TaxTMI 
TaxTMI 
2025 (8) TMI 596
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.... 2. As the facts are identical in these appeals, we hereby pass a consolidated order by taking A.Y. 2011-12 as a lead year relevant to ITA No. 2178/Mum/2018 and 1775/Mum/2018. 3. The assessee has raised the following grounds of appeal: ITA No. 1775/Mum/2018 (A.Y. 2011-12) Ground No. I: Directing the Assessing Officer (the AO') to verify the claim of deduction of discount pertaining to earlier years on payment basis: On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in directing the AO to verify the claim of deduction of discount disallowed in earlier years u/s. 40(a)(ia) of the Act which ought to be allowed in the year under appeal on payment basis... Ground No. II: Disallowance of domestic roaming charges paid/payable to the Other Telecom Operators (the OTO's') amounting to Rs. 31,57,60,673/-u/s. 40(a)(ia) of the Act for non-deduction of taxes: 1. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in holding the disallowance of roaming charges amounting to Rs. 31,57,60,673/-on the alleged ground that the said payment is in the nature of Royalty for the purpose ....
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....,72,022/-u/s. 40(a)(ia) of the Act on the alleged ground that the Appellant has not deducted tax at source disregarding the fact that the payees were not identifiable at the time of making the provision. Ground No. VI: Directing the AO to verify the claim of deduction of provision of commission disallowed in AY 2010-11 on payment basis: On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in directing the AO to verify the claim of deduction of provision of commission disallowed in AY 2010- 11 u/s. 40(a)(ia) of the Act which ought to be allowed in the year under appeal on payment basis. Ground No. VII: Deduction u/s. 35DD of the Act: On facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in not allowing the deduction u/s, 35DD of the Act of Rs. 5,87,487/- (being 1/5th of Rs. 29,37,435/- incurred towards amalgamation of Escotel Mobile Communication Limited with the Appellant w.e.f. April 1, 2006). 4. Brief facts of the case are that the assessee company is engaged in the business of providing cellular mobile service and trading of handsets and accessories. The assessee filed its retu....
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.... Disallowance of free advance to subsidiary company-as discussed in para-11 34,34,00,000/- ix) Disallowance u/s. 40(a)(ia) of the I.T. Act- as discussed in para-12 15,10,72,022/- (x) Disallowance of lesser rate of TDS u/s. 40(a)(ia) of the Act as discussed in para-13 86,59,127/- xi) Lease rent to Quippo Telecom Infrastructure Ltd (QTIL)-as discussed in para-14 52,52,59,662/- (xii) Lease rent to ICTIL-as discussed in para-15 316,80,00,000 2012,10,12,246/- Gross Total Income 2139,42,73,220/- Less: Deduction u/s. 80IA-as claimed 1060,74,15,182/- Total Income 1078,68,58,038/- Less-Set off of b/f losses Nil Total Taxable Income 1078,68,58,038/- R/off 1078,68,58,040/- Calculation of Book Profits u/s. 115JB of the I.T. Act, 1961 Book Profit u/s115JB (as per revised) Rs. 794,64,25,489/- Add: Disallowance u/s. 14A as discussed above Rs. 57,10,82,414/- 5. Aggrieved by the said order, the assessee was in appeal before the first appellate authority, challenging the assessment order. 6. The ld. CIT(....
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....disallowance pertaining to payments made in A.Y. 2010-11. Pertinently, the first proviso to Section 40(a)(ia) of the Act states that when tax has been deducted in any subsequent year or has been deducted during the previous year but has been paid after the due date specified in Sub Section (1) of Section 139 of the Act, then the same shall be allowed as deduction in computing the income of the previous years in which such tax has been paid. As the ld. AO has disallowed the claim of the discount on the ground that the assessee has not deducted tax at source or has deducted but has not paid before the due date specified in Section 139(1) of the Act, the same is allowable as and when the assessee has paid the tax on payment basis. As the assessee claims that it had paid TDS u/s. 194H during the impugned year, we deem it fit to hold that this factual aspect has to be verified by the ld. AO and to allow the corresponding deduction as per the provisions and in accordance with law. We do not find any infirmity in the order of the ld. CIT(A) directing the ld. AO to verify this factual aspect. We therefore are inclined to remand this issue to the file of ld. AO for further verification. ....
