Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

ACIT -10(1), Mumbai Versus M/s. West Gujarat Expressway Ltd., M/s. West Gujarat Expressway Ltd. Versus ACIT -10(1), Mumbai

2015 (5) TMI 305 - ITAT MUMBAI

Interest income - “Income from other sources” or “Business income” - Held that:- From the above submissions of the assessee, it is apparent on the record that the interest income has been earned by the assessee on the security deposits with the bank as per the Common Loan Agreement. The said interest income had been earned by the assessee out of business compulsions of deposits in the ‘Debit Service Reserve Account’, hence the said interest income is linked to the business activities of the asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d period only after incurring expenditure through its own resources on development, construction and maintenance of the infrastructure facility. Secondly, section 32(1)(i1) permits allowance of depreciation on assets specified therein being 'intangible assets' which are wholly or partly owned by the assessee and used for the purposes of its business. The aforesaid condition is fully satisfied by the assessee and therefore considered in the aforesaid perspective we find no justification f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he assessee is not the owner of the toll road. The assessee has been given only the right to develop, maintain and operate the toll road and further to collect the toll for the specified period. This right as discussed above is an intangible asset falling under section 32(1)(ii) of the Act. - Decided in favour of assessee.

Disallowance of claim of expenses incurred in relation to increase in authorized share capital - Held that:- There is no dispute on the point that the authorized sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re capital for the purpose of expansion of business. In view of the decision of the co-ordinate bench of the Tribunal in the case of “M/s. Chiranjeevi Wind Energy vs. ACIT” (2013 (12) TMI 905 - ITAT CHENNAI ) and also in view of our observations made above, we hold that the assessee is entitled to the amortization of the said expenses. - Decided in favour of assessee. - ITA No.5904/M/2012, ITA No.6244/M/2012 - Dated:- 15-4-2015 - Shri B. R. Baskaran And Shri Sanjay Garg,JJ. For the Petitioner : .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has taken the following grounds of appeal: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of interest income of ₹ 1,34,59,582/- under the head " Income from Other Sources" without appreciating the fact that income is not derived from the business activity of the assessee company. 2 On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition made by the Assessing Officer on account of deprec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t income of ₹ 1,34,59,582/- is to be assessed under the head Income from other sources or as Business income of the assessee. The Assessing Officer (hereinafter referred to as the AO) found that the interest income of ₹ 1,34,59,582/- derived from bank deposits had been included by the assessee into its business income. He, however, observed that since the said income was not derived from business activity of the assessee company, hence the same was taxable under the head Income from .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

there in appellant's case in A.Y.2007-08 wherein the undersigned decided the issue as under: "3.3. I have carefully considered the facts of the case. The appellant has explained that it started earning the business receipts i.e. earning toll revenue from the portion of the project completed and total revenue received was ₹ 6.41 crores. Out of this amount, the appellant invested funds of ₹ 6.16 crores into fixed deposits and earned interest income of ₹ 5,59,939/-. In th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d therefore, following the decision of Hon'ble Mumbai High Court in the case of Lok Holdings, the interest income was assessable as business income. The A.O. is directed to assess the same as business income. This ground of appeal is allowed." This issue was also there in A.Y.2008-09 wherein by following the appeal order of A.Y.2007-08, the undersigned directed the A.O. to consider the interest income under the head income from business or profession. The facts of the year under conside .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

have heard the rival contentions of the Ld. Representatives of both the parties and have also gone through the records. A perusal of the above reproduced findings of the Ld. CIT(A) on this issue reveals that the Ld. CIT(A) has allowed the claim of the assessee directing that the interest income be treated as business income relying upon his own findings given in the earlier assessment year 2007-08 for which he had relied upon the decision of the Hon ble Bombay High Court in the case of CIT vs. L .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

