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2020 (5) TMI 590 - AT - Income TaxLicense/registration fee paid - whether is a commercial right and in the nature of an asset within the meaning of section 32(1)(ii) and the assessee is entitled to claim depreciation thereon? - capitalization of expenditure for special Dunnage whereas debiting the expenditure for ordinary Dunnage to the profit and loss account and claimed the same to be revenue expenditure - HELD THAT:- Assessee has been using two types of Dunnage, though for the same purpose, but with two different life times, namely, the special Dunnage having life time of more than five years, whereas the ordinary Dunnage has to be used only for one year and un-usable thereafter - the assessee has capitalized the expenditure on the special Dunnage in their accounts and has been claiming depreciation @ 16% per annum over the useful period and on the same analogy in respect of ordinary Dunnage, they are treating the expenditure for one year and debiting the same to the profit and loss account to claim it as revenue expenditure. It is also not in dispute that the Revenue has been accepting the capitalization of special Dunnage and allowing depreciation @ 16% per annum over the period of life expectancy of such Dunnage. As life expectancy is taken as the determining factor for the separate treatment to the Dunnage, we do not find any illegality or irregularity in the view taken by the ld. CIT(A) that because of the single use within a year in respect of ordinary Dunnage, the expenditure thereon has to be taken as revenue expenditure and no addition on that score could be made. This finding of the ld. CIT(A) cannot be said to be illegal or irregular or perverse. We, therefore, find the ground No. 1 of appeal of the Revenue as devoid of merits. Depreciation in respect of license/registration fee paid to Indian Railways - CIT(A) based his finding on the observations of the Tribunal in the case of ONGC Videsh Ltd [2009 (10) TMI 76 - ITAT DELHI-F] 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) - 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 Railways is an asset whereon depreciation u/s. 32(1) is allowable. We, therefore, dismiss ground No. 2.
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