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....251 ITR 53 (Madras HC) which has not been reversed by the Hon'ble Apex Court, it is to be held that the roaming charges is in the nature of fee for technical service u/s. 194J of the Act for which the assessee is liable to deduct TDS amounting to Rs. 62,41,66,807/- towards international roaming charges and national roaming charges and in the failure to deduct the same, the claim of the assessee are to be disallowed u/s. 40(a)(ia) of the Act. The ld. CIT(A) upheld the disallowance made by the ld. AO by holding that the interconnect/roaming service undertaken by one telecom operator allowing the other telecom operator to use its network is termed as 'process' and the payment made for the use/right of the same would be 'royalty' within the meaning of Section 9(1)(vi) of the Act and also as per DTAA, thereby holding such payment to be liable for deducting tax at source and in the failure of which the assessee is held to be an 'assessee in default' u/s. 201(1) of the Act. The ld. CIT(A) further held that the proviso to Section 201 and Section 40(a)(ia) was inserted only w.e.f. 01.07.2012 and 01.04.2013 respectively which are not applicable for the relevant assessment year, thereby u....
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....ss Ltd. Tax Case Appeal No. 831, 832, 833, 836 and 838 of 2016, order dated 17.05.2024, has remanded this issue back to the Tribunal for deciding this issue in hand to the extent of examining human intervention required for rendering the services along with the terms of agreement between the parties, in which case the Hon'ble High Court has also distinguished the decision of the Hon'ble Apex Court in the case of Bharti Cellular Ltd. (supra). The ld. DR also relied on the order of the lower authorities. 16. We have heard the rival submissions and perused the materials available on record. The moot issue that requires adjudication in this ground is whether the roaming charges paid to OTOs and the interconnect charges paid are in the nature of fee for technical services for which the assessee is required to deduct TDS on such payment u/s. 194J of the Act. The nature of service is that when the assessee's subscribers use roaming facilities in foreign countries, the non-resident operators/foreign telecom operators (FTO) provide telecom services, where the assessee does not have its own network, certain charges are incurred which are to be paid by the assessee which the assess....
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....ficer to carry out factual verification to examine the existence of human interphase for roaming services by obtaining technical evidence from experts in the telecom field. 17. It is observed that the Hon'ble Delhi High Court in the case of Bharti Cellular Ltd. [2008] 175 taxmann.com 573 (Delhi), held that there was there was no human interphase involved in such services and that the expression 'technical services' are those which are rendered by human intervention and held that the interconnect charges/port access charges are not to be considered as 'fees for technical services'. In an appeal preferred by the revenue against the said order, the Hon'ble Apex Court had remanded this issue back to the ld. AO directing for examination by technical experts, where such facility requires manual intervention resulting in the same to be fee for technical services/professional services. Further, it is observed that the Hon'ble Karnataka High Court in the case of Vodafone Idea Ltd. (formerly Vodafone Essar South Ltd.) vs. DCIT (IT) [457 ITR 189 (Karnataka HC)], has categorically held the same to be without human intervention and not to be termed as technical service as the sam....
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....t vs. DCIT [2023] 156 taxamann.com 155 (Banglore Trib.) g. DDIT v. Reliance Infocomm Ltd. (ITA Nos. 5374/Mum/2007 & 6093/Mum/2008) h. DCIT v. Reliance Jio Infocomm Ltd. [2019] 108 taxamann.com 325 (Mumbai) i. Telecom Italia Sparkle Sngapore Ptd. Ltd. Vs. DCIT [2023] 155 taxamann.com 404 (Bangalore ITAT) j. DCIT vs. Orange (formerly known as France Telecom) [2024] 158 taxmann.com 186 (Banglore Trib.) k. HCC Global Communications Ltd. V. DCIT [2024] 158 taxamann.com 633 (Bangalore ITAT) 20. The ld. DR on the other hand controverted the same and stated that the Hon'ble Madras High Court in the case of Verizon Communications Singapore Pte Ltd. vs. DCIT [2014] 361 ITR 575, had distinguished the case of the Hon'ble Delhi High Court in the case of Asia Satellite Telecommunications Co. Ltd. v. DIT [2011] 332 ITR 340/197 Taxman 263/9 taxmann.com 168 which again was relied upon by the coordinate bench in the case of Bharti Airtel Ltd. (Supra). The ld. DR further contended that the expression 'process' used in the definition of 'royalty' u/s. 9(1)(vi) of the Act has been discussed at length in the decision of the Hon'ble Madras High ....
