Short Overview: Though assessee did not own road, however, assessee had been granted license to collect toll in respect of use of highway. This right was admittedly an intangible asset and assessee had rightly capitalized the same as an intangible asset in its books, therefore, depreciation was allowable in assessee’s hands.

Assessee constructed a road as per contract with NHAI. It capitalized toll collection right and claimed depreciation thereon at the rate applicable to intangibles. AO denied assessee’s claim on the ground that assessee was not the owner of concerned asset, i.e., road as same had to be transferred back to NHAI after the end of concession period.

It is held that though assessee did not own road, however, assessee had been granted license to collect toll in respect of use of highway. This right was admittedly an intangible asset and assessee had rightly capitalized the same as an intangible asset in its books, therefore, depreciation was allowable in assessee’s hands.

Decision: In assessee’s favour.