT BY : WRITTEN SUBMISSION. / DATE OF HEARING : 27.11.2017 / DATE OF PRONOUNCEMENT : 29 .11.2017 / ORDER PER SUSHMA CHOWLA JM THE SE TWO APPEAL S FILED BY THE REVENUE ARE AGAINST CONSOLIDATED ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 2 PUNE DATED 01.12.2015 RELATING TO ASSESSMENT YEAR S 2010 - 11 & 2011 - 12 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 153C OF THE INCOME TAX ACT 1961 ( IN SHORT THE ACT). 2 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 2. IN ITA NO. 379/PUN/2016 THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING DEPRECIATION OF RS.45 83 21 687 @25% ON LICENSE TO COLLECT TOLL. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WHETHER THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT ASSESSEE WAS ELIGIBLE TO CLAIM DEPRECIATION ON LICENSE TO COLLECT TOLL CONSIDERING IT AS AN INTANGIBLE ASSET IN TERMS OF SECTION U/S. 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 HAS BEEN FILED U/S. 260A OF THE ACT BEFORE THE HO NBLE BOMBAY HIGH COURT. 4. THE APPELLANT CRAVES TO ADD AMEND OR DELETE ANY OF THE ABOVE GROUNDS. 3. BOTH THESE APPEALS RELATING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER REFERENCE IS BEING MADE TO THE FACTS AND ISSUE IN ITA NO. 379/PUN/2016 TO ADJUDICATE THE SAME. 4. DESPITE SERVICE OF NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER WRITTEN SUBMISSIONS HAVE BEEN FILED AND IT HAS BEEN POINTED THAT THE ISSUE STANDS COVERED BY THE DECISION OF PUNE BENCH OF THE TRIBUNAL AND CO PIES OF THE ORDER OF TRIBUNAL WERE ENCLOSED. 5. T HE LD. DR FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD THE SUBMISSION OF LD. DR AND PERUSED THE RECORD. BRIEFLY STATED IN THE FACTS OF THE CASE THE ASSESSEE WAS A SPECIAL PURPOSE COMPANY FORMED FOR DEVELOPMENT OP ERATION & MAINTENANCE OF THE INFRASTRUCTURE PROJECT OF JAORA NAYAGAON ROAD ON BUILD OPERATE & TRANSFER (BOT) BASIS IN THE STATE OF MADHYA PRADESH. THE ASSESSEE CONSTRUCTED THE INFRASTRUCTURE FACILITY/ROAD ON 3 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 INCURRING COST OF CONSTRUCTION OF RS. 1 83 3 2 86 748/ - AND CONSEQUENT UPON SUCH CONSTRUCTION OF INFRASTRUCTURE FACILITY/ROAD A TOLL COLLECTION PERMISSION WAS ISSUED IN THE NAME OF ASSESSEE ON 11.09.2009 PERMITTING IT SUCH TOLL COLLECTION FROM THE USERS OF THE INFRASTRUCTURE FACILITY FOR THE PERIOD FROM 11 TH SEPTEMBER 2009. THE TOTAL COST INCURRED ON THE CONSTRUCTION OF THE PROJECT WAS CAPITALIZED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT UNDER THE HEAD LICENSE TO COLLECT TOLL AND TREATED AS AN INTANGIBLE ASSET. THE ASSESSEE CLAIMED DEPRECIATION ON THE COST OF INFRASTRUCTURE FACILIT Y AT THE RATE OF 25% U/S. 32(1) (II) OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT RIGHT TO COLLECT TOLL WAS NOT AN INTANGIBLE ASSET ELIGIBLE FOR DEPRECIATION. THE ASSESSEE HAD RELIED ON THE DECISION OF PUNE BENCH IN THE CASE OF ASHOKA INFO PVT. LTD. 123 TTJ 77 PUNE DATED 31.12.2008. BUT THE ASSESSING OFFICER DID NOT APPLY THE SAID DECISION AS THE DEPARTM ENT HAD FILED APPEAL BEFORE THE HONBLE BOMBAY HIGH COURT AGAINST THE SAME. HOWEVER AFTER DISALLOWING THE DEPRECIATION CLAIMED BY ASSESSEE THE ASSESSING OFFICER ALLOWED AMORTIZATION OF THE COST INCURRED ON CONSTRUCTION OF THE TOLL ROAD PRO - RATA OVER TH E PERMITTED TOLL COLLECTION PERIOD AT RS.4 47 14 311/ - . 7. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE IN TURN RELYING ON THE DIFFERENT DECISIONS OF THE PUNE BENCH OF THE TRIBUNAL. 8. THE ISSUE ON RIGHT TO COLLECT TOLL BEING AN INTANGIBLE ASSET ELIG IBLE FOR DEPRECIATION U/S. 32(1) (II) OF THE ACT IS CHALLENGED BEFORE US BY THE REVENUE. WE FIND THAT THE SAID ISSUE IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASHOKA INFRASTRUCTURE LTD. VS. ACIT IN ITA NO. 1452 TO 1457/PUN/2014 FOR ASSES SMENT YEARS 2006 - 07 TO 2011 - 12 ORDER DATED 30.06.2017. THE TRIBUNAL VIDE PARAS 17 TO 23 HELD AS UNDER : 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED AT THE PREMISES OF ASSESSEE ON 4 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 20.04.2010. THE ASSESSEE WAS INCORPORATED FOR EXECUTING INFRASTRUCTURE PROJECT OF LAYING DOWN FOUR LANES AND FOR STRENGTHENING OF PUNE - AHMEDNAGAR ROAD WITH PRIVATE FINANCE ON TOLL RIGHTS UNDER BUILT - OPERATE - TRANSFER BASIS. ON COMPLETION OF THE PROJECT THE OPERATIONS ST ARTED ON 06.07.2005. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD COLLECTED TOLL TO THE EXTENT OF RS.17.16 CRORES AND HAD CLAIMED DEPRECIATION TO THE EXTENT OF RS.10 61 88 185/ - . THE SAID CLAIM OF DEPRECIATION ON LICENSE TO COLLECT TOLL BEING AN INT ANGIBLE ASSET IN VIEW OF GOVERNMENT NOTIFICATION GRANTING SUCH RIGHTS WAS CLAIMED IN THE ORIGINAL RETURN OF INCOME BY THE ASSESSEE. THE ASSESSMENT IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2006 - 07 WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AND THE S AID CLAIM WAS ALLOWED. FURTHER IN ASSESSMENT YEAR 2007 - 08 SIMILAR CLAIM OF DEPRECIATION ON INTANGIBLE ASSET WAS DENIED TO THE ASSESSEE. HOWEVER THE TRIBUNAL IN ITA NO.989/PN/2010 RELATING TO ASSESSMENT YEAR 2007 - 08 VIDE ORDER DATED 18.07.2013 HAD ALL OWED THE CLAIM OF DEPRECIATION ON LICENSE TO COLLECT TOLL @ 25% BEING INTANGIBLE ASSET WITHIN THE SCOPE OF SECTION 32(1)(II) OF THE ACT. 18. THE ASSESSEE MADE A SIMILAR CLAIM IN THE RETURN OF INCOME FILED UNDER SECTION 143(3) R.WS 153A OF THE ACT. HOWEVER THE ASSESSING OFFICER DENIED THE SAID CLAIM OF ASSESSEE IN ALL THE YEARS UNDER CONSIDERATION HOLDING THAT THE ASSESSEE WAS NOT THE OWNER OF ROAD ATTACHED TO THE SAID RIGHT AND THE ASSET ROAD WAS NOT USED IN THE BUSINESS OF ASSESSEE. THE ASSESSING OFFICER ALSO HELD THAT THE RIGHT TO COLLECT TOLL WAS NOT A LICENSE. THE CIT(A) ON THE OTHER HAND RELIED ON THE CIRCULAR ISSUED BY THE CBDT GIVING CLARIFICATION ON TREATMENT OF EXPENDITURE INCURRED FOR DEVELOPMENT OF ROADS / HIGHWAYS IN BUILT - OPERATE - TRANSFER AGREEMENT. THE CBDT VIDE CIRCULAR NO.9/2014 DATED 23.04.2014 GAVE CLARIFICATION ON CLAIM OF DEPRECIATION UNDER SECTION 32(1)(II) OF THE ACT AND CLARIFIED THAT SINCE THE ASSESSEE DOES NOT HOLD ANY RIGHTS IN THE PROJECT EXCEPT RECOVERY OF TOLL FEES TO RECOUP THE EXPENDITURE INCURRED IT THUS CANNOT BE TREATED AS OWNER OF PROPERTY EITHER WHOLLY OR PARTLY FOR THE PURPOSE OF ALLOWABILITY OF DEPREC IATION UNDER SECTION 32(1)(II) OF THE ACT. THE CBDT DENIED THE CLAIM OF DEPRECIATION BUT HELD THE PERSONS TO BE ELIGIBLE FOR DEDUCTION ON ACCOUNT OF AMORTIZED COST INCURRED IN CREATION OF INFRASTRUCTURE FACILITY OF ROADS / HIGHWAYS OVER THE PERIOD OF CONC ESSIONAL AGREEMENT (AIR) AFTER EXCLUDING THE TIME TAKEN FOR CREATION OF SUCH FACILITIES. IN VIEW OF THE SAID CLARIFICATION OF THE CBDT THE ASSESSEES CLAIM FOR DEPRECIATION ON RIGHT / LICENSE TO COLLECT TOLL UNDER SECTION 32(1)(II) OF THE ACT TREATING T HE SAME AS INTANGIBLE ASSET WAS REJECTED AND THE ORDER OF ASSESSING OFFICER IN AMORTIZING THE EXPENDITURE INCURRED ON DEVELOPMENT OF ROADS/HIGHWAYS ON BOT BASIS OVER THE PERIOD OF TIME INVOLVED WAS UPHELD BY THE CIT(A). THE ASSESSEE IS IN APPEAL AGAINS T THE ORDER OF CIT(A) IN THIS REGARD. 19. WE FIND THAT BESIDES THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2007 - 08 THIS ISSUE FURTHER AROSE BEFORE THE MUMBAI BENCH OF TRIBUNAL IN ACIT VS. WEST GUJARAT EXPRESSWAY LTD. (SUPRA) WHICH IN TURN HAD REFERRED TO THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN KARNATAKA EXPRESSWAY LTD. VS. CIT (SUPRA) AND IT WAS DECIDED THE ISSUE RELATING TO THE ALLOWABILITY OF DEPRECIATION ON TOLL ROAD HAD LEFT OPEN THE ISSUE OF ALLOWING DEPRECI ATION ON INTANGIBLE ASSET BEING LICENSE GRANTED TO THE ASSESSEE TO COLLECT TOLL OVER THE ROAD FOR PARTICULAR PERIOD AND IT WAS HELD AS UNDER: - 17. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. SO FAR AS THE RELIANCE OF THE LD. A.R. ON THE ARTICLE/CLAUSE 38.4 OF THE CONCESSION 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. VS. CIT WHICH HAS ALSO BEEN REPRODUCED IN PARA 8 OF THE ORDER OF T HE HONBLE BOMBAY HIGH COURT (SUPRA). THE RELEVANT PART OF THE ORDER FOR THE SAKE OF CONVENIENCE 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 CAPITALIZED BY THE APPELLANT IN ITS BOOKS IN 5 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 THE ASSESSMENT YEAR 2005 - 06 DURING WHICH THE CONSTRUCTION OF THE TOLL ROAD WAS COMPLETED. AS THE ASSESSMENT YEAR UNDER CONSIDERATION WAS THE FIRST YEAR WHEN THE ROAD BECAME OPERATIONAL THE APPELLANT 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 DETAILS OF THE CLAIM OF DEPRECIATION AND A NOTE WAS APPENDED TO THE DEPRECIATION SCHEDULE STATING THAT THOUGH THE APPELLANT WAS ENTITLED TO HIG HER CLAIM OF DEPRECIATION ON TOLL ROAD THE CLAIM IS MADE AT THE RATE OF 10%. THE RIGHT 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 T HAT FOR THE PURPOSE OF CLAIMING TAX DEPRECIATION THE PROPERTY REPRESENTING THE CAPITAL INVESTMENT MADE BY THE CONCESSIONAIRE SHALL BE DEEMED TO BE ACQUIRED AND OWNED BY THE CONCESSIONAIRE. (EMPHASIS SUPPLIED BY US) 18. THE HONBLE BOMBAY HIGH COURT HO WEVER AFTER DISCUSSING THE PROVISIONS OF NATIONAL HIGHWAY ACT 1956 AND NATIONAL HIGHWAY AUTHORITIES OF INDIA ACT 1988 AND VARIOUS CASE LAWS