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....ced reliance on the decision of the Hon'ble Karnataka High Court in the case of Vodafone Idea Ltd. (formerly Vodafone Essar South Ltd.) vs. DCIT (IT) [457 ITR 189 (Karnataka HC)], which had also attained the finality where the revenue's SLP was dismissed by the Hon'ble Apex Court. It had reiterated that payment made to non-resident telecom operators for providing interconnect services and transfer of capacity in foreign countries was not chargeable to tax as 'royalty'. Further, the ld. DR's reliance placed on the Mumbai Tribunal in the case of ACIT vs. Viacom 18 Media Pvt. Ltd., [2022] 193 ITD 716 (Mumbai - Trib.), which had followed jurisdictional High Court decision in the case of PCIT vs. Neo Sports Broadcast (P.) Ltd. [2019] 107 taxmann.com 17 (Bombay), has been dissented order from the earlier decisions and held that the transponder services fee was not in the nature of 'royalty' as per Section 9(1)(vi) of the Act and also the decision of the Hon'ble Madras High Court in the case of Verizon Communications Singapore Pte Ltd. (supra) has also been descended by the Hon'ble Delhi High Court in the case of DIT vs. New Skies Satellite BV (382 ITR 114) (Delhi HC). The....
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....ely available in public domain. It is therefore an intangible asset, the exclusive right over which normally rests with its developer / creator or with the person to whom such asset has been exclusively transferred. In order to receive a 'royalty' in respect of allowing the usage or right to use any property including an intellectual property, the owner thereof must have an exclusive right over such property. As far as intellectual properties (IPs) are concerned, these have significance for the purpose of 'royalty' only till the time the ownership (as differentiated from the right to use) of such property vests exclusively with a single person and such person by virtue of its exclusive ownership allows the usage or right to use such IP to another person/ persons for a consideration in the form of 'royalty'. Payment made for anything which is widely available in the open market to all those willing to pay, cannot constitute 'royalty' and is essentially in the nature of business income. The Hon'ble High Court of Madras in the case of CIT v. Nayveli Lignite Corporation Ltd. [2000] 243 ITR 0459 held that "the term (royalty' norm....
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....es exclusivity and the exclusive right in relation to the thing (be it physical or intellectual property) for which royalty is paid should be with the grantor of that right. In case an intellectual property, it is generally associated with some discovery, invention, creation, specialized knowledge etc. emanating from human mind and is payable to the inventor / creator for allowing the usage of his invention or creation and having an exclusive right over it. The Hon'ble Calcutta High Court in the case of MV Philips (supra) held that a person having some specialised knowledge can claim exclusive right to the same as long as he chooses not to make such specialised knowledge public. Such a person can exploit and utilise such specialised knowledge in the same way as a person holding a patent or owning a mineral right or having the copyright of a publication to allow a limited use of such specialised knowledge to others in confidence against payment in which case it is termed as royalty. However, once such specialized knowledge becomes public; such person loses the exclusivity in respect of such special knowledge and hence, loses the right to receive any royalty in respect of the sam....
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.... same, it is observed that this issue has been recurring in nature, where the majority view taken by the coordinate benches and the Hon'ble High Courts and the Hon'ble Apex Court stands in favour of the assessee. From the above observation, we are inclined to hold that the interconnect usage charges and roaming charges are not in the nature of 'royalty' which are taxable in India and resultantly, the assessee is held to be not liable to deduct TDS on such receipt. We therefore deem it fit to allow this grounds of appeal no. 2, 3 and 4 raised by the assessee by taking a consistent view on the identical issues decided by the various forums. 24. In the result, the ground nos. 2, 3 and 4 raised by the assessee is hereby allowed. 25. Ground no. 5 pertains to the disallowance of year-end provision u/s. 40(a)(ia) of the Act for non-deduction of tax. It is observed that the assessee has made year-end provision on account of commission to distributors, where distributors were not identifiable and the ld. AO disallowed commission of Rs. 15,10,72,072/- u/s. 40(a)(ia) of the Act for the reason that the assessee has failed to deduct taxes u/s. 194A, 194C, 194H, 194I and 194J of th....
