Rs 16,000 crore tax relief for DND Flyway builder

A Rs 16,000-crore relief has been given by the Income Tax Appellate Tribunal (ITAT) to Noida Toll Bridge Company — a special purpose vehicle of the beleaguered IL&FS — that built and runs the Delhi-Noida (DND) Flyway.

ITAT did so after "dismissing the enhancement, merits of addition and reopening of the assessment by the tax department", ToI reported on August 17.

The demand was for Rs 7,983 crore, and an equal amount of penalty. It pertained to the 2006-07 to 2011-12 assessment years.


While the original order was issued on December 31, 2008, reassessment proceedings to disallow amortisation of interest on zero coupon bonds were started on March 28, 2013, the report said.

Noida Toll Bridge Company had mounted a challenge against the enhancement of the assessment under three heads — a) arrear of designated return (around Rs 180 crore), b) lease of land treated as revenue subsidy (Rs 1,730 crore) and c) disallowance of depreciation (around Rs 16 crore).

According to the conclusion made by the tribunal, the commissioner (appeals) cannot “make an enhancement by exploring a new source of income” if the assessing officer has not assessed any income.“… the assessing officer has never considered the three issues mentioned herein on which the CIA(A) has made enhancement, nor were they a part of the return of income. Therefore, in our considered view, the enhancement is bad in law,” ToI's report said quoting the order.

The commissioner held that the company was entitled to a 20% return from the govt. This number was based on a report by the CA.

It dismissed the addition of Rs 180 crore after taking note that the certificate does not entitle the company to a return of 20% of the project cost. The tribunal further noted that the commissioner (appeals) had “completely misunderstood the entire arrangement” between Noida and IL&FS.

Also dismissed were the disallowance of depreciation, based on the conclusion that no capital subsidy is involved since a part of the land with the company was considered 'capital receipt'.