INCLUDING THAT ARE STRONGLY RELIED UPON BY THE LD. A.R. E.G. MYSORE MINERALS LTD. VS. CIT REPORTED IN (1999) 23 9 ITR 775 SC CIT VS PODAR CEMENT PVT. LTD. & OTHERS REPORTED IN (1997) 226 ITR 625 SC AND CIT VS. NOIDA TOLL BRIDGE COMPANY LTD. (ALLAHABAD HC) (SUPRA) HAS HELD THAT THE NATIONAL HIGHWAYS VEST IN THE UNION OF INDIA AND IF THE GOVERNMENT FOR THE PURPO SE OF DEVELOPMENT AND MAINTENANCE OF THE WHOLE OR ANY PART OF THE NATIONAL HIGHWAYS ENTERS INTO AN AGREEMENT WITH PRIVATE PARTIES OR THAT MERELY 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 DISCUSSING THE VARIOUS DECISIONS OF THE HONBLE SUPREME COURT AND OF THE HONBLE HIGH COURTS THE CONTENT ION OF THE ASSESSEE IN THAT CASE THAT IT WAS THE OWNER OF THE TOLL ROAD HAS BEEN REJECTED BY THE HONBLE SUPREME 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 REGARD. 19. HOWEV ER SO FAR AS THE ALTERNATIVE CLAIM OF THE ASSESSEE THAT IF THE ASSESSEE IS NOT FOUND AS OWNER OF THE TOLL ROAD HIS CLAIM OF DEPRECIATION BE CONSIDERED IN RELATION TO INVESTMENTS MADE AS FALLING UNDER THE OTHER CATEGORIES OF ASSETS IS CONCERNED WE WOULD LIKE TO REVERT TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN NORTH KARNATAKA EXPRESSWAY LTD. VS. CIT (SUPRA). IN THIS RESPECT. WE FIND THE HONBLE BOMBAY HIGH COURT IN PARA 24 OF THE SAID DECISION HAS CATEGORICALLY OBSERVED THAT THE CLAIM OF DEP RECIATION 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 ISSUE UNDER CONSIDERATION WAS THAT WHETHER THE TOLL ROADS ARE NOT OWNED BY THE ASSESSEE AND THAT HE CANNOT CLAIM ANY DEPRECIATION THEREUPON. HENCE THE HONBLE 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 HONBLE BOMBAY HIGH COURT IN PARA 39 OF THE DECISION (SUPRA) HAS OBSERVED THAT AS PER THE PROVISIONS OF NATIONAL HIGHWAY ACT 1956 AND NATIONAL HIGHWAY AUTHORITIES OF INDIA ACT 1988 THE OWNERSHIP OF THE TOLL ROAD VESTS 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 NO T BE BROUGHT TO TAX; SIMILARLY IF HE CAN CLAIM ANY DEDUCTIONS FROM HIS INCOME WHICH IS COMPRISING OF PROFIT AND GAIN FROM HIS BUSINESS THEN THAT DEDUCTION CAN BE AVAILED BY HIM. IT IS FOR THAT LIMITED PURPOSE THAT THE TERM ONWER IS DEFINED IN THIS MAN NER IN INCOME TAX ACT 1961. THE ABOVE OBSERVATIONS OF THE HONBLE BOMBAY HIGH COURT 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 CONTR OL LEAVE ALONE OR OVERREACH THE NATIONAL HIGHWAY ACT 1956 OR THE NATIONAL 6 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 HIGHWAY AUTHORITIES OF INDIA ACT 1988. THE HONBLE BOMBAY HIGH COURT FURTHER IN PARA 47 OF THE SAID ORDER HAS OBSERVED THAT THE ASSESSEE CAN DEFINITELY CLAIM DEPRECIATION ON THE INVESTMENTS. HE HAS DEFINITELY INVESTED IN THE PROJECTS OF CONSTRUCTION DEVELOPMENT AND MAINTENANCE OF THE NATIONAL HIGHWAYS AND SUCH OF THE ASSETS IN THE FORM OF BUILDING PLANT & MACHINERY ETC. THE CLAIM FOR DEPRECIATION CAN BE VALIDLY RAISED AND GRANTE D. THAT THE HONBLE HIGH COURT IN THE SAID CASE WAS ONLY CONCERNED WITH THE CLAIM ON THE LAND OR A ROAD ITSELF. FURTHER IN CONCLUDING PARA 52 OF THE ORDER THE HONBLE BOMBAY HIGH COURT HAS CATEGORICALLY CLARIFIED THAT THE ASSESSEES CLAIM FOR DEPRECIATIO N IN RESPECT OF THE BUILDING PLANT & MACHINERY AND FALLING WITHIN THE PURVIEW OF SUB SECTION (1) OF SECTION 32 OF THE INCOME TAX ACT 1961 IF CONSIDERED AND GRANTED SHALL NOT BE AFFECTED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT. 20. A CAREFUL RE ADING OF THE ENTIRE DECISION OF THE HONBLE BOMBAY HIGH COURT AND IN THE LIGHT OF THE VARIOUS OBSERVATIONS MADE IN JUDGMENT AS DISCUSSED ABOVE IT IS VERY CLEAR THAT THE HONBLE BOMBAY HIGH COURT WAS CONCERNED ABOUT THE ISSUE AS TO WHETHER THE ASSESSEE CAN CLAIM ITSELF AS THE OWNER OF THE TOLL ROAD AND THE HONBLE BOMBAY HIGH COURT HAS HELD THAT IN VIEW OF THE EXPRESS PROVISIONS OF THE NATIONAL HIGHWAY ACT 1956 AND NATIONAL HIGHWAY AUTHORITIES OF INDIA ACT 1988 THE UNION IS THE ABSOLUTE OWNER OF THE NATIO NAL HIGHWAYS AS WELL AS THE TOLL ROADS BUILT UPON THE LAND/NATIONAL HIGHWAYS IN AGREEMENT AND THROUGH THE PRIVATE PARTIES AND SUCH PRIVATE PARTIES CANNOT CLAIM THEMSELVES TO BE THE OWNER OF THE TOLL ROAD. HOWEVER THE HONBLE BOMBAY HIGH COURT HAS LEFT UPO N THE ISSUE RELATING TO THE CLAIM OF DEPRECIATION IF OTHERWISE ELIGIBLE UNDER THE OTHER PROVISIONS OF THE INCOME TAX ACT. 21. THE LD. A.R. BEFORE US HAS PUT THE ALTERNATIVE CLAIM THAT IN VIEW OF THE OBSERVATIONS OF THE HONBLE BOMBAY HIGH COURT EITHER T HE INVESTMENTS MADE BY THE ASSESSEE BE TREATED UNDER THE ASSET BUILDING PLANT & MACHINERY AND DEPRECIATION BE GRANTED ACCORDINGLY OR THE SAME BE TREATED AS INTANGIBLE ASSET ON THE GROUND THAT 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 ALLOWANCE OF DEPRECIATION ON THE LICENSE AUTHORIZING HIM TO COLLECT THE TOLL BEING AN INTANGIBLE ASSET OR TR EATING THE PROJECT AS PLANT & MACHINERY? 