ITAT Delhi Allows 25% Depreciation on Toll Collection Rights; Deletes Penalty Under Section 271(1)(c)
Court / Authority
Income Tax Tribunal
Update / Judgement Date
26 Aug 2026
Source
WCP News Bulletin
Author
Manas Yadav — WCP Legal Desk
Reading Time
2 min read
View Count
Key Facts and Tribunal Findings
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, partly allowed appeals of M/s Jalandhar Amritsar Tollways Ltd. for Assessment Years 2011–12 and 2012–13, while dismissing the Revenue’s penalty appeal and deleting penalty under Section 271(1)(c).
The primary issue before the Tribunal was the rate of depreciation applicable to “right to collect toll.” The Assessing Officer had restricted depreciation to 10% by treating it as a building (road), whereas the assessee claimed 25% treating it as an intangible asset. Relying on the Special Bench ruling in ACIT v. Progressive Construction, the Tribunal held that the right to collect toll qualifies as an intangible asset and allowed depreciation at 25%.
On the issue of subsidy received from NHAI amounting to ₹39.45 crore, the Tribunal upheld the action of the Assessing Officer in reducing the same from the project cost under Explanation 10 to Section 43(1), thereby sustaining disallowance of excess depreciation.
The Tribunal also upheld disallowance of provision for resurfacing expenses, holding that the provision was not based on a scientific or rational method and represented a contingent liability not allowable under law.
In respect of depreciation claimed on capitalised “negative grant” payable to NHAI, the Tribunal upheld disallowance, observing that the liability had not crystallised and could not be capitalised for depreciation purposes.
However, the Tribunal allowed the assessee’s claim that additions made would correspondingly enhance deduction under Section 80IA.
On penalty, the Tribunal deleted the entire penalty under Section 271(1)(c), holding that disallowance of claims, by itself, does not amount to concealment or furnishing of inaccurate particulars. The Revenue’s appeal on penalty was dismissed.
Full Judgement / Attachment
Full Judgement
Frequently asked questions about Income Tax Tribunal
- What is the Income Tax Appellate Tribunal (ITAT)?
- The ITAT, set up in 1941, is the second appellate authority in direct tax matters and the final fact-finding body. It hears appeals against orders of the Commissioner (Appeals) and certain other authorities, through benches across India.
- What is the time limit to file an appeal before the ITAT?
- An appeal must be filed within two months from the end of the month in which the order is communicated. This rule has applied since 1 October 2024 and continues under the Income-tax Act, 2025. The Tribunal can condone delay for sufficient cause.
- Can the ITAT stay a tax demand?
- Yes. The Tribunal can stay recovery of a disputed demand while an appeal is pending, usually on deposit of a part of the demand or furnishing security. Stays are granted for a limited period, and the appeal is expected to be decided within it.
- Where does an appeal go after the ITAT?
- An appeal against an ITAT order lies to the High Court, but only on a substantial question of law. A further appeal lies to the Supreme Court.
- How can White Collar Professional help with a ITAT matter?
- Post your requirement on White Collar Professional to receive proposals from verified Chartered Accountants and tax Advocates, compare them, and pay securely through the platform. This page also tracks the latest ITAT ITAT orders as they are reported.
