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2011 (7) TMI 513 - AT - Income TaxDisallowance - Deduction under section 80-IA - License fee for wayside amenities - Assessee was required to develop operate and maintain roadside amenities such a condition of the agreement under which it was allowed to build operate and maintain road but that by itself does not make the road and amenities a part of the road or infrastructure facility - Therefore, assessee is eligible for deduction under section 80-IA only in respect of road business income which are derived from developing operating and maintaining road and income which were derived by the assessee from roadside amenities are not allowable as deduction under section 80-IA of the Act - It is not in dispute that the assessee derived income of Rs. 21,91,999 from roadside amenities - Therefore, confirm the order of the lower authorities to the extent of exclusion of above income for calculating deduction allowable under section 80-IA of the Act. Regarding fee for lying optical fibre cable and fee from film shooting - it is not clear whether the same relates to road or the same relates to road side facility - find that income derived from operating and maintaining of road qualifies for deduction under section 80-IA of the Act - Thus, income derived by assessee from any operation of road is eligible for deduction under section 80-IA of the Act and the contention of the Revenue that only toll charges will qualify for deduction under section 80-IA cannot be accepted - Therefore, set aside the issue relating to fee from lying down optical fibre cable and fee from film shooting back to the file of the Learned Assessing Officer and direct him to verify the facts and allow deduction under section 80-IA in respect of those income which relates to road. Regarding to scrap sales - find that sale of scrap represents the sale of left over materials which were acquired for developing road - No material has been brought on record by the lower authorities to controvert the above submission of the assessee - Thus the sale of scrap was intimately connected with the business of developing operating and maintaining infrastructure facility and income from such sale goes on to reduce the expenditure of developing the infrastructure facility and truly speaking the same is not an independent income to the assessee - Therefore, delete the disallowance of deduction under section 80-IA. Depreciation claim - Project assets at the rate of 10 per cent applicable to building - During the course of assessment proceedings in the assessment year 2006-07, it was held by the Assessing Officer that the assessee is not the owner of the project assets, as such is not eligible for claiming depreciation of such assets - However, taking into account the fact that the entire cost of the project has to be borne by the assessee and such cost has to be recovered from the users of the project by way of toll fees prescribed by the Government, the entire cost was amortized over the period of concession. So, as the assessee has claimed huge depreciation more than the amortization value of the assessment years 2002-03, 2003-04 and 2004-05 - The Hon'ble ITAT in the above case in ITA No. 2082/Mds./2008 & 817/Mds./2007 for assessment years 2003-04 and 2004-05 respectively has held as under : after the assessment year 1988-89 all the Appendices have the note that building would include roads - Therefore, the assessee would become entitled to depreciation on the road in the category of building - Thus, set aside the order of the Commissioner of Income-tax (A) on this issue and direct the Assessing Officer to allow depreciation on the road at the rate applicable to the building.'
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