2019 (8) TMI 1831 - AT - Income Tax

Tribunal rulings on depreciation for 3G Spectrum and TDS deduction for roaming charges

Tata Teleservices (Maharashtra) Limited Versus The Asst. Commissioner of Income Tax Circle 8 (3) (1), Mumbai And The Joint Commissioner of Income Tax (OSD) Versus Tata Teleservices (Maharashtra) Limited

The Tribunal allowed the appeal of the assessee regarding the disallowance of depreciation on the payment for 3G Spectrum and dismissed the Revenue's ... Depreciation on an amount paid to DoT for purchase of 3G Spectrum - AO was of the opinion that said capital expenditure on account of acquisition of 3G Spectrum fees is covered under Section 35AAB of the Act and is required to be amortized as per provisions of Section 35ABB of the Act over the period of 20 years for which 3G Spectrum has been allocated and accordingly disallowed the depreciation claim - HELD THAT:- We noted that this issue is squarely covered by the co-ordinate bench decision of Idea Cellular Limited. [2017 (12) TMI 660 - ITAT MUMBAI]. Following the co-ordinate Bench decision, we allow this issue of assessee’s appeal. TDS u/s 194J - payment made towards roaming charges/ services provided by other telecom services - Non deduction of TDS - Addition u/s 40(a)(ia) - HELD THAT:- As decided in own case [2016 (6) TMI 174 - ITAT MUMBAI] roaming / inter– connectivity charges paid by the assessee to other telecom networks not being in the nature of fees for technical services will not attract the provisions of section 194J. That being the case, assessee was not required to deduct tax at source on payment of roaming charges in terms of section 194J. In view of the aforesaid, we quash the demand raised under sections 201(1) and 201(1A) - Decided in favour of assessee. Issues:1. Disallowance of depreciation on payment for 3G Spectrum2. Disallowance of payment for roaming charges without TDS deductionIssue 1: Disallowance of depreciation on payment for 3G SpectrumThe appeal involved the disallowance of depreciation on the amount paid for the purchase of 3G Spectrum. The appellant contested the disallowance and cited a previous Tribunal decision in a similar case. The appellant argued that the expenditure on 3G Spectrum should qualify as an intangible asset eligible for depreciation under Section 32 of the Income-tax Act, 1961. The Assessing Officer (AO) had disallowed the depreciation claim, considering the payment under Section 35AAB and requiring amortization under Section 35ABB over 20 years. However, the Tribunal found in favor of the appellant, citing the previous decision and allowing the depreciation claim.Issue 2: Disallowance of payment for roaming charges without TDS deductionThe second issue pertained to the disallowance made by the Assessing Officer (AO) regarding payments for roaming charges without deduction of TDS under Section 194J of the Income-tax Act. The Revenue challenged the deletion of disallowance by the Commissioner of Income Tax (Appeals) (CIT(A)) invoking Section 40(a)(ia) of the Act. The appellant relied on a Tribunal decision in their own case from previous assessment years, where it was held that the payments for roaming services did not require TDS deduction under Section 194J. The Tribunal analyzed technical reports and concluded that roaming services were provided automatically without human intervention, thus not falling under the purview of Section 194J. Following the precedent set in the appellant's own case, the Tribunal confirmed the CIT(A)'s decision to delete the disallowance.In conclusion, the Tribunal allowed the appeal of the assessee regarding the disallowance of depreciation on the payment for 3G Spectrum and dismissed the Revenue's appeal concerning the disallowance of payment for roaming charges without TDS deduction. The decisions were based on legal interpretations, previous tribunal rulings, and the specific circumstances of each issue presented in the appeals.