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TMI Blog2018 (9) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... eing claim u/s 80 IA of the Act on Rail System (Rolling Stock) ignoring the decision of the Hon'ble Delhi High Court in the appellant's own case in A.Y. 2003- 04 to 2005-06. 3. The Ld.CIT(A) erred, on the facts and in law, in confirming the disallowance of Rs. 2,11,42,578/- on account of depreciation on intangible assets being License acquired from the Indian Railways for running container trains on Indian Railways. 4. The Ld.CIT(A) erred, on the facts and in law, in confirming the disallowance of Rs. 2,42,00,048/- being claim of deduction on account of lease rent paid in advance against land taken on long terms lease for business purposes on pro rata basis, ignoring the facts that similar claim was allowed by the Ld.CIT(A) in earlier years. 5. The Ld.CIT(A) erred, on the facts and in law, in confirming the disallowance of expenditure Rs. 1,10,90,500/- u/s 14A of the Act read with Rule 8D of Income Tax Rules, 1962 ignoring the fact that the appellant had not incurred any direct or indirect expenditure in relation to the exempt income." ITA 186/Del/2015 (Revenue's appeal) The Assessing Officer, Dy. Commissioner of Income Tax Circle 6(2), New Delhi is hereby directed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Delhi High Court as well as Hon'ble Supreme Court. 6. ITA No. 77/Del/2015 (assessee's appeal) Ground No. 1 is in respect of deduction denied under section 80 IA of the Act by Ld. CIT (A) on ICDs/CFS, which are inland ports. 6.1. Ld.Counsel submitted that the issue was decided by this Tribunal in ITA No. 2851 and 3680/Del/2007 for Assessment Year 2003-04 to 2005-06 against assessee, which has been reversed by Hon'ble High Court. He further submitted that decision of Hon'ble High Court reported in (2012) 21 Taxmann.com 317, which has been subsequently affirmed by Hon'ble Supreme Court in CIT vs Container Corporation of India Ltd. reported in (2018) 93 Taxmann.com 31. Ld. Counsel placed before us decision of Hon'ble Supreme Court wherein it has been held as under: "21. Moving further to the issue whether the ICDs can be termed as Inland Ports so as to entitle deduction under Section 80-IA of the IT Act. The term port, in commercial terms, is a place where vessels are in a habit of loading and unloading goods. The term 'Port' as is used in the Explanation attached to Section 80-IA(4) seems to have maritime connotation perhaps that is the reason why the word airport is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out any distinguishing feature/facts for the year under consideration. 7. We have perused the submissions advanced by both the sides on the basis of the records placed before us. 7.1. It is observed that Ld. CIT (A) for the year under consideration has rejected the claim of assessee by following the order of this Tribunal in assessee's own case for Assessment Year 2003-04 to 2005-06 (supra), Hon'ble High Court reversed the view of this Tribunal which has now been affirmed by Hon'ble Supreme Court. Further it is observed that there are no factual differences regarding this issue in Assessment Year under consideration, vis-a-vis Assessment Year 2003-04 to 2005-06 (supra). 7.2. Respectfully following the decision of Hon'ble Supreme Court, we allow this claim of assessee. 7.3. Accordingly this ground raised by assessee stands allowed. 8. Ground No. 2 is regarding disallowance of the claim under section 80 IA of the Act on rail system (rolling stock). 8.1. Ld. Counsel submitted that this ground has also attained finality with the decision of Hon'ble High Court in assessee's own case, in Container Corporation of India Ltd. vs. ACIT reported in (2012) 21 Taxmann.com 317. He submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion issued earlier would cease to have effect from 1.4.2002. Since the notification continued to have effect even beyond 1.4.2002, there is merit in the contention of the learned counsel for the assessee. Circular No.7/2002, dated 26th August, 2002, reported in (2002) 257 ITR (St.) 28 clarified as under: "Such projects, for which agreements have been entered into on or after April 1, 1995, but on or before March 31, 2001, and which have been notified by the Board on or before March 31, 2001, would continue to be exempt, subject to the fulfillment of the conditions prescribed in section 80-IA(4)(i)(b), as it existed prior to its substitution by the Finance Act, 2001." This circular fortifies the assessee's claim." 8.2. Ld.Counsel has also placed before us a subsequent order passed by Hon'ble Delhi High Court dated 31/10/17 wherein following the above reproduced view, appeal filed by revenue has been dismissed in ITA No. 917/2017 and 918/2017. 8.3. Ld.CIT.DR though supported the order passed by authorities below, could not bring out any distinguishing feature/facts for the year under consideration. 9. We have perused the submissions advanced by both the sides on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, business records and assets which are invaluable for carrying on the business of the assessee. It was further held that the intangible assets were comparable to a license to carry on the existing business and in Page 12 of 21 absence of such intangible assets it would have been difficult for the assessee to carry on its business. Therefore, it was held that such intangible assets are eligible for depreciation in terms of section 32(1)(ii) of the Act as under:- "12. In the present case, it is seen that the assessee, vide slump sale agreement dated June 30, 2004, acquired, as a going concern, the transmission and distribution business of the transferor company with effect from April 1, 2004. As a result thereof, the running business of transmission and distribution was acquired by the transferee lock, stock and barrel minus the trade mark of the transferor which was retained by the transferor, for lump sum consideration of Rs. 44.7 crores. It is further seen that the book value of the net tangible assets (assets minus liabilities) acquired was recorded in the balance-sheet of the transferor as on the date of transfer as Rs. 28.11 crores. The said assets and liabilities were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. It