Assessee's Appeal Partly Allowed: Disallowance under Section 40(a)(ia) Deleted, Depreciation Upheld.

The Tribunal partly allowed the assessee's appeal, deleting the disallowance under section 40(a)(ia) but upholding the disallowance of depreciation. The judgment was pronounced on 28.03.2018.

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Issues:
1. Validity of proceedings under section 147 of the Act challenged by the assessee.
2. Disallowance of &8377; 7,28,19,366 under section 40(a)(ia) contested by the assessee.
3. Addition of &8377; 8,67,68,976 on account of disallowance of depreciation disputed by the assessee.

Issue 1: Validity of Proceedings under Section 147:
The assessee contested the initiation of proceedings under section 147, claiming it was based on a mere change of opinion without tangible material. The Assessing Officer found non-deduction of tax at source on inter-connection and access charges, leading to disallowance. The Commissioner (Appeals) upheld the proceedings. The Tribunal noted that the burden was on the assessee to prove the original assessment did not address the tax deduction issue. As no evidence was presented, the challenge was dismissed.

Issue 2: Disallowance under Section 40(a)(ia):
The Assessing Officer disallowed &8377; 7,28,19,366 for non-deduction of tax at source on inter-connection charges. The Commissioner (Appeals) upheld this disallowance. The assessee argued that a Tribunal decision in a similar case favored non-applicability of tax deduction. The Tribunal agreed, citing the precedent, and deleted the disallowance, as there was no obligation to deduct tax at source on such payments.

Issue 3: Disallowance of Depreciation:
The Assessing Officer disallowed depreciation of &8377; 8,67,68,976 due to a reduction in asset cost based on a previous order. The Commissioner (Appeals) directed verification of double disallowance and to delete if already addressed. The Tribunal found no fault in the Commissioner's decision, as the only contention was about double disallowance, which was appropriately addressed. Therefore, the disallowance of depreciation was upheld.

In conclusion, the Tribunal partly allowed the assessee's appeal, deleting the disallowance under section 40(a)(ia) but upholding the disallowance of depreciation. The judgment was pronounced on 28.03.2018.

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