The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the depreciation under section 32 of the Income Tax Act, 1961 is allowable on toll collection rights as the same would be trated as ‘capital asset’.
The assessee, Rohan & Rajdeep Infrastructure claimed depreciation on the same. However, the AO has amortized the opening WDV over the remaining concession period following the CBDT Circular No.9/2014. Thus the AO denied assessee’s claim of depreciation treating the right of toll collection as intangible asset. Aggrieved by the AO’s order the assessee filed an appeal before ld.CIT(A) wherein the claim was granted.
The Revenue approached the Tribunal for relief.
A bench of Shri S.S.Viswanethra Ravi, JM and Dr. Dipak P. Ripote, AM has relied on the decision of ITAT Pune wherein a Co-ordinate Bench of the Tribunal, after considering the decision rendered by Mumbai Tribunal in the case of ACIT Vs. West Gujarat Expressway Ltd, which in turn had relied upon the ratio laid down by Hon’ble Bombay High Court in the case of North Karnataka Expressway Ltd., Vs CIT reported in and after considering the CBDT Circular No.9/2014 dated 23.04.2014 (which has also been relied upon by Ld PCIT in the present case) has held that the right to collect toll is capital expenditure and consequently the assessee is entitled to claim depreciation on such intangible assets as provided under section 32(1)(ii) of the Act.
Dismissing the appeal filed by the Revenue, the Tribunal observed that “Therefore, respectfully following the above decision of the Hon’ble ITAT Pune, we hold that assessee’s claim of depreciation shall be allowed. Thus, the Ground No.2 of Revenue is dismissed.”
Shri Nikhil Pathak appeared for the assessee.
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