TaxTMI 
TaxTMI 
2012 (9) TMI 215
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....) read with section 147 of the Income-tax Act, 1961. 2. The assessee in the present case, is running a proprietory business under the name and style of M/s. Royal Telecom Private Exchange. She provides telecommunication services to her subscribers within a limited radius of 500 meters. In computing her total income for all these assessment years under appeal, the assessee claimed the benefit of deduction under section 80-IA(4)(ii) of the Income-tax Act, 1961. Section 80-IA provides for deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 3. Sub-section (4) of section 80-IA provides that this benefit of deduction is available to any enterprise carrying on the....
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....ve circumstances, the assessing authority held that the assessee is not eligible for deduction provided under section 80-IA(4)(ii). 6. In the first appeal, the Commissioner of Income-tax (Appeals) held that the assessee is providing telecommunication services envisaged in section 80-IA(4)(ii). She also observed that there is no express bar in the provisions of section 80-IA(4)(ii) to deny the deduction to a franchisee of BSNL. She also found that the provisions have been introduced to promote tele-density in the country and the deduction has been given as incentive and therefore, the parameters of the deduction should be construed in a liberal manner. She further observed that even though the assessee is connected through the MDF of BSNL....
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.... 80-IA clearly refers to only such telephone service providers which are engaged in providing basic or cellular services including radio paging, domestic satellite services, network of trunking, broadband and network and internet services. 4. The Commissioner of Income-tax (Appeals) failed to appreciate that this clause (ii) of sub-section (4) of section 80-IA does not envisage in its ambit any franchisee of this service provider. The Commissioner of Income-tax (Appeals) erred in extending the benefit of deduction to a franchisee of a service provider by liberally interpreting the provisions of section 80-IA(4)(ii). 5. The Commissioner of Income-tax (Appeals) failed to appreciate that principles of beneficial interpretation in favour ....
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....ent. Therefore, it is very important as mandated by the statute that the assessee who claims deduction should be engaged in infrastructure development. Therefore, the question to be considered is whether the running of a private telephone exchange carried on by the assessee amounts to development of infrastructure or not. Clause (ii) of sub-section (4) of section 80-IA has included providing of telecommunication services also as an infrastructure. But the crucial question is whether the telecommunication services rendered by the assessee are developed as infrastructure or not. The assessee is running a private exchange as a franchisee of BSNL. The MDF is provided by BSNL. The MDF is the lowest physical frame of providing telecommunication s....