2017 (12) TMI 418

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... erred in deleting the addition of Rs. 1,26,58,244/- made by the Assessing Officer, without considering that the assessee has not withdrawn its claim for total deduction of the license fee. In the A.Y. 2006- 07, which is pending for adjudication before the Ld ITAT, and without giving a specific direction that the claim should be withdrawn m case the time is decided by the Ld IT AT in favour of the assessee in that year 2. The appellant craves to leave, to add, alter or amend any ground of appeal raised above at the time of the hearing. 3. The order of the Ld CIT(A), being contrary to the facts on record and the settled position of law, be set aside and that of the Assessing Officer be restored." 4. Brief facts of the case are that the assessee is engaged in the business of radio broadcasting at Delhi under the channel identity 93.5 FM. The first issue to be examined during the assessment proceedings was the claim of assessee with regard to benefit of deduction in respect of license fees in accordance with CIT(A) order dated 02.12.2010 for assessment year 2006-07. In the original return furnished the assessee has not claimed any such deduction as per order of CI....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....wability of the remaining license fee expenditure of Rs. 12,65,82,440/- as paid during the A.Ys. 2004-05 and 2005-06 under Phase- I license regime. The appellant has claimed the above amount for deduction in full as revenue expenditure u/s 35ABB of the Act basing on the cutoff date of 01.04.2005 for migration to Phased! license regime. The AO has disallowed the same by treating it as a capital loss. On careful examination, I find that the migration of license from Phase-1 license regime to Phase-II license regime does not per-se amount to 'transfer' of license by the appellant as required under sub-section (2) of section 35ABB of I.T. Act in order to justify the appellant's claim for allowing the remaining entire license fee expenditure of Rs. 12,65,82,440/- under Phase- I license regime during A.Y. 2006-07 itself. In this case, I find that while migrating from Phase-I license regime to Phase -II license regime, there was no transfer of license from the appellant to any other party. The case laws as cited by the Id. AR vide its submissions dated 18.11.2010 are distinguishable on facts as such cases deal with definition of 'transfer' of a capital asset u/s 2(47) ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....order to permit the appellant to migrate to Phase-II license regime. 5.8 In view of the above, the remaining expenditure on account of Fixed License Fee-as actually incurred by the appellant under Phase-1 license regime becomes part and parcel of all the payments as made in order to become eligible for Further, copy of letter dated 21.12.05 as issued by the Ministry of Information and Broadcasting to the appellant also clearly vide para- 4 specifies the amounts due and payable by the appellant under Phase-1, license fee regime and vide para 5 states as under: obtaining Phase-ll license. As OTEF (migration fee) of Rs. 22,22,52,219/- has been accepted by the AO to be allowed over the 10 year term of Phase-ll license under sub-section (1) of section 35ABB, on the same basis, I am of the view that the remaining expenditure of Rs.l2,65,82,440/-as incurred by the appellant under Phase -I license also needs to be allowed over the new 10 year term under Phase-II license regime starting from A.Y.2006-07 in accordance with section 35ABB(1) Of I.T. Act read with CBDT's Circular 763 dated 18.12.1998. 5.9 I find that the above issue is similar to the issue of allowability ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....sessee's own case vide order dated 24.11.2015 for assessment year 2006-07. The relevant finding of the ITAT is reproduced hereinbelow for ready reference: "We have also carefully perused the reason given by CIT (A) for allowing the deduction of fees paid by assessee under PHASE -I over the remaining life of the license granted under PHASE-II of the regime. We do not find any infirmity in the finding as well as reasoning given by CIT (A) as in substances the reason canvassed by CIT (A) are similar to what we have propounded in our order. In view of this we confirm the order of CIT(A) in granting deduction of Rs. 1,26,58,244/- being 1/1Oth of Rs. 12,65,82,440/- being fees paid by assessee in Phase I as deductible expenditure u/s 35ABB(1) during the year under consideration i.e. A.Y. 2006-07. In result ground no 1 of the appeal of the assessee is dismissed." 7. The matter travelled before the Hon'ble Delhi High Court where the Hon'ble High Court in ITA Nos. 432 to 434/2016 vide order dated 24.5.2017 upheld the finding of the Tribunal. For the sake of convenience, the relevant operative para No. 11 of the order is reproduced hereinbelow: "11. Having heard l....