Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (9) TMI 163 - AT - Income TaxExpenses incurred on normal repairs and maintenance – nature of expenses capital or not - Whether the expenses incurred so qualifies u/s 31(1) - Enhancement of assessed income – Procedure u/s 251(2) not followed – Held that:- The assessee made contract with NHAI to construct, operate and maintain 90 KMs N.H. between Jaipur to Kishangarh and incurred total cost more than ₹ 590 crores - The assessee collected total revenue from the toll is more than ₹ 136 crores and shown net income more than ₹ 59 crores from this project – assessee had already got constructed earthen shoulder road on both sides of road and fencing but on used by the heavy traffic, it got damaged and is not remained in good condition to be used smoothly by the heavy traffic, therefore, nominal tear and wear is required - The assessee incurred 3.86 crores expenditure on normal repair and maintenance including expenditure on repairing of fencing - This highway was taken on contract on BOT basis for 18 years - The assessee has to recover his cost as well as profit on investment within given time, which hardly extended by the NHAI - assessee had to maintain the national highway in good condition to attract the traffic to increase toll collection, so profit can be maximized. Expenditure on replacement is also a revenue expenditure - If the expenditure is treated capital expenditure, it cannot be recovered in 18 years of period of contract - it required to incur expenditure every year and under which section, the assessee would claim last years’ repair and maintenance expenditure as full - the normal repair expenditure on earthen shoulder road on both sides of highway with normal tear wear on fencing has been claimed by the assessee and allowable u/s 31(1) of the Act - the assessee has exceptional circumstances of constructing highways on BOT basis - The expenditures are not capital expenditure as no new assets has been created - the assessee has only constructive ownership for the period of 18 years on it – the AO has allowed the expenditures as revenue in AYs 2009-10 and 2010-11 – Decided partly in favour of assessee. Depreciation on road construction – Rate of depreciation on EDP equipment @ 60% or 15% - Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that the depreciation @ 10% is allowed on expenditure incurred on road by considering the amendment made in item number building in depreciation schedule in favour of the assessee - the order of the CIT(A) is upheld – Decided against Revenue.
|