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2018 (2) TMI 1514 - AT - Income TaxDepreciation on expenditure incurred on construction of Mumbra bypass road on BOT basis - Held that:- The assessee is entitled to claim depreciation on the cost incurred on construction of the BOT facility, since, by incurring such investment the assessee has acquired a valuable commercial or business right in the nature described under section 32(1)(ii) r/w Explanation 32(1), Explanation–3(b) of the Act. Also in the preceding assessment years the Assessing Officer after examining assessee’s claim has not only accepted the expenditure incurred on BOT facility as capital in nature but has allowed depreciation by treating it as an intangible asset. In the impugned assessment year, the assessee has claimed depreciation on the opening WDV only. As far as the nature and character of the expenditure, whether capital or revenue, has attained finality in the preceding assessment years wherein, the Assessing Officer has allowed assessee’s claim of deprecation. Therefore, it is not open to the Department to re–examine the nature of expenditure again in the impugned assessment year. The Assessing Officer having allowed assessee’s claim of depreciation on the BOT facility by treating it as an intangible asset in the preceding assessment years, it cannot be denied in the impugned assessment year. Therefore, allowing assessee’s claim we direct the Assessing Officer to allow depreciation as claimed by the assessee. Allowing foreign exchange loss - Held that:- In order to hedge the financial exposure of high debt and high interest outcome the assessee entered into currency swap derivative option agreement with ICICI Bank on 11th April 2007 to hedge the high interest outcome relating to Mumbra project debt of ₹ 75 crore by swapping debt of ₹ 35 crore into Japanese Yen for a period of five years. As per the swap arrangement, the assessee receives 9.50% interest per annum and pays interest @ 7.50% per annum on the Yen amount. Thus, from the aforesaid facts, it is clear that the hedging transaction with ICICI Bank was for the purpose of reducing the high interest outcome on the debt incurred for the Mumbra project. The aforesaid facts indicate not only that the hedging transaction is for the business requirement of the assessee but it was in the regular course of business. Moreover, as brought to our notice by the learned Authorised Representative, the assessee consistently following this method of accounting has shown foreign exchange gain / loss in the preceding assessment years which have been accepted by the Department. Therefore, no reason to interfere with the finding of the learned Commissioner (Appeals) on this issue. These grounds are dismissed. Disallowance under section 14A - Held that:- No disallowance of interest expenditure under section 8D(2)(ii) can be made in view of the decision of the Hon'ble Bombay High Court in CIT v/s HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT). As far as disallowance of administrative expenditure under rule 8D(2)(iii) is concerned, we do not find any infirmity in the order of the learned Commissioner (Appeals) in directing the Assessing Officer to exclude the strategic investment and investment which have not resulted in any exempt income during the year for computing disallowance under the said provisions, as such the findings of the learned Commissioner (Appeals) are in conformity with well settled principles of law. Applicability of section 14A to the computation of book profit under section 115JB - Held that:- the applicability of section 14A for making adjustment to book profit under section 115JB of the Act also requires consideration in view of the Special Bench decision of the Tribunal, Delhi Bench, in ACIT v/s Vireet Investment [2017 (6) TMI 1124 - ITAT DELHI]. In view of the aforesaid, we restore these issues to the file of the Assessing Officer for fresh adjudication after due opportunity of being heard to the assessee
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