Consultancy fees claimed as business expense-can tax disallowance rest on survey suspicion despite invoices, contracts and bank trail? Appeal dismisse...
Variable licence fee paid to the telecom regulator under the 1999 policy was held to be capital expenditure because it is consideration for acquiring/retaining the licence, and must be amortized under s.35ABB; the appellate relief treating it as revenue was reversed to that extent and the revenue's ground was partly allowed. Spectrum usage charges were distinguished as not covered by the SC ruling and, consistent with the assessment approach in another year, were treated as revenue expenditure deductible under s.37(1); the revenue's challenge on this aspect was dismissed. Subscriber verification penalty for KYC violations was held not hit by Explanation 1 to s.37(1) and remained allowable. Discounts on prepaid instruments were held outside s.194H, so disallowance under s.40(a)(ia) was deleted, with consequential direction to recompute s.80-IA deduction. - ITAT
Variable licence fee paid to the telecom regulator under the 1999 policy was held to be capital expenditure because it is consideration for acquiring/retaining the licence, and must be amortized under s.35ABB; the appellate relief treating it as revenue was reversed to that extent and the revenue's ground was partly allowed. Spectrum usage charges were distinguished as not covered by the SC ruling and, consistent with the assessment approach in another year, were treated as revenue expenditure deductible under s.37(1); the revenue's challenge on this aspect was dismissed. Subscriber verification penalty for KYC violations was held not hit by Explanation 1 to s.37(1) and remained allowable. Discounts on prepaid instruments were held outside s.194H, so disallowance under s.40(a)(ia) was deleted, with consequential direction to recompute s.80-IA deduction. - ITAT
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