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TMI Blog2022 (11) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... itted to consider following questions of law: "(i) Whether the Tribunal was correct in upholding the disallowance of the depreciation to the extent of Rs. 4,00,01,168/- on the basis that the Appellant had not acquired any business and commercial rights without appreciating the material on record in the right perspective? (ii) Whether the Tribunal was right in holding that leasehold rights partakes the character of land and would not be entitled to depreciation under Section 32 of the Act?" 2. Heard Shri T. Suryanarayana, learned Senior Advocate for the appellant and Shri E.I.Sanmathi, learned standing counsel for the Revenue. 3. Assessee is Bengaluru International Airport Ltd. Its case is, it has entered into various agreements with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He relied upon Areva T & D India Ltd., Vs Deputy Commissioner of Income-tax [2012] 20 taxmann.com 29 (Delhi) Para 13 in support of his contention. He urged that once there is no dispute with regard to the fact that the expenditure in question is qualified to be capitalized, further finding of the ITAT that assessee had not acquired any commercial rights is untenable. He urged that as pre-operative expenditure incurred towards entering various agreements is qualified for capitalization, this appeal may be allowed. 7. Shri E.I.Sanmathi, learned Standing counsel for the Revenue submitted that CIT(A) has recorded in Para 4.10 that there is no evidence to show that the expenditure sought to be capitalized has been actually spent. Since amount s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has incurred certain expenditure. Shri Sanmathi's contention is, the expenditure was not proved before the Assessing Officer. Shri Suryanarayana submitted that subject to assessee demonstrating factual expenditure, assessee may be permitted to capitalize such expenditure and to claim depreciation on that expenditure. 11. In Areva T & D India Ltd., assessee-appellant therein had entered into Slump Sale Agreement and acquired know-how, business contacts, business information, etc. The Delhi High Court framed the following questions for consideration; "Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that know-how, business contacts, business information, etc. acquired as part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's contention that CIT(A) has recorded that the assessee has not proved the expenditure also merits consideration. It is relevant to note that CIT(A), on appreciation of material on record, has held in Para 4.9 that assessee had acquired business and commercial rights and licenses by making payment which were in the nature of 'intangible asset' entitled for claiming depreciation under Section 32(1)(ii) of the Act. This finding has not been challenged by the Revenue before the ITAT. 14. The second substantial question of law is whether a lease right constitutes an intangible right. In our view, Shri Suryanarayana is right in his submission because, the intangible right accrued in favour of assessee is transferable and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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