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....ned. We therefore allow this ground of appeal for statistical purpose. 28. In the result, the ground no. 5 raised by the assessee is allowed for statistical purpose. 29. Ground no. 6 pertains to claim of deduction of provisions of commission disallowed in A.Y. 2010-11 on payment basis. The assessee has raised this ground where the ld. AO disallowed the claim of deduction on provision of commission of Rs. 3,70,22,239/- on the ground that the assessee has failed to deduct tax at source as per Section 40(a)(ia) of the Act. 30. The ld. CIT(A) had remanded this issue to the file of ld. AO to allow the claim of deduction on payment basis. Both the ld. Representatives fairly agreed with this issue has to be remanded back to the ld. AO for verification as to whether the assessee has deducted and paid tax on payment basis towards the commission expenses claimed by the assessee amounting to Rs. 3,70,22,239/-. We do not find any infirmity in the order of the ld. CIT(A) and hereby uphold the same. Ground no. 6 raised by the assessee is hereby allowed for statistical purpose. 31. In the result, the ground no. 6 raised by the assessee is hereby allowed for statistical purpose. 32.....
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.... 7. "The appellant prays that the order of CIT(A) on the above ground be set- 7 aside and that of the assessing be restored". 36. This appeal filed by the revenue challenges the order of the ld. CIT(A) on various grounds. Ground no. 1 pertains to the disallowance u/s. 14A of the Act r.w.r. 8D of the Income Tax Rules, 1962. It is observed that the assessee has made investment of Rs. 2572,80,70,000/- but had claimed that no expenses were incurred for earning the exempt income. The ld. AO not satisfied with the correctness of claim of the assessee pertaining to such expenditure, invoked Rule 8D and made a disallowance of Rs. 57,10,82,414/- to the total income of the assessee. 37. Aggrieved the assessee was in appeal before the first appellate authority, who then deleted the impugned disallowance on the ground that as the assessee has earned no exempt income during the year under consideration and hence no disallowance could be made in lieu of the proposition laid down by the Hon'ble Delhi High Court in the case of Chem Invest Ltd. vs. CIT-VI in ITA No. 749/2014, order dated 02.09.2015 38. Aggrieved the revenue is in appeal before us challenging the order of the ld. CIT(A)....
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....ay any tax on the same and relied on the decision of the Hon'ble Apex Court in the case of Hindustan Coca Cola Pvt. Ltd. vs. CIT (293 ITR 226). The ld. AO made a disallowance of the impugned amount for failing to deduct TDS on payments made as discount which were given to prepaid distributors u/s. 40(a)(ia) of the Act. 43. The ld. CIT(A) on the other hand allowed this ground of appeal in favour of the assessee by relying on his own order for A.Y. 2010-11 and 2012-13 and also decision of the Hon'ble Rajasthan High Court in ITA No. 168/2015, vide order dated 11.07.2017, where it has been held that the relationship between the assessee and distributors would be Principal to Principal and not Principal to Agent, where the assessee did not have liability to deduct TDS on selling prepaid cards to the distributors. 44. The ld. CIT(A) had extensively relied on the decision of the Hon'ble Karnataka High Court in the case of Bharti Airtel Ltd. 372 ITR 33, where on identical facts this issue had been decided in faovur of the assessee. 45. We have heard the rival submissions and perused the materials available on record. Though, it is observed that there are contrary decis....
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....e distributor has rights of distribution and is akin to a franchisee. Franchise agreements are normally considered as sui generis, though they have been in existence for some time. Franchise agreements provide a mechanism whereby goods and services may be distributed. In franchise agreements, the supplier or the manufacture, i.e. a franchisor, appoints an independent enterprise as a franchisee through whom the franchisor supplies certain goods or services. There is a close relationship between a franchisor and a franchisee because a franchisee's operations are closely regulated, and this possibly is a distinction between a franchise agreement and a distributorship agreement. Franchise agreements are extremely detailed and complex. They may relate to distribution franchises, service franchises and production franchises. Notwithstanding the strict restrictions placed on the franchisees - which may require the franchisee to sell only the franchised goods, operate in a specific location, maintain premises which are required to comply with certain requirements, and even sell according to specified prices - the relationship may in a given case be that of an independent contractor. Fa....