22. WE MAY OBSERVE THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD. (SUPRA) WHILE RELYING UPON THE VARIOUS DECISIONS OF THE HONBLE SUPREME COURT AND OTHER HONBLE HIGH C OURTS HAS HELD THAT EVEN IF A CLAIM IS NOT MADE BEFORE THE AO IT CAN BE MADE BEFORE THE APPELLATE AUTHORITIES. THE JURISDICTION OF THE APPELLATE AUTHORITIES TO ENTERTAIN SUCH A CLAIM IS NOT BARRED. THE HONBLE BOMBAY HIGH COURT WHILE RELYING UPON THE DECI SION OF THE HONBLE SUPREME COURT IN THE CASE OF JUTE CORPORATION OF INDIA LIMITED VS. CIT 1991 SUPP (2) SCC 744 = (1991) 187 ITR 688 HAS OBSERVED THAT THE POWER OF THE APPELLATE COMMISSIONER IS COTERMINOUS WITH THAT OF THE INCOME TAX OFFICER AND AN APPE LLATE AUTHORITY WHILE HEARING APPEAL AGAINST THE ORDER OF THE SUBORDINATE AUTHORITY HAS ALL THE POWERS WHICH THE ORIGINAL AUTHORITY MAY HAVE IN DECIDING THE QUESTIONS BEFORE IT SUBJECT TO THE RESTRICTIONS OR LIMITATIONS IF ANY PRESCRIBED BY STATUTORY P ROVISIONS. IN THE ABSENCE OF ANY STATUTORY PROVISION THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHICH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. AN ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTITLED TO RAISE ADDITIONAL CLAIMS BEFORE THEM. THE APPELLATE AUTHORITIES HAVE THE DISCRETION WHETHER OR NOT TO PERMIT SUCH ADDITIONAL CLAIMS TO BE RAISED. IT CANNOT HOWEVER BE SAID THAT THEY HAVE NO JURISDICTION TO CON SIDER THE SAME. THE APPELLATE AUTHORITIES HAVE JURISDICTION TO DEAL NOT MERELY WITH ADDITIONAL GROUNDS WHICH BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW BUT WITH ADDITIONAL GROUNDS WHICH WERE AVAILABLE WHEN THE RETURN WAS FILED BUT COULD NOT HAVE BEEN RAISED AT THAT STAGE. THE WORDS COULD NOT HAVE BEEN RAISED MUST BE CONSTRUED LIBERALLY AND NOT STRICTLY. IT IS OPEN TO THE ASSESSEE TO CLAIM A DEDUCTION BEFORE THE APPELLATE AUTHORITY WHICH COULD NOT HAVE BEEN CLAIMED BEFORE THE AO. THE HO NBLE BOMBAY HIGH COURT HAS FURTHER OBSERVED THAT THE DECISION OF 7 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LIMITED V. CIT (2006) 157 TAXMAN 1 REGARDING THE RESTRICTION OF MAKING THE CLAIM THROUGH A REVISED RETURN 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 APPELLATE AUTHORITIES TO ENTERTAIN SUCH CLAIM BY WAY OF ADDITIONAL GROUND. RELIANCE CAN ALSO BE PLACED IN THIS REGARD ON THE DECISIONS OF THE TRIBUNAL I N THE CASE OF PV. ANANTHKRISHNAN VS. ACIT IN ITA NO.1820/M/2011 DECIDED ON 05.05.2014 AND IN THE CASE OF THE PRESIDENCY CO - OPERATIVE HOUSING SOCIETY LTD. VS. ACIT IN ITA NO.4051/M/2011 DECIDED ON 16.05.2014. THE PRESENT CASE IS NOT A CASE WHERE THE ASSESSEE HAD 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 ROAD. SUCH A CLAIM OF THE ASSESSEE HAS BEEN AL LOWED IN THE PREVIOUS ASSESSMENT YEARS. THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT HE HAS CORRECTLY CLAIMED THE DEDUCTION OF DEPRECIATION ON THE TOLL ROAD IN VIEW OF THE CONSISTENT FINDINGS OF THE TRIBUNAL ON THIS ISSUE. HOWEVER DUE TO THE CHANGE OF LEGA L POSITION IN VIEW OF THE LAW LAID DOWN BY THE HONBLE 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 DEDUCTI ONS IN THIS RESPECT. THE CLAIM OF DEDUCTION HAS BEEN VERY MUCH PUT BY THE ASSESSEE IN THE RETURN OF INCOME BUT WRONGLY TREATING ITSELF AS OWNER OF THE ROAD WHICH CLAIM AS OBSERVED ABOVE WAS UNDER BONAFIDE BELIEF AND IN VIEW OF THE SETTLED LEGAL POSITION AS WAS THERE AT THE TIME OF PUTTING THE CLAIM. EVEN THE AO HAS ALSO OBSERVED IN THE ASSESSMENT ORDER THAT IT IS A FACT THAT THE ASSESSEE COMPANY HAS INCURRED HUGE EXPENDITURE ON THE SAID PROJECT WHICH CANNOT BE TREATED AS REVENUE EXPENDITURE ALLOWABLE 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 AGREEMENT AS IT WAS ALLOWED IN THE A.Y. 2007 - 08 AND 2008 - 09. IT IS ALSO A FAC T THAT THE SAID AMORTIZATION OF THE EXPENSES HAS NOT BEEN ACCEPTED BY THE TRIBUNAL AND THE ASSESSEE IN THE EARLIER ASSESSMENT YEARS HAS BEEN GRANTED DEDUCTION AS DEPRECIATION TREATING THE ROAD AS A CAPITAL ASSET. 