TaxTMI 
TaxTMI 
2022 (1) TMI 1207
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....Act 1961 is without jurisdiction, illegal, bad in law and void ab-initio. Without prejudice to the above, 1.2 On the facts and circumstances of the case and in law, the Principal Commissioner of Income Tax ("PCIT") has erred in passing the Order dated 31 March 2021 u/s. 263 of the Income-tax Act, 1961. 1.2.1 On the facts and circumstances of the case and in law, the PCIT has erred m holding that the Order dated 29 December 2017 passed by the Deputy Commissioner of Income Tax - 14(2)(1) ("DCIT") u/s. 143(3) of the Income-tax Act, 1961 was erroneous and prejudicial to the interests of revenue and in thereby revising the same. 1.2.2. On the facts and circumstances of the case and in law, the Appellant submits that the Order passed by the Ld DCIT was neither erroneous nor prejudicial to the interest of the revenue and hence the revision of the same by the PCIT u/s. 263 of the Income-tax Act, 1961 is erroneous and bad in law. 1.2.3. The learned AO had not only made adequate inquires, but had also undertaken necessary verification basis the details/ documents sought from the Appellant during the course of assessment proceedings, and hence, the....
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.... appeal at or before the hearing of the appeal." 2. Briefly stated facts necessary for adjudication of the controversy at hand are that; assessee company is into the business of providing cell phone and data services. In its books of accounts assessee company amortized amount spent on acquiring 3G spectrum and claimed 1/20th of the expenditure for the year as fee paid for spectrum. However, for the income tax purposes the assessee company capitalized the item and claimed depreciation @ 25% treating the spectrum as an 'intangible asset'. The assessee company by filing return of income for A.Y. 2015-16 declared total income at Rs. 4350,27,68,335/- by claiming depreciation to the tune of Rs. 1682.48 crores @ 25% on the spectrum fees paid by treating it as 'intangible asset', which was allowed by the AO under section 32 of the Act. 3. However, the Ld. PCIT by invoking the revisionary jurisdiction called upon the assessee company by way of issuance of notice under section 263 of the Act, as to why the spectrum fee claimed as depreciation by the assessee company, should not have been amortized on pro-rata basis over a period of license in force as per provisions of section 35AB of ....
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....sessee contended inter-alia that the assessment order passed in this case is neither erroneous nor prejudicial to the interest of the revenue nor it is a case of no application of mind on the part of the AO; that AO has duly thrashed the issue as to the allowability of depreciation @ 25% on spectrum fees as claimed by the assessee company by raising repeated queries and has taken the Bench to numerous letters/questionnaire issued by the AO and reply filed thereto. 10. However, on the other hand, to repeal the argument addressed by the Ld. A.R. for the assessee company, the Ld. D.R. for the Revenue contended inter-alia that the AO has failed to do adequate enquiries rather accepted the claim of the assessee without raising any specific question as to the use of spectrum as well as qua the claim of depreciation on "spectrum fee" made by the assessee; that in all the questionnaires the AO raised generic queries which lead to the conclusion that no enquiry has been made by the AO; that impugned order under section 263 of the Act has been rightly passed by the Ld. PCIT under explanation 2 to section 263 of the Act as depreciation claim has been allowed without making enquiry and reli....
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....purchase of bandwidth. Details of upfront fees and operation and maintenance charges paid for such acquisition. v) Details of entry / license fees and spectrum with date from which obtained and proof of put to use." 14. The assessee company, on the other hand, in order to submit reply/explanation to the queries raised by the AO during assessment proceedings had written a letter dated 22 August, 2017 available at page 95 giving complete details of addition made to the fixed assets and sample invoices of fixed assets purchased as annexure II(A) and annexure II(B). Then again written letter dated 21st November 2017 available at page 97 wherein in para 1 the details of spectrum capitalized is given as annexure I, examined by the tax auditor with necessary calculation of depreciation claimed and certified by the tax auditor as annexure II. Then again assessee company issued letter dated 26.12.2017 available at page 99 wherein detail as to bidding by the assessee company in various spectrum options conducted by the department of telecommunication (DOT) in order to acquire right to use spectrum is given. 15. Then Ld. A.R. for the assessee has taken us to the letter dated 5 ....
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....o far as suo-moto information supplied by the assessee company to the AO vide letter dated 5 April, 2017 available at page 111 to 117 providing detail qua depreciation on cost of right to use spectrum as extracted in preceding para 13 is concerned, the arguments addressed by the Ld. D.R. for the Revenue are misconceived because information duly received by the AO during the official course of assessment proceedings in continuation of earlier communications, though submitted on its own by the assessee, are deemed to be examined by the AO by applying his mind. 17A. So far as the contention raised by the Ld. D.R. for the Revenue that Ld. PCIT has passed the order by invoking explanation 2 to section 263 of the Act is concerned, the Ld. A.R. for the assessee contended that unless explanation 2 to section 263 of the Act is used in the show cause notice under section 263 of the Act the same cannot be invoked while passing the order under section 263 of the Act and relied upon the decision rendered by the Hon'ble Supreme Court in the case of Principal Commissioner of Income Tax vs. Shreeji Prints (P.) Ltd. reported in (2021) 130 taxmann.com 294 (SC). 18. Bare perusal of the notice i....
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....assing the order under section 263 of the Act. 22. A perusal of para 5.13 of the impugned order passed by the Ld. PCIT shows that the Ld. PCIT has himself admitted this fact that on identical issue order passed under section 263 of the Act in assessee's own case for A.Y. 2011-12 has been set aside but he has keept this issue alive on the pretext that the order passed by the Tribunal is not accepted by the Department by returning following findings: "5.11 As regards, the legal objection to taking action against 263 and maintainability of this provision suffice to say that perusal of records and filing does not indicates any debate or discussion for considering Section 35ABB or Section 32 at all. It is thus, not the case that the AO has examined both the provisions and took a conscious decision after detailed enquiry, examination and verification of facts that it is not 35ABB but Section 32 which should be invoked and depreciation is to be allowed. 5.12 The submissions made before the AO only indicates what the assessee had to tell about various expenditures items he had claimed. It is interesting to note that the AO queried about amortization and apparently was ....
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....rights of similar nature." 4. Explanation 3 states that the expression `asset' shall mean an intangible asset, being knowhow, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. A reading the words `any other business or commercial rights of similar nature' in clause (b) of Explanation 3 indicates that goodwill would fall under the expression `any other business or commercial right of a similar nature'. The principle of ejusdem generis would strictly apply while interpreting the said expression which finds place in Explanation 3(b). 5. In the circumstances, we are of the view that `Goodwill' is an asset under Explanation 3(b) to Section 32(1) of the Act. 6. One more aspect needs to be highlighted. In the present case, the Assessing Officer, as a matter of fact, came to the conclusion that no amount was actually paid on account of goodwill. This is a factual finding. The Commissioner of Income Tax (Appeals) [`CIT(A)', for short] has come to the conclusion that the authorised representatives had filed copies of the Orders of the High Court ordering amalgamation of the above ....