2025 (6) TMI 1479

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..../DEL/2015-16 and No. 184/15- 16/IT/DEL/2015-16 arising out of the appeals before it against the orders dated 26.12.2011 and 28.03.2013 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as 'the Act') by the ACIT, Circle-2(3), Hyderabad and ACIT, Circle 16(1), New Delhi (hereinafter referred to as the Ld. AO), respectively. 2. The assessee company derives income from providing telecommunication services and the return of the assessee for the two years before us was selected for scrutiny and mandatory notices were issued. The AO examined the amortization expenses of tangible assets and amortization expenditure for funding TTML acquisition. Accordingly, in 2009-10 an addition of Rs. 90,14,00,000/- and in 2010-11 an addition o....

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....e distributors the difference of the sale price and purchase price of the same which is shows as customer acquisition cost. It was further submitted that the expenditure is incurred for promoting the provision of telecommunication services as more customers would avail the services when handsets are cheaper and affordable. It was further submitted that even the AO did not doubt the genuineness of the expenditure and the same have been incurred for business. The Hon'ble Supreme Court in the case Taparia Tools Ltd. vs. JCIT (2015) 372 ITR 605 (SC) was relied. CIT(A) upheld the disallowance to the extent of 50% of the expenditure. 4. Accordingly, the assessee is in appeal and to dispose of the two appeals heard together, the facts wherever re....

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....orities below. 6. We find that the case of assessee is that the pre-operative expenditure incurred in the subject matter pertains to expansion of the existing business of the Assessee, with intermingling of funds and common management and not in relation to set-up of new business. Ld. AR has contended that it is a well-established principal that the nomenclature of the expense does not determine the allowability of a claim. Now there is no dispute with regard to the fact that the expense pertains to subject year itself and same is revenue in nature and therefore, allowable to the Assessee. There is nothing on record by way of any enquiry or findings any new asset was created after incurring the said pre- operating expenditure. The details ....