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....ributors/franchisees from the third parties/customers, or while selling/transferring the pre-paid coupons or starter-kits to the distributors. Section 194-H of the Act is not applicable to the facts and circumstances of this case. Accordingly, the appeals filed by the assessee - cellular mobile service providers, challenging the judgments of the High Courts of Delhi and Calcutta are allowed and these judgments are set aside. The appeals filed by the Revenue challenging the judgments of High Courts of Rajasthan, Karnataka and Bombay are dismissed. There would be no orders as to cost. Pending applications, if any, shall stand disposed of." 46. By respectfully following the above decision, we decide this issue in favour of the assessee, thereby dismissing ground no. 2 of the revenue's appeal. 47. In the result, ground no. 2 raised by the revenue is hereby dismissed. 48. Ground no. 3 pertains to the disallowance of Rs. 15,03,41,540/- debited in the P & L account towards amortization and intrinsic value of shares under the Employee Stock Option Plan ("ESOP"). It is observed that the assessee had debited an amount of Rs. 15,03,41,450/- towards ESOP amortization cost to its P & L....
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.... said proposition. In view of the same, ground no. 3 raised by the revenue is hereby dismissed. 52. In the result, the ground no. 3 raised by the revenue is hereby dismissed. 53. Ground no. 4 pertains to the disallowance of Revenue Share License Fee (RSLF) amounting to Rs. 1107,62,42,826/- paid to the Department of Telecommunication (DOT). The assessee is said to have debited an amount of Rs. 1107,64,42,826/- as license fee and claimed deduction u/s. 35ABB of the Act. It is observed that the assessee has obtained a license to carry on business of telecom service provider from the Government of India in A.Y. 1996-97 and commenced its business in A.Y. 1997-98 and had claimed the amount which was paid towards the license fee as deduction u/s. 35ABB of the Act which was amortized over the period of the license. The assessee had also paid license fee on revenue sharing basis from A.Y. 2000-01 onwards which was initially capitalized and depreciation was claimed on the same. The ld. AO observed that the assessee subsequently claimed expenditure u/s. 37(1) of the Act towards the same expenditure. The ld. AO disallowed the said claim u/s. 37(1) of the Act but had allowed depreciation ....
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....) of the Act. It is further observed that the Tribunal in assessee's case has consistently held the same to be an allowable deduction u/s. 37(1) of the Act as revenue expenditure. Pertinently, the Hon'ble Apex Court in the Review Petition filed by the assessee in case of Commissioner of Income-tax vs. Bharti Hexacom Ltd. [2023] 155 taxmann.com 322 (SC)/[2023] 458 ITR 593 (SC)[16-10-2023], held that license fee paid to DOT under National Telecom Policy would be capital in nature and was to be amortized in accordance with Section 35ABB of the Act as the same was non-transferable and non-assignable and the payment was intrinsic to existence of license as well as trade, holding the entry fee and the variable annual fee to be capital in nature. This review petition was filed by the assessee against the order dated 16.10.2023 in Bharti Hexacom Ltd. (supra), wherein the Hon'ble Apex Court held that the payment of entry fee as well as variable annual license fee paid by the assessee to the DOT under the New Telecom Policy, 1999 are capital in nature and are to be amortized as per Section 35ABB of the Act, thereby setting aside the decision of the Hon'ble High Court of Delhi, Bo....
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.... be treated as revenue. The nature of payment being for the same purpose cannot have a different characterisation merely because of the change in the manner or measure of payment or for that matter the payment being made on annual basis. 27. Therefore, in the ultimate analysis, the nomenclature and the manner of payment is irrelevant. The payment post 31 July, 1999 is a continuation of the payment pre 31 July, 1999 albeit in an altered format which does not take away the essence of the payment. It is a mandatory payment traceable to the foundational document i.e., the license agreement as modified post migration to the 1999 policy. Consequence of nonpayment would result in ouster of the licensee from the trade. Thus, this is a payment which is intrinsic to the existence of the licence as well as trade itself. Such a payment has to be treated or characterized as capital only. 28. In the result, the judgment of the Division Bench of the High Court of Delhi, dated 19 December, 2013 in ITA No. 1336 of 2010 and connected matters, is hereby set aside. The judgments passed by the High Courts of Delhi, Bombay and Karnataka, following the judgment of the Division Bench of ....