is seen that such rights need not answer the description of "know-how, patents, trade marks, licences or franchises" but must be of similar nature as the specified assets. On a perusal of the meaning of the categories of specific intangible assets referred to in section 32(1)(ii) of the Act preceding the term "business or commercial rights of similar nature", it is seen that the aforesaid intangible assets are not of the same kind and are clearly distinct from one another. The fact that after the specified intangible assets the words "business or commercial rights of similar nature" have been additionally used, clearly demonstrates that the Legislature did not intend to provide for depreciation only in respect of specified intangible assets but also to other categories of intangible assets, Page 13 of 21 which were neither feasible nor possible to exhaustively enumerate. In the circumstances, the nature of "business or commercial rights" cannot be restricted to only the aforesaid six categories of assets, viz., know-how, patents, trade marks, copyrights, licences or franchises. The nature of "business or commercial rights" can be of the same genus in which all the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is a valuable commercial right for Rs. 50 crores and same is eligible for depreciation u/s 32(1)(ii) of the Act. In view of this ground No. 3 and 4 of the appeal of the assessee are allowed with above direction." 10.2. Ld.Counsel thus submitted that the issue is squarely covered in favour of assessee by an order passed by this Tribunal in assessee's own case for Assessment Year 2008-09 and 2009- 10 in ITA No.1876/Del/2012 and 6377/Del/2012, vide order dt. 18.01.2017. 10.3. On the contrary, Ld.CIT, D.R. (by way of written submissions) submitted that the A.O. rightly treated nonrefundable registration fee of Rs. 50 crores as deferred revenue expenditure whereas assessee has reflected it as an intangible asset, terming it as 'License Fee' and has claimed depreciation under the Act. 11. We have perused the submissions advanced by both the sides in the light of the records placed before us. This Tribunal for A.Y. 2008-09 in assessee's own case vide order dated 18/01/2017 held that, commercial right acquired by assessee by way of this license for earning enduring benefit for a period of 20 years would amount to capital asset. It is also observed that this view of Tribunal derives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused the submissions advanced by both the sides in the light of the records placed before us. As there is no change in the factual circumstances, respectfully following the aforestated view taken by this Tribunal in assessee's own case for Assessment Year 2008-09 and 2009-10, we set aside this issue to the file of Ld. AO with the direction to assessee to furnish all requisite details in respect of the claim of depreciation. Ld. AO shall then verify the details to determine whether the claim of assessee is allowable or not as per law. 13.1. Accordingly this ground raised by assessee stands allowed for statistical purposes. 14. Ground No. 5 is in respect of disallowance computed under section 14A read with Rule 8D. 14.1. Ld. Counsel submitted that exempt income earned by assessee during the year under consideration amounts to Rs. 29,64, 769/-. He submitted that Assessing Officer disallowed an expenditure of Rs. 1,10,90,500/-under section 14 A by taking 0.5% of average investments under rule 8D (2) (iii). Placing reliance upon para 9.2 of assessment order Ld.Counsel submitted that Assessing Officer has accepted that no direct expenses was incurred by assessee for earning exempt in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Hon'ble Delhi High Court. The Hon'ble Delhi High Court in case of CIT Vs. Yamaha Motor India Pvt. Ltd has considered an identical issue in 328 ITR 297 as under:- 6. The relevant and related provisions, in this regard, for decision of the issue are section 32(1) (which requires that the assets are used for the purposes of the business), section 32(1)(iii) (lays down the details and requirements with respect to claim of depreciation inter alia of discarded machinery), section 43(6)(c)(i)(B) (defines written down value with respect to block of assets), section 50(2) (under the head of profits chargeable to tax on the aspect of discarded machinery). 7. On the aspect of passive user, there are two decisions of two Division Benches of this Court in the cases reported as CIT v. Refrigeration and Allied Industries Ltd. [2001] 247 ITR 12_ (Delhi) and Capital Bus Services P. Ltd. v. CIT [1980] 123 ITR 404 (Delhi). In this view of the matter, we need not refer to the judgments of any other court as we are bound by the earlier judgments of this court. In fact, we also agree with the ratio of both the decisions which hold that as long as the machinery is available for use, thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d written off in the books of account for the year under consideration from the written down value of the block of assets. Actual user of the machinery is not required with respect to discarded machinery and the condition for eligibility for depreciation that the machinery being used for the purpose of the business would mean that the discarded machinery is used for the purpose of the business in the earlier years for which depreciation has been allowed. " 21. The Ld.DR could not point about any infirmity in the order of the Ld. CIT(A) wherein he has followed the order of the Hon'ble High Court and further, could not controvert the decision cited by the Ld AR covering the issue in favour of the assessee. In view of this ground No. 1 of the appeal of the revenue is dismissed." 17.2. It has been further submitted by Ld. Counsel that the aforestated view has been upheld by Hon'ble Delhi High Court in ITA No. 917-918/2017 vide order dated 31/10/2017 wherein, Hon'ble Court held as under: "5. The last question urged is with respect to amortised depreciation. The ITAT correctly, in our opinion, applied section 32 of Income Tax Act, 1961. No question of law, therefore, arises." ..... X X X X Extracts X X X X X X X X Extracts X X X X
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