June 2014
Treatment of expenditure incurred for development of roads/highways in BOT agreements – Circular No. 9 dated 23rd April, 2014
By Pinky Shah, Sonalee Godbole, Chartered Accountants
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CBDT has clarified that the cost of construction on development of infrastructure facility of roads/highways under BOT projects be amortised and claimed as allowable business expenditure under the Act. The amortisation is computed at the rate which ensures that the whole of the cost incurred in creation of infrastructural facility of road/highway is amortised evenly over the period of concessionaire agreement after excluding the time taken for the creation of such facility.
In the case where an assessee has claimed any deduction out of the initial cost of the development of infrastructure facility of roads/highways under BOT projects in the earlier year, the total deduction so claimed for the Assessment Years prior to the Assessment Year under consideration be deducted from the initial cost of infrastructure facility of roads/highways and the cost ‘so reduced’ be amortised equally over the remaining period of toll concessionaire agreement.Trade Circular VAT liability of developers – computation – Trade Circular 12T of 2014 dated 17-04-2014.
This Circular is applicable only to those infrastructure projects for development of road/highways on BOT basis where ownership is not vested with the assessee under the concessionaire agreement.
