This article reviews the case of Gwalior Bypass Project Ltd vs ACIT, Circle-10(2), New Delhi, where the main contention was over the depreciation claimed on highway projects for the assessment year 2015-16.
The appellant, Gwalior Bypass Project Ltd, is a special purpose vehicle engaged in the development of a highway project. For the assessment year 2015-16, the company filed a return declaring a significant loss, which included a large depreciation claim on the highway project. The Assessing Officer disallowed this claim, leading to an appeal by the company.
The appellant contested the CIT(A)’s decision which upheld the Assessing Officer’s disallowance of depreciation claimed on the highway project. The company argued that their claim was in accordance with the provisions of the Income Tax Act and backed by various judicial precedents favoring their stance. The dispute centered around whether the expenses on the highway project should be capitalized and depreciated or treated as an amortizable cost.
The Income Tax Appellate Tribunal reviewed the submissions and precedents presented. It noted that similar cases had established the right to claim depreciation on such projects. The Tribunal decided in favor of the appellant, allowing the depreciation claim and setting aside the disallowance made by the Assessing Officer.
The Tribunal’s decision clarified the treatment of depreciation for special purpose vehicles engaged in infrastructure projects, particularly those involving BOT (Build-Operate-Transfer) models. This case is significant as it provides clarity on the depreciation norms for companies in the infrastructure sector, ensuring that similar future disputes can refer to this precedent.
Gwalior Bypass Project Ltd vs ACIT, Circle-10(2), New Delhi: Depreciation Dispute for AY 2015-16
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