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....tax and has to pay the same to the government and further in short fall in deduction if any, then the assessee can held 'assessee in default' u/s. 201 but no disallowance u/s. 40(a)(ia) of the Act can be made on such circumstances. The same has been reiterated by the Hon'ble High Court of Delhi in the case of Future First Info Service Pvt. Ltd. (supra). 61. From the above observations, we find no infirmity in the order of the ld. CIT(A) in deleting the disallowance u/s. 40(a)(ia) of the Act on short fall in deduction of tax. We therefore dismiss the ground no. 5 raised by the revenue. 62. In the result, the ground no. 5 raised by the revenue is hereby dismissed. 63. Ground no. 6 pertains to disallowance of lease charges paid to Quipo Telecom Infrastructure Ltd. (QTIN) during the year under consideration, where the assessee is said to have transferred 747 sites in A.Y. 2008-09 and 128 sites in A.Y. 2009-10 to one SREI Infrastructure Pvt. Ltd. which had in turn transferred this assets to QTIN and these towers were leased back by the SREI Infrastructure to the assessee vide an agreement dated 31.12.2007 and 01.01.2008 between the assessee and SREI and assessee and QTIN, r....
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....de the four corners of the law applicable at the relevant time. The tax management is permissible, if the law authorises so. 13. In the present case, the first appellate authority and the Tribunal have held that the transactions were genuine and validly entered into and that the assets were sold and leased back purely on business considerations and there is no question of any colourable device because in the said transaction, the assessee-company has got a substantial benefit by selling its plant and machinery to the leasing company and the advantage, which the assessee-company has acquired, cannot be considered to be artificial or dubious and there was no motive on the part of the assessee's to defraud the Revenue. The object of the transaction was to augment funds which were invested by the assessee's in the Unit Trust of India. From the aforesaid finding it is apparent to us that the assessee's entered into transactions with the parties to sell and lease back the assets, on the sale price which was determined by an independent valuer. This has been done to minimize the tax liability, which in our opinion, is permissible under the law. In the aforesaid view, we do not fi....
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....the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the action of the AO of disallowing depreciation claimed by the Appellant on right to use 3G Spectrum on the ground other than that alleged by the AO without providing an opportunity to the Appellant to rebut the same. Without prejudice to Ground No. III, Ground No. IV: Disallowance of depreciation claimed u/s. 32(1) of the Act on right to use 3G Spectrum amounting to Rs. 5,16,33,50,000/- On the facts and in the circumstances of the case, the Hon'ble CIT(A) erred in disallowing depreciation amounting to Rs. 5,16,33,50,000/- claimed u/s 32(1) on the right to use 3G Spectrum by holding that the provisions of section 35ABA of the Act are retrospective in nature and thus charges paid to acquire right to use spectrum is to be amortized over the period of validity of the right to use spectrum and thereby allowing only 1/20th of the expenditure incurred. Without prejudice to Ground No. III and IV, Ground No. V: Not allowing the entire 3G Spectrum cost u/s 37(1) of the Act: On the facts and in the circumstances of the case, the Hon'ble ....
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....the said expenses should not be amortized over a period of 20 years and the depreciation claimed by the assessee ought to be disallowed with respect to intangible assets. The assessee contended that under the New Telecom Policy, 1999, cellular licenses were bifurcated from Spectrum, wherein earlier it was to pay license fee fixed for a license period of 10 years, where no separate charges for use of Spectrum was applicable. The assessee further contended that as per clause 3.6 of the notice inviting application to allow the right to use specified frequencies by means of auction, if the license expired before the duration of 3G Spectrum, the license pertaining only to 3G Spectrum would be extended to 20 years from the date of allotment of 3G Spectrum. Further, the assessee contended that the depreciation on such intangible assets was claimed at 25%, where bid price paid for the allotted Spectrum was one time cost and has to be capitalized as intangible assets as block of intangible assets from A.Y. 2010-11 onwards which was alleged to have been accepted by the revenue. The assessee further contended that as the spectrum was allotted for 20 years, the same was intangible asset eligib....
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....e action of the ld. AO in disallowing the depreciation claimed on spectrum and amortizing the same. 77. Aggrieved by the said order, the assessee is in appeal before us. 78. It is observed that the Tribunal in assessee's case for earlier years has been consistently allowing the depreciation claimed by the assessee on right to use 3G spectrum u/s. 32 of the Act. Further, the revenue's contention that after insertion of Section 35ABA, the assessee was not entitled to claim deprecation u/s. 32 of the Act but rather the same has to be amortized over the license period as per the specific provision which was inserted by Finance Act, 2016 w.e.f. 01.04.2017 on expenditure for obtaining right to use 3G Spectrum for telecommunication services which according to the revenue is applicable retrospectively. 79. We do not find force in the argument of the revenue that the said provision applies retrospectively for the reason that the explanatory notes to Finance Act, 2016 specifically states that this amendment shall take effect from 1st April, 2017 and will accordingly apply from A.Y. 2017-18 and subsequent assessment years. Further, it is observed that the new provision was inserted f....