en while adjudicating the another issue relating to some other interest income of the assessee, the claim regarding treatment of which as business income was rejected by the Ld. CIT(A). The said issue has been discussed vide paras 2 to 8 of the assessee s appeal for assessment year 2007- 08. The Tribunal has observed that since it was a matter of short term deposit temporarily made out of borrowed funds pending utilization of the same, hence the issue was covered with the decision of the Hon ble .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e assessee has been granted rights/license to collect toll for the period of 20 years for up gradation, operation, maintenance and implementation of Jetpur- Rajkot Road Project. The said project has been assigned to the assessee as a concessionaire on Built-Operate-Transfer (BOT) basis. The Ld. AR of the assessee has further brought our attention to the Common Loan Agreement dated 20th June, 2005, entered between the assessee and the lender banks namely 1. Punjab National Bank, 2. Corporation Ba .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vice or ₹ 1800 lakh. The Ld. AR of the assessee has further relied upon the copy of the letter dated 31.12.2011 of the Relationship Manager of the Punjab National Bank certifying that all the original FD receipts were physically lying with the said Bank (PNB) and there was lien on the same under the Debt Service Reserve Account . The ld. AR has further submitted that interest income from the FDRs kept with the bank as required under the Common Loan Agreement upon which the bank has lien ha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

come had been earned by the assessee out of business compulsions of deposits in the Debit Service Reserve Account , hence the said interest income is linked to the business activities of the assessee. The issue is covered with the decisions of the Tribunal in the own case of the assessee for earlier assessment years. Hence, the interest income of the assessee is ordered to be assessed as Business Income. Ground No.1 of the Revenue s appeal is therefore dismissed. Ground No.2 8. Ground No.2 is re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was granted concession under the said Agreement for a period of 20 years commencing from 22.09.2005. The total cost of the infrastructure facility is ₹ 274.52 crores. (ii) At the end of the concession period, the assessee company will have to hand over the project facility to NHAI. (iii) The project is an infrastructure eligible for deduction u/s 80-IA of the Act and the income from the said project is totally exempt from tax for a period of 10 years. (iv) The total cost of construction o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

itions required to be fulfilled are that it should be a capital asset, owned by the assessee and used for the purpose of business. The assessee company has fulfilled all the said conditions. The said asset is treated as buildings and depreciation is claimed at the prescribed rate. (viii) Without prejudice to the above submissions, the assessee company has also lodged or an alternate claim that depreciation should be allowed in respect of the Toll Roads by treating the said project facility as &# .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

32 of the Act, he held that to claim depreciation, the asset should be owned by the assessee. He further observed that the toll roads did not form part of the specified assets covered by appendix-1 and rule 5 of the I.T. Rules. He therefore denied the claim of depreciation on the toll road. The AO also rejected the alternate claim of the assessee that the toll roads be treated as plant and machinery. He, however, observed that since it was a fact that the assessee company had incurred huge expen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

7-08 and 2008-09. In the appeal orders, the undersigned held that the appellant was entitled for depreciation on toll road. The undersigned also held that the depreciation allowable was at the rate of considering the toll road as part of building. The appellant s claim of allowing depreciation considering the toll road as part of plant & machinery was rejected. Following the appeal order of earlier years, the A.O. is directed to allow depreciation on toll road. The A.O. is directed to allow .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d order, has concluded as under: 19. We have considered the rival submissions and perused the orders of the lower authorities and various decisions relied upon by the assessee and various clauses of the concession agreement pointed out by the Ld. DR. After considering the entire facts in the light of the judicial decisions and in particular clause 38.4 of the concession agreement which provides as under: For the purposes of claiming tax depreciation, the property representing the capital investm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ribunal, following the order dated 27.02.13 (supra), has allowed the claim of the assessee in this respect vide order dated 21.03.13 passed in ITA No.6841 & 6796/M/2011. 13. Earlier, this matter was heard on 21.10.14 by us. On the said date, It was contended by the ld. AR that the issue was covered by the decisions of the Tribunal for earlier assessment years in the own case of the assessee and further by that of various High Courts e.g. M/s. Noida Toll Bridge Company Ltd. passed in ITA No.3 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bay High Court, in the said case, has categorically held that in view of the provisions of National Highway Act, 1956 and National Highway Authorities of India Act, 1988, the ownership of the roads vests in the Union of India and further that the above said Acts are special statutes. It has been observed by the Hon ble high Court that when the concept of ownership and vesting therein is of absolute nature that cannot be said to be in any manner restricted or curtailed by a general definition or .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tter could not have been decided as covered by the decisions of the Tribunal in the light of the above decision of the jurisdictional Hon ble Bombay High Court. 14. We have heard the rival contentions of the Ld. Representatives of both the parties and have also gone through the records. The Ld. A.R. of the assessee has contended that the assessee company has entered into an agreement dated 22.03.2005 with the NHAI and has been granted concession for design, engineering, financing, procurement, c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

