- (1.) This Income Tax Appeal filed by the Commissioner of Income-tax under 260-A of the Income-tax Act, 1961 (in short, the Act) arises out of order dated 4.4.2011 passed by the Income-Tax Appellate Tribunal, Delhi Bench 'E', New Delhi in ITA No. 4765/Del/2010 for the assessment year 2005-06. We have heard Shri Shambhu Chopra, learned counsel appearing for the Income Tax Department. Shri S.R. Patnaik, Ms. Akansha Agarwal and Shri Ashish Agarwal appeared for the respondent-assessee.
(2.) The assessee-company is engaged in the business to develop, establish, finance, design, construct, operate and maintain a bridge (NOIDA-Bridge), across the river 'Yamuna' connecting Delhi and Noida (DND Flyover) under the Build, Own, Operate & Transfer (BOOT) basis. The Delhi Noida link bridge comprises and includes adjoining roads and other related facilities, and to enter into the Ashram flyover construction agreement with Noida, which is constructed at the landfall of the Delhi Noida Link Bridge.
(3.) For the assessment year 2005-06 the assessee filed a return showing a loss of Rs. 30,90,02,565/- on 30.10.2005. The return was revised by the assessee declaring a loss of Rs. 29,25,38,781/- on 13.9.2006. The return was processed under Section 143(1) of the Act on 19.9.2006, on which the case was selected for scrutiny. A notice under Section 143(2) of the Act was issued and duly served on the assessee. Thereafter a questionnaire was issued under Section 142(1) on 25.1.2007 in response to which the representative of the assessee appeared before the Income Tax authority. The Assessing Officer disallowed the depreciation on toll road/bridge amounting to Rs. 17,62,66,283/- under the Block-"Building" @ 10%, and the take out assistance fee claimed at 1,48,54,608/-. The business loss was accordingly reduced by adding the depreciation on roads and bridges; and take out assistance fee at Rs. 10,14,17,890/-. The AO reduced the business loss by a short term capital gain as shown at Rs. 58,64,907/-, and long term capital gains as shown at Rs. 4,02,822 /- and accordingly calculated the net loss at Rs. 9,51,50,161 /-. By the assessment order dated 28.12.2007 the AO also directed the charging of interest under Sections 234B, 234C and 234D and to draw penalty proceedings separately under Section 271(1)(c) of the Act. Aggrieved with the assessment order the assessee filed appeal before the Commissioner of Income-tax (Appeals), Ghaziabad. The CIT(A) by his order dated 4.8.2010 allowed the appeal observing that since the issue involved in the assessment order is identical to that of the assessment years 2002-03 and 2003-04, hence following the orders of ITAT and CIT(A), the assessee was entitled for depreciation on toll road/bridge. On the take out assistance fee also the CIT(A) found that the AO was not justified in treating the expenses as expenditure to be capital in nature and deleted the additions.;