2019 (2) TMI 1469

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....providers also, which is only putting EPEX system without creating infrastructure in the field of Telecom ? 2. Brief facts of the case are that the assessee filed its return of income electronically on 11.9.2009 declaring total income at Rs. 1,07,79,550/-. This return was processed under section 143(3) of the Income Tax Act, 1961 on 8.2.2011 and returned income was accepted. Subsequently, the case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Act was issued and served on 26.8.2010 upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee has claimed deduction of Rs. 2,07,91,043/- under section 80IA of the Act. According to the assessee, it has shown income from t....

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....the Act provides for deduction in respect of profits and gains from industrial undertaking or enterprises engaged in infrastructure development. According to the Revenue, the assessee has only erected an EPABX system which could not be construed as creation of infrastructure development. It was contended that ITAT, Chennai Bench in the case of ITO Vs. Smt. A. Jayalaxmi, 50 SOT 57 took a view that establishment of EPABX system does not amount to creation of an infrastructure which can enable an assessee to claim deduction under section 80IA. Since there were conflicting opinion at the end of the ITAT - one involved in the assessee's own case and other rendered by the ITAT, Chennai Bench, the Bench which heard this appeal made a reference to ....

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....of the opinion that the Tribunal is justified in directing the Assessing Officer to allow deduction u/s 80IA of the Act. The Tribunal has relied upon the decision of ITAT, Mumbai Bench in ITA No. 4355/Mum/03 for the assessment year 1998-99 rendered on 12.09.2003 as the terms and conditions of the assessees in the cases before it as well as that of the assessee in ITA No. 4355/Mum/03 were identical. The relevant portion of the order dated 12.09.2003 relied upon the Tribunal is reproduced hereunder: "From the perusal of clause-1, it is evident that the EPABX owned by the assessee will provide direct in dialing services through the PSTN of the MTNL. Thus, the services provided by the assessee would come within the purview of basic tel....

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....ied upon the order dated 12.09.2003 passed by the Mumbai Bench. The assessees have made huge investment in setting up and maintaining the entire PABX. In view of the agreement between the parties which has been minutely considered by this Court, the services provided by the assessees shall fall within the definition of 'basic telephone service' and therefore they shall be entitled to deduction u/s 80IA of the Act. The Tribunal has not committed any error in reversing the orders passed by the Assessing Officer. The Tribunal had examined all the aspects of the case and concluded that the assessees were providing basic telecommunication service and were entitled to deduction under section 80IA(4)(ii). 8. In view of the above, ....