23. IN VIEW OF THE ABOVE FACTS IT IS NOT D ISPUTED OR CONTESTED BY THE REVENUE THAT THE ASSESSEE IS NOT ENTITLED TO ANY DEDUCTION. THE ONLY ISSUE IN DISPUTE IS AS TO UNDER WHAT HEAD/PROVISION THE DEDUCTION IS TO BE ALLOWED TO THE ASSESSEE. THE HONBLE JURISDICTION HIGH COURT OF BOMBAY IN THE CASE O F BALMUKUND ACHARYA VS. DCIT REPORTED IN (2009) 221 CTR 440 (BOM.) HAS HELD THAT THE HONBLE APEX COURT AND THE VARIOUS HIGH COURTS HAVE RULED THAT THE AUTHORITIES UNDER THE ACT ARE UNDER OBLIGATION TO ACT IN ACCORDANCE WITH LAW. TAX CAN BE COLLECTED ONL Y AS PROVIDED UNDER THE ACT. IF THE ASSESSEE UNDER A MISTAKE MISCONCEPTION OR ON NOT BEING PROPERLY INSTRUCTED IS OVER ASSESSED THE AUTHORITIES UNDER THE ACT ARE REQUIRED TO ASSIST HIM AND ENSURE THAT ONLY LEGITIMATE TAXES DUES ARE COLLECTED. WHILE HOLD ING SO THE HONBLE BOMBAY HIGH COURT HAS RELIED UPON THE VARIOUS DECISIONS E.G. KOSHTI VS. CIT (2005) 193 CTR (GUJ) 518 : (2005) 276 ITR 165 (GUJ) C.P.A. YOOSUF VS. ITO (1970) 77 ITR 237 (KER.) CIT VS. BHARAT GENERAL REINSURANCE CO. LTD. (1971) 81 ITR 3 03 (DEL) CIT VS. ARCHANA R. DHANWATEY (1981) 24 CTR (BOM) 142 : (1982) 136 ITR 355 (BOM). IN VIEW OF THE ABOVE DISCUSSED FACTUAL AND LEGAL POSITION WE HAVE NO HESITATION TO HOLD THAT THE ASSESSEE IS ENTITLED TO PUT HIS ALTERNATE CLAIM THAT THE DEDUCTION ALLOWABLE TO HIM MAY BE CONSIDERED AS ALLOWABLE AS DEPRECIATION TREATING THE PROJECT/INVESTMENTS MADE UNDER THE HEAD PLANT & MACHINERY OR TREATING IT AS A RIGHT/LICENSE TO COLLECT THE TOLL TAX AS INTANGIBLE ASSET. 20. THE MUMBAI BENCH OF TRIBUNAL THEN REFERRED TO THE CIRCULAR ISSUED BY CBDT VIDE NO.9/2014 DATED 23.04.2014 AND OBSERVED AS UNDER: - 8 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 24. HAVING HELD THAT THE ASSESSEE IS ENTITLED TO THE 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 ASSESSEE. IT IS UNDISPUTED THAT IN VIEW OF THE AGREEMENT WITH THE NHAI THE ASSESSEE HAS BEEN GIVEN THE RIGHT TO DEVELOP AND MAINTAIN THE TOLL ROAD AND ALSO THE RIGHT TO COLLECT TOLL FOR A SPECIFIED PERIOD WITHOUT HAVING AC TUAL OWNERSHIP OVER THE SAID TOLL ROAD. THE ASSESSEE HAS AN EXPRESS RIGHT/LICENSE FOR RECOVERY OF TOLL FEE TO RECOUP THE EXPENDITURE. THE SAID RIGHT BRINGS TO THE ASSESSEE AN ENDURING BENEFIT DURING THE PERIOD OF AGREEMENT. THIS FACT HAS ALSO BEEN DISCUSSE D BY THE CBDT IN CIRCULAR NO.09/2014 DATED 23.04.14. THE PARA 4 OF WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: THERE IS NO DOUBT THAT WHERE THE ASSESSEE INCURS EXPENDITURE ON A PROJECT FOR DEVELOPMENT OF ROADS/HIGHWAYS HE IS ENTITLED TO R ECOVER COST INCURRED BY HIM TOWARDS DEVELOPMENT OF SUCH FACILITY (COMPRISING OF CONSTRUCTION COST AND OTHER PRE - OPERATIVE EXPENSES) DURING THE CONSTRUCTION PERIOD. FURTHER EXPENDITURE INCURRED BY THE ASSESSEE ON SUCH BOT PROJECTS BRINGS TO IT AN ENDURING BENEFIT IN THE FORM OF RIGHT TO COLLECT THE TOLL DURING THE PERIOD OF THE AGREEMENT. HONBLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. VS. CIT IN 225 ITR 802 ALLOWED SPREADING OVER OF LIABILITY OVER A NUMBER OF YEARS ON THE GROUND THAT THERE WAS CONTINUING BENEFIT TO THE COMPANY OVER A PERIOD. THEREFORE ANALOGOUSLY EXPENDITURE INCURRED ON AN INFRASTRUCTURE PROJECT FOR DEVELOPMENT OF ROADS/HIGHWAYS UNDER BOT AGREEMENT MAY BE TREATED AS HAVING BEEN MADE/INCURRED FOR THE PURP OSES OF BUSINESS OR PROFESSION OF THE ASSESSEE AND THE SAME MAY BE ALLOWED TO BE SPREAD DURING THE TENURE OF CONCESSIONAIRE AGREEMENT. 25. HAVING DISCUSSED THE ABOVE STATED FACTUAL POSITION 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 CLAIMED 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 DISPUTED 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 SPE CIFICALLY MENTIONED THAT IT BRINGS AN ENDURING BENEFIT IN THE FORM OF RIGHT TO THE ASSESSEE. HAVING ADMITTED THE ABOVE POSITION BY THE REVENUE NOW THE QUESTION TO BE CONSIDERED IS WHETHER ANY DEPRECIATION IS ALLOWABLE ON SUCH A RIGHT? 21. THE TRIBUNAL AL LOWED THE CLAIM OF ASSESSEE UNDER SECTION 32(1)(II) OF THE ACT I.E. DEPRECIATION ON INTANGIBLE ASSETS HOLDING AS UNDER: - 26. AS PER SECTION 32(1)(II) DEPRECIATION IS ALLOWABLE ON INTANGIBLE ASSETS LIKE LICENSES FRANCHISES OR ANY OTHER BUSINESS OR SIMILA R COMMERCIAL RIGHTS OF SIMILAR NATURE. THE RELEVANT PART OF THE SECTION FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: DEPRECIATION. 