The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that depreciation under section 32 of the Income Tax Act, 1961 is allowable in respect of the amount paid as a license fee to the Indian Railway.
The assessee Corporation is an Authority constituted under the law for the marketing of agricultural produce and derives the bulk of its income from the letting out of godowns or warehouse for storage and processing the marketing of commodities etc.
During the relevant assessment year, the income tax department rejected the claim of depreciation along with some other similar claims.
On the first appeal, the Commissioner of Income Tax (Appeals) held that the license/registration fee paid to Indian Railway is allowable as a deduction.
The authority relied on the decision of the Tribunal in the case of ONGC Videsh Ltd. wherein it was held that the right granted to the assessee by way of license whereunder the assessee had become owner of such right, such license enables the assessee to have an access to carry on their business and therefore, it falls within the category of an asset u/s. 32(1)(ii) of the Income Tax Act.
Concurring with the findings of the first appellate authority, the Tribunal observed that “no decision is brought to our notice to the contrary to take a different view. We, therefore, while agreeing with the ld. CIT(A), find that the claim of depreciation in respect of license/registration fee paid by the assessee to the Indian Railway is an asset whereon depreciation u/s. 32(1) is allowable.”
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