claiming depreciation on the cost of the project facility @ 15% treating the same as 'plant and machinery'. The Project was awarded by the NHAI on build, operate and transfer (BOT) basis with toll collection rights. The only source of operating income to the assessee is from the toll fees charged from the users of the Project road in accordance with the rates prescribed in the toll notification from time to time. As per the terms of the Concession Agreement, the Road Asset is required t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tal investment made by the Concessionaire shall be deemed to be acquired and owned by the Concessionaire". 15. The Ld. A.R., strongly relying upon the above reproduced clause 38.4, has contended that the expenditure incurred to construct the toll road is a capital expenditure and the assessee is the owner in terms of the above clause of the agreement entered into by the assessee with the NHAI and has all the rights to claim the tax depreciation on the toll road constructed and capitalized i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y High Court in the case of North Karnataka Expressway Ltd. vs. CIT (supra) has left open the issue of treating the toll road project as plant & machinery or of the claim of depreciation in relation to investment made under other categories of assets as mentioned under section 32 of the Act. If the assessee is not found entitled to claim the ownership of the road, claim of the assessee may also be considered being intangible asset as the assessee has been granted license to collect toll over .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

this stage. The Ld. D.R. has also relied upon the circular No.09/2014 of the CBDT contending that the CBDT has clarified that the cost of construction on development of infrastructure facility of roads/highways under build-operatetransfer (BOT) projects may be amortised and claimed as allowable business expenditure under the Act. 17. We have considered the rival contentions. So far as the reliance of the Ld. A.R. on the article/clause 38.4 of the concession agreement between the assessee and th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t year 2005-06 during which the construction of the toll road was completed. As the assessment year under consideration was the first year when the road became operational, the Appellant claimed Depreciation of ₹ 59.92 crores at the rate of 10% on the capitalized cost of the toll road. The Appellant also filed necessary details of the claim of depreciation and a note was appended to the depreciation schedule stating that though the Appellant was entitled to higher claim of depreciation on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sing the provisions of National Highway Act, 1956 and National Highway Authorities of India Act, 1988 and various case laws including that are strongly relied upon by the Ld. A.R. e.g. Mysore Minerals Ltd. vs. CIT reported in (1999) 239 ITR 775 SC, CIT vs Podar Cement Pvt. Ltd. & others reported in (1997) 226 ITR 625 SC and CIT vs. Noida Toll Bridge Company Ltd. (Allahabad HC) (supra), has held that the national highways vest in the Union of India and if the government for the purpose of dev .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ention of the assessee in that case that it was the owner of the toll road has been rejected by the Hon ble Supreme Court. Hence, the clause 38.4 relied upon by the assessee in the present case will not be of any help to the assessee in this regard. 19. However, so far as the alternative claim of the assessee that if the assessee is not found as owner of the toll road, his claim of depreciation be considered in relation to investments made as falling under the other categories of assets, is conc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

