TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 1212
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....ost. (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 claimed that it has received assets worth Rs.846.19 crores under BTA and accordingly claimed....
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....t 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. 6.2.5 Since the assessee has paid the amount of Rs.37 crores over and above the net asset value of assets, the Ld CIT(A) held that the proportionate cost out....
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....ost 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 expenditure that would be incurred on restoration of site upon dismantling the towers and included the same as part of cost of asset. Accordingly, it has claimed depreciation ....
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....s 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 dismantled. In view of this distinguishing factor, we are of the view that though there is certainty of incurring of expenses on site restoration, yet there is no definite time frame by which it would be incurred. Hence, it is a case of expectation of incurring certain expenses in future. Hence the site ....
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.... 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 as per the requisition received from construction sites. However, the ld CIT(A) took the view that based on sample invoices of Rs.24.19 crores, he cannot allow depreciation on the new additions of Rs.223.40 crores. Accordingly he disallowed depreciation of Rs.14.72 crores claimed on the new additions of Rs.223.40 cro....
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.....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 crores (A) Other expenses 5.60 crores (B) Total (A + B) 15.10 crores 6.6.4 With regard to security expenses, the contention of the assessee is that it was paid for supply of security staffs only. It was further submitted that the provisions of sec. 194C shall be attracted only if it involves "carrying on of any work". Even though supply of labo....
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....alcutta 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 also expressed similar views. On the other hand, as already noticed, the Rajasthan High Court in the judgment under appeal has expressed the contrary view relying upon the decision in Associated Cement Co. Ltd.'s case (supra) ". The Bombay High Court, in the case of East India Hotels Ltd vs. CBDT (320 ITR 526)(Bom) has also examined the application of provisions of sec.194C, wh....