9 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 32. (1) [IN RESPECT OF DEPRECIATION OF (I) BUILDINGS MACHINERY PLANT OR FURNITURE BEING TANGIBLE ASSETS; (II) KNOW - HOW PATENTS COPYRIGHTS TRADE MARKS LICENCES FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1 ST DAY OF APRIL 1998 OWNED WHOLLY OR PARTLY BY THE ASSESSEE AND USED FOR TH E PURPOSES OF THE BUSINESS OR PROFESSION THE FOLLOWING DEDUCTIONS SHALL BE ALLOWED ] . (EMPHASIS SUPPLIED BY US) 27. IT IS NOT DISPUTED THAT THE ASSESSEE HAS BEEN GIVEN LICENSE/COMMERCIAL RIGHT OVER THE PROJECT TO RECEIVE 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 TOLL. THE SAID RIGHT HAS BEEN GIVEN TO THE ASSESSEE FOR A SPECIFIED PERIOD WITH ENDURING BENEFIT. IT IS ALSO NOT DISPUTED THAT ON THE EXPIRY OF THE TIM E PERIOD OF THE AGREEMENT THE SAID RIGHT OF THE ASSESSEE WILL CEASE TO HAVE EFFECT WHICH MEANS IT SLOWLY WILL DEPRECIATE TO THE NIL VALUE. AS PER THE PROVISIONS OF THE INCOME TAX ACT ESPECIALLY UNDER SECTION 32(1)(II) THE ASSESSEE IS ENTITLED TO CLAIM O F DEPRECIATION ON SUCH TYPE OF RIGHTS. SUCH RIGHTS HAVE BEEN DESCRIBED AS INTANGIBLE ASSETS 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 T O COLLECT TAX BEING AN INTANGIBLE COMMERCIAL RIGHT UNDER SECTION 32(1)(II) AT THE RATE AS HAS BEEN PRESCRIBED UNDER THE RELEVANT RULES. OUR ABOVE VIEW IS FURTHER SUPPORTED BY THE DECISION OF THE CO - ORDINATE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. AS HOKA INFRASTRUCTURE LTD. VS. ITO IN ITA NO.989/PN/2010 & ITA NO.1105/PN/2010 WHEREIN THE TRIBUNAL WHILE FURTHER RELYING UPON ANOTHER DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ASHOKA INFRAWAYS PVT. LTD. VS. ACIT IN ITA NO.185 & 186 /PN/2012 DATED 29.04.2013 HAS HELD IN CLEAR TERMS THAT THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON LICENCE TO COLLECT TOLL BEING AN INTANGIBLE ASSET FALLING WITHIN THE SCOPE OF SECTION 32(1)(II) OF THE ACT IS LIABLE TO BE UPHELD. THE RELEVANT PART O F FINDINGS OF THE TRIBUNAL FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: 6. AT THE TIME OF HEARING IT WAS A COMMON POINT BETWEEN THE PARTIES THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ASHOKA INFRAWA YS PVT. LTD. VS. ACIT VIDE ITA NOS. 185 & 186/PN/2012 DATED 29.04.2013. AS PER THE TRIBUNAL FOLLOWING THE PRECEDENTS BY WAY OF VARIOUS DECISIONS OF DIFFERENT BENCHES OF THE TRIBUNAL MENTIONED THEREIN THE CLAIM OF THE ASSESSEE FOR TREATING THE 'LICENSE TO COLLECT TOLL' AS AN INTANGIBLE ASSET ELIGIBLE FOR THE CLAIM OF DEPRECIATION @ 25% AS PER SECTION 32(1)(II) OF THE ACT WAS JUSTIFIED. 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 PARTIES THAT THE IMPUGNED ISSUE HAS BEEN ADJUDICATED IN FAVOUR OF THE ASSESSEE IN THE FOLLOWING DECISIONS OF THE TRIBUNAL: - I) ASHOKA BUILDCON LTD. IN ITA.NO.1302/PN/09 DATED 20.03.2012. 10 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 II) M/S. KALYAN TOLL INFRASTRUCTURE LTD. IN ITA.NO S.201 & 247/IND/2008 DATED 14.12.2010. III)DIMENSION CONSTRUCTION PVT. LTD. IN 1TA.NO.222 223 233 & 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 SUBMITTED THAT THE 'INTANGIBLE ASSETS' ELIGIBLE FOR DEPRECIATION IN SECTION 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 BY 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 WAS 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 CONSIDERED BY OUR COORDINATE BENCHES IN THE CASE OF ASHOKA BUILDCON LTD. (SUPRA) KALYAN TOLL INFRASTR UCTURE LTD. (SUPRA) DIMENSION CONSTRUCTION PVT. LTD. (SUPRA) AND ASHOKA INFO (P) LTD. (SUPRA). 9. ON THE OTHER HAND THE LD. REPRESENTATIVE FOR THE RESPONDENT ASSESSEE POINTED OUT THAT THE AFORESAID ARGUMENT SET UP BY THE REVENUE HAS ALSO BEEN CONSIDERED IN THE AFORESAID PRECEDENTS BEFORE CONCLUDING THAT THE IMPUGNED 'RIGHT TO COLLECT TOLL' WAS AN 'INTANGIBLE ASSET' ELIGIBLE FOR CLAIM OF DEPRECIATION @ 25% AS PER SEC. 32(1)01) OF THE ACT. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. FACTUALLY SP EAKING 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 CONSTRUCTION OF THE INFRASTRUCTURE FACILITY I.E. DEWAS BY - PASS ROAD. IT IS ALSO NOT IN DISP UTE THAT THE ASSESSEE WAS TO BUILD OPERATE AND TRANSFER THE SAID INFRASTRUCTURE FACILITY IN TERMS OF AN AGREEMENT WITH THE GOVERNMENT OF MADHYA PRADESH. THE EXPENDITURE ON DEVELOPMENT CONSTRUCTION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY FOR A SPEC IFIED PERIOD WAS TO BE INCURRED BY THE ASSESSEE OUT OF ITS OWN FUNDS. MOREOVER 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 DEVELOP ING CONSTRUCTING MAINTAINING THE FACILITY FOR A SPECIFIED PERIOD AND THEREAFTER TRANSFERRING IT TO THE GOVERNMENT OF MADHYA PRADESH FREE OF CHARGE ASSESSEE WAS GRANTED A RIGHT TO COLLECT TOLL' FROM THE MOTORISTS USING THE SAID INFRASTRUCTURE FACILITY DU RING THE SPECIFIED PERIOD. THE SAID RIGHT TO COLLECT THE TOLL' IS EMERGING AS A RESULT OF THE COSTS INCURRED BY THE ASSESSEE ON DEVELOPMENT CONSTRUCTION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY. SUCH A RIGHT HAS BEEN ADJUDICATED BY THE TRIBUNAL IN T HE AFORESAID PRECEDENTS TO BE IN THE NATURE OF 'INTANGIBLE ASSET' FALLING WITHIN THE PURVIEW OF SECTION 32(1)(I/) OF THE ACT AND HAS BEEN FOUND ELIGIBLE FOR CLAIM OF DEPRECIATION. NO DECISION TO THE CONTRARY HAS BEEN CITED BY THE LD. DR BEFORE US AND THER EFORE WE FIND NO REASONS TO DEPART FROM THE ACCEPTED POSITION BASED ON THE AFORESAID DECISIONS. 