TaxTMI 
TaxTMI 
2015 (2) TMI 637
X X X X Extracts X X X X
X X X X Extracts X X X X
....bsp; (1) Whether the ITAT was justified in the eyes of law in dismissing the appeal of the revenue on the issue of the disallowance of the variable license fee. (2) Whether the Ld. ITAT was justified in the eyes of law in deleting the disallowance of Rs. 1,31,25,000/- made by the AO on account of upfront fee paid by the assessee. (3) Whether the ITAT was justified in the eyes of law in dismissing the appeal of the revenue with regard to the issue of claim of the assessee of expenses amounting to Rs. 3,59,39,412/- incurred on the basic telephone projects in Delhi, Haryana, Tamil Nadu and Karnataka and for verification that they are capital or revenue in nature. (4) Whether the ITAT was justified in the eyes of law in remitting the mater back to the file of the AO concerning the issue about the claim of the software expenses. (5) Whether the ITAT was justified in the eyes o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d against the Revenue by another Division Bench in CIT v. Bharti Hexacom Ltd., ITA No.1336/2010 by a judgment dated 19.12.2013. 4. So far as question no.6, i.e., disallowance on account of interest on delayed payment to DoT (towards the license fee), the initial addition by the AO was directed to be deleted by the ITAT. This too was considered in Bharti Hexacom (supra). The Court while observing that the claim of licence fee payment was varied w.e.f. 31.7.1999 inasmuch as prior to that it was a fixed amount whereas subsequently it was altered to variable one - held as follows: "The answer to the question would depend upon the finding whether payment related to license fee payable for the period prior to 31.7.1999 or was for the subsequent period. If interest was paid in respect of the license fee payable for the period prior to 31.7.1999, it would have to be crystallized. Similarly, if interest is payable for license fee for the period post 31.7.1999, it should be treated as revenue in nature/character." 5. This Court notices that after recording as above in Bharti Hexacom (supra), the matter wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of these applications acquired a license to use the said applications on payment of consideration. The said expenditure has been disallowed by the Assessing Officer in each of the assessment years by treating the expenditure as one incurred on capital account. Accordingly, depreciation at the rate of 25 per cent was allowed to the assessee. The assessee carried the matter in appeal to the Commissioner of Income-tax (Appeals) (hereinafter referred to as "the CIT (A))". The Commissioner of Income-tax (Appeals), while sustaining the order of the Assessing Officer, allowed depreciation at the rate of 60 per cent. This resulted in both the assessee and the Revenue being aggrieved. Consequently, cross-appeals were filed by both the assessee and the Revenue. XXX XXX XXX The first issue, in our opinion , has been considered and decided against the Revenue in a judgment delivered by us passed in ITA Nos.1110 of 2006 and 1111 of 2006 titled CIT v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to the borrowed funds and that the advances were made out of the assessee‟s own capital. At the relevant time the assessee was found to be having an adequate non-interest bearing fund by way of Share Capital and Reserves. Even otherwise, the advances were found to be made to the subsidiaries for business considerations which is nothing ITA Nos. 1337/10, 1339/10 & 1340/10 Page 12 of 12 but the commercial expediency of assessee. That being the factual position reflected from the record of the assessee, the onus that laid on it stood discharged. 13. We are in entire agreement with the findings recorded by the CIT(A) as also by ITAT in all the three cases and do not find any ground to interfere with those findings." 12. Following the above decision, we are of the opinion that the impugned order cannot be faulted. This question is answered in favour of the assessee and against the Revenue. Question No.7 13. The Assessing Officer had not adjudicated on the claim of expenditure for the sum of Rs. 14,05,886/- made in the revised return. The CIT (A) granted the relief to the assessee in the following terms: &....