The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the rights to build and operate toll road are considered as tangible assets and the depreciation shall be allowed.
The assessee is engaged in the business of Prime multi-disciplinary organization providing a full range of consultancy, design & engineering services in various fields of telecommunications, IT, and civil construction in India as well as abroad. The return of income was filed declaring a total income of Rs. Nil.
The assessee has been granted the right to collect the toll from the user of the road and this right arises out of investment made by the assessee towards the construction of the road. The assessee had claimed depreciation at the rate of 25% on its right to build and operate in a transfer arrangement by treating the same as an intangible asset.
The Departmental Representative submitted that the Commissioner of Income Tax (Appeal) [CIT(A)] has failed to appreciate the fact that the Assessing Officer has duly taken into consideration the Circular no. 9 of 2014 which clarifies that construction cost of any project under Build Operate Transfer (BOT) is to be amortized over its concessionaire period.
It was further submitted that the Assessing Officer has rightly concluded that the assessee is not the owner of the land which otherwise belongs to the State Government. The Authorized Representative however relied on the findings of the Commissioner of Income Tax (Appeal).
In reference to the judgment of the Hyderabad Bench in the case of DCIT Hyderabad M/s. Progressive Construction Limited, Hyderabad, ITA no. 214/Hyd./2014 the Two-member bench comprising of N.K. Billaiya (Accountant member) and Anubhav Sharma (Judicial member) held that it can be appreciated from the orders of the Commissioner of Income Tax (Appeal) that the fact that rights under BOT projects have been considered to be intangible assets.
Therefore, there is no error in the findings of the Commissioner of Income Tax (Appeal). Thus, the appeal of the revenue was dismissed.
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