essee and that he cannot claim any depreciation thereupon. Hence, the Hon ble Bombay High Court has not discussed the issue relating to the claim of depreciation on the license for right to collect the toll as intangible asset. Further, the Hon ble Bombay High Court in para 39 of the decision (supra) has observed that as per the provisions of National Highway Act, 1956 and National Highway Authorities of India Act, 1988, the ownership of the toll road vests in Union , however, the term owner as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pose that the term onwer is defined in this manner in Income Tax Act, 1961. The above observations of the Hon ble Bombay High Court reveal that for the purpose of claiming deduction under Income Tax Act, the term owner as defined under the Income Tax Act can be looked into. However, that cannot control, leave alone or overreach the National Highway Act, 1956 or the National Highway Authorities of India Act, 1988. The Hon ble Bombay High Court further, in para 47 of the said order, has observed t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

urt has categorically clarified that the assessee s claim for depreciation in respect of the building, plant & machinery and falling within the purview of sub section (1) of section 32 of the Income Tax Act, 1961, if considered and granted, shall not be affected by the decision of the Hon ble Bombay High Court. 20. A careful reading of the entire decision of the Hon ble Bombay High Court and in the light of the various observations made in judgment as discussed above, it is very clear that t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

laim themselves to be the owner of the toll road. However, the Hon ble Bombay High Court has left upon the issue relating to the claim of depreciation, if otherwise eligible under the other provisions of the Income Tax Act. 21. The Ld. A.R., before us, has put the alternative claim that in view of the observations of the Hon ble Bombay High Court either the investments made by the assessee be treated under the asset building, plant & machinery and depreciation be granted accordingly or the s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rs & Shareholders Pvt. Ltd. (supra), while relying upon the various decisions of the Hon ble Supreme Court and other Hon ble High Courts, has held that even if a claim is not made before the AO it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim is not barred. The Hon ble Bombay High Court while relying upon the decision of the Hon ble Supreme Court in the case of Jute Corporation of India Limited vs. CIT 1991 Supp (2) SCC .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e plenary powers which the subordinate authority may have in the matter. An assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. The appellate authorities have jurisdiction to deal not merely with add .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reme Court in the case of Goetze (India) Limited v. CIT (2006) 157 Taxman 1, regarding the restriction of making the claim through a revised return was limited to the powers of the Assessing Authority and the said judgment does not impinge on the power or negate the powers of the appellate authorities to entertain such claim by way of additional ground. Reliance can also be placed in this regard on the decisions of the Tribunal in the case of PV. Ananthkrishnan vs. ACIT in ITA No.1820/M/2011 dec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bonafide belief that he has correctly claimed the deduction of depreciation on the toll road in view of the consistent findings of the Tribunal on this issue. However, due to the change of legal position in view of the law laid down by the Hon ble Bombay High Court (supra), the assessee cannot be treated as the owner of the toll road. But it is not disputed that the assessee has made investments on the project and he is entitled to claim deductions in this respect. The claim of deduction has be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oviding enduring benefit to the assessee company, hence, the said amount would be eligible for amortization for the period of the concession agreement as it was allowed in the A.Y. 2007-08 and 2008-09. It is also a fact that the said amortization of the expenses has not been accepted by the Tribunal and the assessee in the earlier assessment years has been granted deduction as depreciation treating the road as a capital asset. 23. In view of the above facts, it is not disputed or contested by th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der the Act. If the assessee, under a mistake, misconception or on not being properly instructed is over assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes dues are collected. While holding so, the Hon ble Bombay High Court has relied upon the various decisions e.g. Koshti vs. CIT (2005) 193 CTR (Guj) 518 : (2005) 276 ITR 165 (Guj), C.P.A. Yoosuf vs. ITO (1970) 77 ITR 237 (Ker.), CIT vs. Bharat General Reinsurance Co. Ltd. (1971) 81 ITR 303 ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

see is entitled to the deduction on the investments made by him, we now have to discuss as to under what head the said deductions can be claimed by the assessee. It is undisputed that in view of the agreement with the NHAI, the assessee has been given the right to develop and maintain the toll road and also the right to collect toll for a specified period without having actual ownership over the said toll road. The assessee has an express right/license for recovery of toll fee to recoup the expe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erative expenses) during the construction period. Further, expenditure incurred by the assessee on such BOT projects brings to it an enduring benefit in the form of right to collect the toll during the period of the agreement. Hon ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd. vs. CIT in 225 ITR 802 allowed spreading over of liability over a number of years on the ground that there was continuing benefit to the company over a period. Therefore, analogously, expend .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

