2017 (5) TMI 1506

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the Income Tax Appellate Tribunal ('ITAT') in ITA Nos. 1720, 1721 and 4364/Del/2011 for the Assessment Year ('AY') 2006-07. 2. The three Respondents are the Delhi, Mumbai and Kolkata companies of the same group, i.e., Digital Radio Broadcasting Limited. For easy reference facts pertaining to the Respondent in ITA No. 432 of 2016 i.e. Digital Radio (Delhi) Broadcasting Limited are discussed. 3. The Respondent was awarded licence in terms of an Agreement dated 27th October 2000 with the Government of India, Ministry of Information and Broadcasting ('I&B') for FM radio broadcasting. The Respondent was to pay a fixed license fee for each year with an escalation clause for increasing the fee by 15% every year for a period of 10 years. The....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....y regime and accordingly, paid the remaining fixed license fees payable under Phase-I within the stipulated time during the year under consideration, i.e., AY 2006-07 since it was a pre-condition of the I&B Ministry. Since the Respondent had migrated from Phase-I to Phase-II, Phase-I license had come to an end. Thus, the Respondent claimed deduction of Rs. 12,65,82,440 under Section 35ABB of the Act for the remaining license fee payable under Phase-I. 7. However, the AO disallowed the above expenditure. The AO construed the expenditure incurred on the payment of the licence fee to be capital expenditure. The AO treated the loss incurred as a result of the migration from Phase-I as a capital loss and not revenue expenditure as claimed by ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....iture of Rs. 12,65,82,440 spread over the remaining 10 year life of the license granted under Phase-II resulting in allowance of 1/10th expenditure of Rs. 1,26,58,244 during the year under consideration. 10. The following questions raised by the Revenue in ITA 432 of 2016 arise in the other two appeals as well: "2.1 Whether the learned ITAT/CIT (A) were right in law in allowing deduction of Rs. 1,26,58,244 towards the license fee of phase-I under Section 35ABB of the Income Tax Act, 1961 despite the fact that the Phase-I license was no longer in force? 2.2 Whether learned ITAT erred in holding that licence fee incurred in Phase-I regime becomes part and parcel of all the payments made for Phase-II license regime and ava....