Developer entitled to Claim Depreciation of Public Roads, Treating Same as Building: Madras High Court [Read Judgment]

The Madras High court held that the developer was entitled to claim depreciation of public roads, treating the same as Building.

The assessee, M/s. L & T Transportation Infrastructure Ltd. is engaged in the business of the development of infrastructural facilities and developed a bye-pass road bridge in Coimbatore. The assessee has claimed depreciation on-road/bridge. In the assessment order, the Assessing Officer has held that the assessee is not entitled to depreciation on-road/bridge, since the assessee itself amortized the cost of the road/bridge over the construction period of 30/20 years and denied the claim of the assessee. Challenging the order of assessment, the assessee preferred an appeal before the Commissioner of Income Tax directed the Assessing Officer to allow the claim of the assessee.

Aggrieved over the same, the Revenue preferred an appeal before the Income Tax Appellate Tribunal, and the Tribunal dismissed the appeal. Challenging the order passed by the Income Tax Appellate Tribunal, the Revenue has filed the appeal.

Mr.Karthik Ranganathan, Senior Standing Counsel appearing for the appellant submitted that the substantial question of law that arises for consideration in the above appeal has already been decided against the Revenue and in favor of the Assessee in the Judgment dated 29.06.2021 made in Commissioner of Income Tax-I, Chennai. v. M/s. L & T Transportation Infrastructure Ltd., Chennai.

The division bench of Justice M. Duraiswamy and Justice R.Hemalatha held that execution of document transferring title necessarily follows if the schedule of payment is observed by the allottee. If only the allottee may default the property may revert back to the Board. That is a matter only between the Housing Board and the allottee. No third person intervenes. The part payments made by the allottee are with the intention of acquiring title. The delivery of possession by the Housing Board to allottees is also a step towards conferring ownership. Documentation is delayed only with the idea of compelling the allottee to observe the schedule of payment.

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