11 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 11. SO HOWEVER THE PLEA OF THE LD. DR BEFORE US IS 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 GOVERNMENT OF MADHYA PRADESH ONLY ALLOWED THE ASSESSEE TO RECOVER THE COSTS INCURRED FOR CONSTRUCTING THE ROAD FACILITY WHEREAS SECTION 32(1)(I1) OF THE ACT REQUIRED THAT THE ASSETS MENTIONED THEREIN SHOULD BE ACQUIRE D BY THE ASSESSEE AFTER SPENDING MONEY. THE SAID ARGUMENT IN OUR VIEW IS FACTUALLY AND LEGALLY MISPLACED. FACTUALLY SPEAKING IT IS WRONG TO SAY THAT IMPUGNED RIGHT ACQUIRED BY THE ASSESSEE WAS WITHOUT INCURRENCE OF ANY COST. IN FACT IT IS QUITE EVIDENT T HAT ASSESSEE GOT THE RIGHT TO COLLECT TOLL FOR THE SPECIFIED PERIOD ONLY AFTER INCURRING EXPENDITURE THROUGH ITS OWN RESOURCES ON DEVELOPMENT CONSTRUCTION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY. SECONDLY SECTION 32(1)(I1) PERMITS ALLOWANCE OF DEP RECIATION ON ASSETS SPECIFIED THEREIN BEING 'INTANGIBLE ASSETS' WHICH ARE WHOLLY OR PARTLY OWNED BY THE ASSESSEE AND USED FOR THE PURPOSES OF ITS BUSINESS. THE AFORESAID CONDITION IS FULLY SATISFIED BY THE ASSESSEE AND THEREFORE CONSIDERED IN THE AFORESAID PERSPECTIVE WE FIND NO JUSTIFICATION FOR THE PLEA RAISED BY THE REVENUE BEFORE 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)(I1) OF THE ACT FOLLOWING THE AFORESAID PRECEDENTS.' 13. IN TERMS OF THE AFORESAID PRECEDENT THE CLAIM OF THE ASSESSEE IN THE PRESENT CASE FOR DEPRECIATION ON 'LICENSE TO COLLECT TOLL' BEING AN 'INTANGIBLE ASSET ' FALLING WITH THE SCOPE OF SECTION 32(1)(II) OF THE ACT IS LIABLE TO BE UPHELD. WE HOLD SO. 14. 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 CONCER NED IT MAY ONLY BE NOTED THAT THE SAID JUDGEMENT HAS SINCE BEEN ALTERED BY THE HON'BLE SUPREME COURT VIDE ITS ORDER REPORTED AT (2010) 327 ITR 323 (SC). ACCORDINGLY IN VIEW OF THE AFORESAID DISCUSSION WE HEREBY ALLOW THE GROUND OF APPEAL NO. 1.1 RAISED B Y THE ASSESSEE. 29. IN VIEW OF OUR OBSERVATIONS MADE IN THE PRECEDING PARAS AND ALSO AGREEING WITH THE ABOVE REPRODUCED FINDINGS OF THE TRIBUNAL WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEPRECIATION ON THE ROAD TO COLLECT TOLL BEING AN INTAN GIBLE ASSET FALLING WITHIN THE PURVIEW OF SECTION 32(1) (II) OF THE ACT. 22. THE TRIBUNAL IN ACIT VS. WEST GUJARAT EXPRESSWAY LTD. (SUPRA) FURTHER REFERRING TO THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT HELD THAT SINCE THE ASSESSEE IS NOT THE O WNER OF TOLL ROAD BUT HAS BEEN GIVEN THE RIGHT TO DEVELOP MAINTAIN AND OPERATE THE TOLL ROAD AND TO FURTHER COLLECT THE TOLL FOR THE SPECIFIED PERIOD THEN THIS RIGHT IS AN INTANGIBLE ASSET FALLING UNDER SECTION 32(1)(II) OF THE ACT AND THE ALTERNATE CON TENTION OF ASSESSEE THAT THE PROJECT BE TREATED AS PLANT & MACHINERY AND DEPRECIATION BE ALLOWED WAS REJECTED VIDE PARA 30 OF THE ORDER. FURTHER VIDE PARA 31 THE TRIBUNAL CONSIDERED THE CONTENTION OF REVENUE THAT INVESTMENT MADE BY THE ASSESSEE BE TREA TED AS REVENUE EXPENDITURE AND BE AMORTIZED FOR THE PERIOD OF AGREEMENT WAS REJECTED HOLDING THAT THE INVESTMENT MADE UNDER THE CIRCUMSTANCES COULD NOT BE SAID TO BE REVENUE IN NATURE BUT WAS CAPITAL IN NATURE ON WHICH THE ASSESSEE WAS ENTITLED TO CLAIM THE DEPRECIATION. PARA 31 OF THE ORDER READS AS UNDER: - 12 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 31. SO FAR AS THE CONTENTION OF THE REVENUE THAT THE INVESTMENT MADE BY THE ASSESSEE BE TREATED AS A REVENUE EXPENDITURE AND BE AMORTIZED FOR THE PERIOD OF THE AGREEMENT IS CONCERNED WE DO NOT FIN D 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 ADMITTED THAT THE LICENSE OF RIGHT TO COLLECT TOLL FREE HAS BEEN GIVEN TO THE ASSESSEE IN LIEU OF THE INVESTMENTS MADE AND THAT SUCH A RIGHT BRINGS TO THE ASSESSEE AN ENDURING BENEFIT. THE INVESTMENTS MADE UNDER SUCH CIRCUMSTANCES CANNOT BE SAID TO BE OF REVENUE IN NATURE BUT AS DISCUSSED ABOVE ARE OF CAPITAL IN NATURE. THE ASSESSEE THUS IS ENTITLED TO CLAIM DEPRECIATION ON SUCH TY PE OF CAPITAL ASSET. 23. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES BEFORE US WHERE THE CLAIM OF ASSESSEE WAS DEPRECIATION ON THE RIGHT TO COLLECT TOLL BEING INFRASTRUCTURE AND NOT ON THE TOLL ROAD WHERE THE COST INCURRED FOR DEVELOPMENT AND CONSTRUCTION OF INFRASTRUCTURE FACILITY WAS A RIGHT IN THE NATURE OF INTANGIBLE ASSET FALLING WITHIN PURVIEW OF SECTION 32(1)(II) OF THE ACT THE ASSESSEE WAS ENTITLED TO DEPRECIATION ON SUCH INTANGIBLE ASSET. THE ASSESSEE UNDOUBTEDLY HAD EXPENDED O N DEVELOPMENT CONSTRUCTION AND MAINTENANCE OF INFRASTRUCTURE FACILITY FOR A SPECIFIED PERIOD OUT OF ITS OWN FUNDS AND AFTER THE END OF SPECIFIED PERIOD THE ASSESSEE WAS TO TRANSFER THE SAID INFRASTRUCTURE FACILITY TO THE GOVERNMENT OF MAHARASHTRA FREE OF CHARGE. IN CONSIDERATION OF DEVELOPING CONSTRUCTING AND MAINTAINING THE FACILITY FOR SPECIFIED PERIOD AND THEREAFTER TRANSFERRING IT TO THE STATE GOVERNMENT THE ASSESSEE WAS GRANTED THE RIGHT TO COLLECT TOLL FROM MOTORISTS WHOEVER USES THE SAID INFRAS TRUCTURE FACILITY DURING THE SPECIFIED PERIOD. THE SAID RIGHT TO COLLECT TOLL WAS ON ACCOUNT OF ASSESSEE INCURRING THE COST TOWARDS DEVELOPMENT CONSTRUCTION AND MAINTENANCE OF INFRASTRUCTURE FACILITY WHICH WAS TREATED BY THE ASSESSEE AS ITS INTANGIBLE A SSET AND ON WHICH IT CLAIMED THE DEPRECIATION UNDER SECTION 32(1)(II) OF THE ACT. FOLLOWING THE PRECEDENT REFERRED TO ABOVE THE ASSESSEE IS ENTITLED TO CLAIM THE SAID DEDUCTION ON INTANGIBLE ASSET IN VIEW OF SECTION 32(1)(II) OF THE ACT. THE REASON FO R WHICH THE SAID DEPRECIATION WHICH WAS EARLIER ALLOWED BY THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR ASSESSMENT YEAR 2007 - 08 AND WAS ALLOWED BY THE ASSESSING OFFICER IN THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT RELATING TO ASSESSMENT YEAR 2006 - 07 WAS DENIED BY THE ASSESSING OFFICER AS THE APPEALS WERE PENDING AGAINST THE ORDER OF TRIBUNAL IS NOT CORRECT APPROACH. FURTHER THE CIT(A) HAS RELIED ON THE CBDT CIRCULAR DATED 23.04.2014 WHEREIN THE CBDT HAS LAID DOWN THAT INSTEAD OF DEPRECIATION O N THE COST INCURRED BY THE ASSESSEE THE SAID COST SHOULD BE AMORTIZED OVER A SPECIFIED PERIOD AND ALLOWED IN THE HANDS OF ASSESSEE. HOWEVER THE EXPENDITURE INCURRED BY THE ASSESSEE IS NOT REVENUE IN NATURE AND THE SAME CANNOT BE AMORTIZED OVER THE PERIO D FOR WHICH THE ASSESSEE CAN COLLECT THE TOLL; THE RIGHT TO COLLECT TOLL IS CAPITAL EXPENDITURE INCURRED BY THE ASSESSEE AND CONSEQUENTLY THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION ON SUCH INTANGIBLE ASSETS AS PROVIDED UNDER SECTION 32(1)(II) OF THE A CT. ACCORDINGLY WE HOLD S. THE ASSESSEE IS THUS ENTITLED TO ITS CLAIM. THUS THE SECOND PART OF THE ORDER OF ASSESSING OFFICER IN AMORTIZING THE EXPENDITURE OVER THE PERIOD OF FACILITY AND ALLOWING THE SAME STANDS REVERSED. THE ASSESSING OFFICER IS D IRECTED TO ALLOW THE CLAIM OF ASSESSEE OF DEPRECIATION ON SUCH INTANGIBLE ASSET UNDER SECTION 32(1)(II) OF THE ACT. 9. THE ISSUE ARISING IN THE PRESENT APPEAL I.E. AGAINST CLAIM OF THE ASSESSEE ON RIGHT TO COLLECT TOLL BEING AN INTANGIBLE ASSET AND ELIGIBLE FOR DEPRECIATION U/S. 32(1) (II) OF THE ACT IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN THE CASE OF 13 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 ASHOKA INFRAS TRUCTURE LTD (SUPRA) AND FOLLOWING THE SAME IN PARITY OF REASONING WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE SAID CLAIM. 10. FURTHER THE TRIBUNAL IN THE CASE OF ITO VS. M/S. ASHOKA HIGHWAYS (BHANDARA) IN ITA NO. 1299/PUN/2015 HAS ALLOWED THE CLAIM O F ASSESSEE WHERE SIMILAR CLAIM OF DEPRECIATION ON THE COST INCURRED FOR CONSTRUCTION OF ROAD HOLDING THE RIGHT TO COLLECT TOLL I S AN INTANGIBLE ASSET. FOLLOWING THE SAME PARITY OF REASONING WE ALLOW THE CLAIM OF ASSESSEE AND DISMISS THE GROUNDS OF APP EAL RAISED BY REVENUE. 11. THE ASSESSING OFFICER HAD ALLOWED AMORTIZATION OF THE COST INCURRED ON CONSTRUCTION OF THE TOLL RIGHT ON PRO - RATA BASIS AFTER DENYING THE DEPRECIATION ON THE SAID RIGHT TO COLLECT TOLL. HOWEVER SINCE WE HAVE ALLOWED CLAIM OF DEPRECIATION ON TOLL ROAD THE AMORTIZATION OF THE COST INCURRED ON CONSTRUCTION OF TOLL ROAD WOULD STAND REVERSED. ACCORDINGLY THE ASSESSING OFFICER WOULD COMPUTE THE INCOME IN THE HANDS OF ASSESSEE IN LINE WITH GUIDELINE OF THE ORDER OF TRIBUNAL ABOVE . 1 2 . THE ISSUE ARISING IN ITA NO. 380/PUN/2016 IS IDENTICAL TO THE ISSUE RAISED IN ITA NO. 379/PUN/2016 AND OUR DECISION IN ITA NO.379/PUN/2016 WOULD APPLY MUTATIS - MUTANDIS TO ITA NO. 380/PUN/2016. 13 . IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRO NOUNCED ON THIS 29 TH DAY OF NOVEMBER 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) ( SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 29 TH NOVEMBER 2017 . SB 14 ITA NO S . 379 & 380/PUN/2016 A.Y S.2010 - 11 & 2011 - 12 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 12 PUNE. 4. THE PR. CIT CENTRAL NAGPUR. 5. / DR ITAT B BENCH PUNE. 6. / GUARD FILE. // TRUE COPY // / BY ORDER / PRIVATE SECRETARY / ITAT PUNE .