expenditure. The assessee, however, has claimed that the same is a capital expenditure and it is entitled to deductions over the investments made as depreciation. A perusal of the above reproduced para 4 of the circular reveals that it is not disputed even by the Revenue Authorities that in lieu of the investments made in the project, the assessee has been given right/license to collect the toll. It has also been specifically mentioned that it brings an enduring benefit in the form of right to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed - ] ……. (emphasis supplied by us) 27. It is not disputed that the assessee has been given license/comme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ax Act, especially under section 32(1)(ii), the assessee is entitled to claim of depreciation on such type of rights. Such rights have been described as intangible assets under the Act and are eligible for claim of depreciation. 28. In view of the express provisions of the Act, we have no doubt to hold that the assessee is entitled to collect tax being an intangible commercial right under section 32(1)(ii) at the rate as has been prescribed under the relevant rules. Our above view is further sup .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sset falling within the scope of section 32(1)(ii) of the Act is liable to be upheld. The relevant part of findings of the Tribunal for the sake of convenience is reproduced as under: 6. At the time of hearing, it was a common point between the parties that an identical issue has been considered by the Pune Bench of the Tribunal in the case of Ashoka Infraways Pvt. Ltd. vs. ACIT vide ITA Nos. 185 & 186/PN/2012 dated 29.04.2013. As per the Tribunal following the precedents by way of various d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

wing decisions of the Tribunal:- i) Ashoka Buildcon Ltd. in ITA.No.1302/PN/09 dated 20.03.2012. ii) M/s. Kalyan Toll Infrastructure Ltd. in ITA.Nos.201 & 247/Ind/2008 dated 14.12.2010. iii)Dimension Construction Pvt. Ltd. in 1TA.No.222, 223, 233 & 857/PN/2009 dated 18.03.2011. iv)Ashoka Info (P) Ltd. (supra) v) Reliance Ports and Terminals Ltd. (supra). 8. The Ld. CIT(DR) appearing for the Revenue, has submitted that the 'intangible assets' eligible for depreciation in section 32 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Ld. CIT(DR) has not contested the factual matrix that identical issue has been considered by our coordinate Benches in the case of Ashoka Buildcon Ltd. (supra), Kalyan Toll Infrastructure Ltd. (supra), Dimension Construction Pvt. Ltd. (supra) and Ashoka Info (P) Ltd. (supra). 9. On the other hand, the Ld. Representative for the respondent assessee pointed out that the aforesaid argument set up by the Revenue has also been considered in the aforesaid precedents before concluding that the imp .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as to build, operate and transfer the said infrastructure facility in terms of an agreement with the Government of Madhya Pradesh. The expenditure on development, construction and maintenance of the infrastructure facility for a specified period was to be incurred by the assessee out of its own funds. Moreover, after the end of the specified period, assessee was to transfer the said infrastructure facility to the Government of Madhya Pradesh free of charge. In consideration of developing, constr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

unal in the aforesaid precedents to be in the nature of 'intangible asset' falling within the purview of section 32(1)(i/) of the Act and has been found eligible for claim of depreciation. No decision to the contrary has been cited by the Ld. DR before us and, therefore, we find no reasons to depart from the accepted position based on the aforesaid decisions. 11. So however, the plea of the Ld. DR before us is to the effect that the impugned right is not of the nature referred to in sect .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

