TaxTMI 
TaxTMI 
2023 (1) TMI 1212
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.... (b) disallowance of depreciation on the claim of site restoration cost. (c) disallowance made u/s 40(a)(ia) of the Act. 4. The facts relating to the case are stated in brief. The present name of the assessee is "M/s ATC Telecom Infra P Ltd". Earlier it was known as Viom Networks Ltd and earlier to that, it was known as "Wireless TT Info Services Ltd (WTTIL). The company WTTIL was wholly owned subsidiary company of M/s Tata Teleservices Ltd (TTSL). The assessee is engaged in the business of providing passive infrastructure to telecom companies. 5. During the year under consideration, the TTSL sold its passive infrastructure undertaking to WTTIL by entering into a Business Transfer Agreement (BTA) on 8.11.2007 read with an Amendment Agreement dated 26.2.2008. As per the BTA, the passive infrastructure business was sold as a going concern by way of slump sale w.e.f. 31st October, 2007. However, the transfer process could be completed only by February, 2008. It is stated that during the period from November, 2007 to February, 2008, the business carried by TTSL on behalf of WTTIL. 6. The first issue relates to the disallowance of depreciation. The assessee clai....
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....f Sec.43(6)(c)(i)(C) of the Act. 6.2.1 The Ld CIT(A) noticed that the Explanation 4A to sec. 43(1) invoked by the AO in the assessment order is not applicable to the facts of the present case. The above said Explanation 4A was related to the cases of sale and lease back of the transactions. 6.2.2 The Ld CIT(A) found that the provisions of sec. 43(6)(c)(i)(C) was related to the computation of WDV in the hands of seller of assets. 6.2.3 The Ld CIT(A) also noticed that the Explanation 6 to sec. 43 relating to the transfer of assets between holding company and subsidiary company would not be applicable in the facts of the present case, since the said Explanation 6 would apply only if such transfer is claimed as exempt u/s 47 (iv) and (v) of the Act. In the instant case, the ld CIT(A) noticed that the TTSL has declared capital gains u/s 50B of the Act. 6.2.4 The Ld CIT(A) also held that the Explanation 3 to sec. 43 will not also apply because, in order to make the said provisions of Explanation 3 applicable, it is required to be shown that the transfer of assets is for the purpose of reducing tax liability. In the instant case, there is no such allegation made by the AO. ....
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....preciation disallowed on site restoration cost of Rs.6.96 crores. We noticed earlier that the, while working out the cost of towers, the assessee has estimated the cost that would be incurred on restoration of land upon dismantling the tower. The AO took the view that the above said site restoration cost is a notional claim and accordingly disallowed the same. The Ld CIT(A) noticed that he had allowed identical claim in the assessee's own case in AY 2012-13, vide his order dated 24.4.2017. In that order, the Ld CIT(A) had held that the "asset retirement obligation" (akin to "site restoration cost") is not a contingent liability. The Ld CIT(A) had also noticed that the assessee has been following similar method of accounting in the earlier years. Accordingly, he had held that the depreciation is allowable on estimated "asset retirement obligation". Following the said order, the Ld CIT(A) allowed depreciation claim on the "Site restoration cost" also. 6.4.1 We heard the parties on this issue and perused the record. We notice that the "Site restoration cost" is an expenditure that will be incurred by the assessee after dismantling the towers. The assessee has estimated the expendit....
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....ounting practice followed by the assessee may not be relevant, since the consistent practice cannot override the accounting standard and law. 6.4.2 In the written submissions, certain propositions have been raised:- (a) The first proposition was that the provision for site restoration is an ascertained liability and hence it is fully allowable as deduction u/s 37(1) of the Act. The assessee has also placed reliance on certain case laws. However, the distinguishing factor is that in those cases, the expenditure akin to site restoration cost was required to be incurred within a definite period of time. On the contrary, in the instant case, the assessee was required to incur site restoration cost only when the towers are dismantled. Thus, there appears to be no definite period within which the said expenditure will be incurred. For example, in the case of Provision for leave encashment, there is a binding contract between the employer and employee for payment of leave encashment and further there is certainty of retirement. On the contrary, the site restoration cost shall be incurred only when the tower is dismantled and there is no certainty when the tower shall be disman....
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....ences. During the year under consideration, the assessee claimed depreciation on new assets worth Rs.223.41 crores. In the assessment order, the AO had disallowed the claim of depreciation on this amount without assigning any reason. In the remand report, the AO stated that the assessee could furnish bills for about Rs.6 crores only and did not furnish copies of bills for the remaining amount. The AO further stated that the assessee could not relate the above said bills for Rs.6 crores with any specific asset. He also observed that the assessee could not produce any work order, details of making payment or deducting TDS. Accordingly, the AO recommended that the disallowance of depreciation claimed on Rs.223.41 crores should be sustained. 6.5.1 Before Ld CIT(A), the assessee produced invoices for an amount of Rs.24.19 crores. The assessee also produced 100 binders containing invoices. It was submitted that the assessee keeps track of goods received and goods issued (GR-GI) for the entire addition of fixed assets of Rs.223.40 crores and each invoice can be tracked to GR-GI. It was submitted that the assessee places bulk orders for materials and delivery is made from its warehouses....
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....nce to the extent of Rs.20.08 crores. With regard to the balance amount, the Ld CIT(A) granted relief to the extent of 0.85 lakhs, since the assessee had deducted tax at source. Accordingly, the Ld CIT(A) confirmed the balance amount of Rs.15.10 crores. 6.6.1 The revenue is contesting the relief granted to the extent of Rs.20.08 crores. The assessee is contesting the decision of Ld CIT(A) in confirming the balance amount. 6.6.2 With regard to the relief of Rs.20.08 crores granted by the assessee, we notice that the same relates to the tower rent given to various parties and the each of the payment was less than the threshold limit (Rs.1,20,000/- per annum) for making deduction u/s 194I of the Act. In this regard, the Ld CIT(A) has verified sample copies of rental agreements. Accordingly, we do not find any reason to interfere with the view expressed by Ld CIT(A) on this issue. 6.6.3 The disallowance confirmed by Ld CIT(A) consisted of following three types of expenses:- Security expenses - 10.23 crores Repairs and maintenance 0.12 crore 10.35 crores Less:- TDS deducted on 0.85 crore 9.50 cr....
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.... in it the transportation of goods by a carrier. In Bombay Goods Transport Association v. CBDT [1994] 210 ITR 136, the Bombay High Court quashing the impugned circular has held that the expression 'carrying out any work' would not include carrying of goods. In Calcutta Goods Transport Association v. Union of India [1996] 219 ITR 486, similar view has been expressed by the Calcutta High Court. It has also been pointed out in this decision that the Parliament had sought to bring professional services and other works within the net of tax deduction at source. If such 'works' were already covered by section 194C, it was wholly unnecessary for the Parliament to introduce separate statutory provisions in this regard and, thus, it follows that the word 'work' is to be understood in the limited sense as product or result. The carrying out of work indicates doing something to conduct the work to completion or an operation which produces such result. In V.M. Salgaocar & Bros. Ltd. v. ITO [1999] 237 ITR 630, the Karnataka High Court has concurred with the views expressed by the Bombay and Calcutta High Courts. The High Courts of Gujarat, Madras, Orissa and Delhi have a....