2021 (9) TMI 466 - ITAT DELHI - Income Tax

Head Note / Extract:
Excess depreciation - cost of development of infrastructure facility of roads/highways - depreciation as allowable on the toll road/bridges under Build-Operate-Transfer (BOT) arrangement - whether deduction shall be allowed on the basis of amortization over the concessionaire period? - HELD THAT:- Board’s Circular which is dated 23.04.2014 following the Circular, the appellant company has amortized WDV on 01.04.2014 over the remaining life of the asset. A close reading of the Circular also shows that deduction claimed out of initial cost of development of infrastructure, facility of road /highway under BOT projects in earlier year may be deducted from the initial cost of infrastructure facility of roads/bridge and the cost so reduced shall be amortized equally over remaining period of toll concessionaire agreement (refer para 7 of the CBDT circular no. 09/2014 dated 23.04.2014). This effectively means that the reduced cost is to be amortized equally over the remaining period. There is nothing in the circular to suggest and the same shall be applicable on retrospective basis. Action of the Ld. AO in applying the circular retrospectively is not in order. Accordingly, the disallowance made by the Ld. AO on account of difference between the depreciation claimed and the depreciation allowed on the basis of amortization for the remaining part of the concessionaire agreement is directed to be deleted - assessee has rightly claimed the depreciation. The appeal of the Revenue is dismissed.