any cost. In fact, it is quite evident that assessee got the right to collect toll for the specified period only after incurring expenditure through its own resources on development, construction and maintenance of the infrastructure facility. Secondly, section 32(1)(i1) permits allowance of depreciation on assets specified therein being 'intangible assets' which are wholly or partly owned by the assessee and used for the purposes of its business. The aforesaid condition is fully satisf .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sent case for depreciation on 'License to collect Toll', being an 'intangible asset' falling with the scope of Section 32(1)(ii) of the Act is liable to be upheld. We hold so. 8. In so far as the reliance placed by the CIT(A) on the judgement of the Hon'ble Bombay High Court in the case of Techno Shares And Stocks Ltd. (supra) is concerned it may only be noted that the said judgement has since been altered by the Hon'ble Supreme Court vide its order reported at (2010) 327 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee that the project be treated as plant & machinery and the depreciation be accordingly allowed to it, we do not find that the said license of right to collect toll in any way falls in the definition of plant & machinery. As held by the Hon ble Bombay High Court, even the assessee is not the owner of the toll road. The assessee has been given only the right to develop, maintain and operate the toll road and further to collect the toll for the specified period. This right as discuss .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

investments made and that such a right brings to the assessee an enduring benefit. The investments made under such circumstances cannot be said to be of revenue in nature but, as discussed above, are of capital in nature. The assessee, thus, is entitled to claim depreciation on such type of capital asset. 32. In view of our above findings, this ground of the Revenue is hereby dismissed but on a different footing as discussed above and in terms of our observations made above. 33. Now we take up t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

llant claims that depreciation on the toll road be granted treating the same as plant and machinery. 2. On the facts & circumstances of the case the appellant prays that the depreciation @15% be granted on the toll road instead of @10% allowed by the learned Commissioner of Income tax (Appeal). 3. On the facts and in the circumstances of the case and in law, the Learned commissioner (Appeals) has erred in disallowing the claim of expenses incurred in relation to Increase in Authorised Share .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

B of the Income Tax Act, 1961. The appellant denies the liability of payment of interest u/s 234B. The appellant prays that the levy of interest u/s 234B is not justified and be deleted. 5. The appellant craves leave to add, alter or amend the grounds of appeal which are without prejudice to one other. Ground Nos.1 & 2: 35. Ground Nos.1 & 2 relate to the issue of claim on depreciation on toll road. These issues have already been taken and decided by us as discussed above in Revenue s app .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d expanded its business and therefore the aforementioned expenses were capital in nature. 37. The Ld. CIT(A) also confirmed the finding of the AO to the effect that the expenditure incurred for increase in share capital for expansion of the business was capital in nature. Aggrieved by the order of the Ld. CIT(A), the assessee has come in appeal before us. 38. Before us, the Ld. A.R. of the assessee has submitted that the assessee had incurred pre-operation expenses in the financial year 2005-06, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g. While inviting our attention to the provisions of section 35D, he has submitted that any expenditure incurred by the Indian company after commencement of its business in connection with the extension of its undertaking or in connection with setting up of a new unit is liable as a deduction. He has claimed that in the return of income for the year under consideration for A.Y. 2009-10, the assessee has claimed 1/5th of the total expenditure of ₹ 43,22,000/- on account of increase in autho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

: 6. We have heard the submissions made by the representatives of both the sides. We have also perused the orders of the authorities below as well as the judgments relied on by the ld. Counsel for the assessee. The provisions of section 35D provides for amortization of certain preliminary expenses which are incurred before commencement of the business or incurred after the commencement of business in connection with the extension of undertaking or in connection with setting up of new unit. The l .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y private placement, the assessee-company intends to expand its existing project. This view is strengthened by the fact that the assessee has invested substantial amount in purchase of Machineries etc., Further, with the increase in number of Windmills, the sales turnover of the assessee has increased almost three fold from Financial Year 2008-09 to Financial Year 2010-11. Therefore, the expenditure incurred towards raising of additional equity shares by private placement can be attributed to ex .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Leyland Ltd (supra). 7. In view of our above findings, this ground of appeal of the assessee is allowed. The assessee is entitled to amortization of preliminary and pre-operative expenses as well as consultancy and legal charges incurred towards private placement of shares. 39. The Ld. AR of the assessee has brought our attention to page 86 of the paper book filed with the appeal papers and has contended that as per the bifurcation/details provided, the expenses were incurred towards stamp duty .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version