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Issues: Whether the revisionary order under section 263 was justified in disallowing depreciation claimed on 3G spectrum fees and directing treatment under section 35ABB instead of section 32.
Analysis: The issue was held to be covered by the jurisdictional Tribunal's earlier decision in the assessee's favour on the same question. The fees paid for acquisition of 3G spectrum were treated as expenditure not for acquiring a right to operate telecom services, but as payment conferring a depreciable intangible asset. The Court therefore followed the binding precedent and held that section 35ABB, which governs amortisation of licence-related expenditure, was not applicable to such payment. Once the original assessment had rightly allowed depreciation under section 32, the revision under section 263 could not be sustained.
Conclusion: The revisionary order was held to be invalid and the assessee's claim for depreciation was accepted.
Final Conclusion: The appeals succeeded and the assessee obtained relief against the revisionary interference, with depreciation on 3G spectrum fees upheld under the depreciation provision rather than amortisation.
Ratio Decidendi: Fees paid for acquisition of 3G spectrum are allowable as depreciation on an intangible asset under section 32 and are not required to be amortised under section 35ABB; consequently, a revisionary order under section 263 cannot stand where the assessment has correctly allowed such depreciation.
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