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.... 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of revenue share license fees ("RSLF") amounting to Rs. 1462,97,07,807/- paid to the Department of Telecommunications ("the DOT") 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Lease Charges of Rs 43.06,34,844/- paid to Quipo Telecom Infrastructure Ltd." 5. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs 3,58,75,373/- debited to the Profit & Loss Account towards amortization of the intrinsic value of shares under the Employee Stock Option Plan ("ESOP") 6. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in holding that payments made for roaming services is not in the nature of FTS and deleting the disallowance made by the AP u/s 40(a)(ia) without appreciating the fact that such services necessarily involve human intervention and therefore such payments attract provisions of section 194J of the Act." 7. "Whether on the facts and circumstance....
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....s account towards amortization of the intrinsic value of shares under the employee stock option plan (ESOP). As the facts of this ground is identical to that of ground no. 3 in ITA No. 2178/Mum/2018 for A.Y. 2011-12, the finding given in the said appeal shall apply mutatis mutandis to this ground also. 93. In the result, the ground no. 5 raised by the revenue is hereby dismissed. 94. Ground no. 6 pertains to the disallowance of roaming charges paid to telecom operators u/s. 40(a)(ia) of the Act for non-deduction of taxes u/s. 194J amounting to Rs. 88,21,94,192/-. As the facts of this ground is identical to that of ground no. 2 in ITA No. 1775/Mum/2018 for A.Y. 2011-12, the finding given in the said appeal shall apply mutatis mutandis to this ground also. 95. In the result, the ground no. 6 raised by the revenue is hereby allowed. 96. Ground no. 7 pertains to the disallowance u/s. 40(a)(ia) of the Act for short deduction of taxes. As the facts of this ground is identical to that of ground no. 5 in ITA No. 2178/Mum/2018 for A.Y. 2011-12, the finding given in the said appeal shall apply mutatis mutandis to this ground also. 97. In the result, the ground no. 7 raised by ....
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....circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the action of the AO of disallowing the year-end provision for commission of Rs. 5,55,86,818/-u/s. 40(a)(ia) of the Act on the alleged ground that the Appellant has not deducted tax at source disregarding the fact that the payees were not identifiable at the time of making the provision. 101. Ground no. 1 pertains to the disallowance of roaming charges paid/payable to Foreign Telecom Operators (FTO) u/s. 40(a)(ia) of the Act for non-deduction of taxes. As the facts of this ground is identical to that of ground no. 3 in ITA No. 1775/Mum/2018 for A.Y. 2011-12, the finding given in the said appeal shall apply mutatis mutandis to this ground also. 102. In the result, the ground no. 1 raised by the assessee is hereby allowed. 103. Ground no. 2 pertains to the disallowance of interconnection charges paid to FTOs u/s. 40(a)(ia) of the Act for non-deduction of taxes amounting to Rs. 1,63,60,00,000/-. As the facts of this ground is identical to that of ground no. 4 in ITA No. 1775/Mum/2018 for A.Y. 2011-12, the finding given in the said appeal shall apply mutatis mutandis to this ground also. 104. In....
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.... vs P.V.S. Memorial Hospital Ltd. [60 taxmann.com 69] which ruled to the contrary and in favour of revenue." 6. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Lease Charges of Rs. 51,33,42,392/- paid to Quipo Telecom Infrastructure Ltd." 7. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 2,33,12,548/- being write back of creditors claimed by assessee to be for capital goods though not substantiated during assessment proceedings nor before CIT(A)." 8. "The Appellant prays that the order of the CIT(A) on the above ground be set aside and that of the assessing be restored." 9. "The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 110. Ground no. 1 pertains to the disallowance of net discount given to the prepaid card distributors ("Distributors") u/s. 40(a)(ia) of the Act for non-deduction of Tax u/s. 194H of the Act amounting to Rs. 5,32,21,15,067/-. As the facts of this ground is identical to that of ground no. 2 in ITA No. 2178/Mum/2018 for A.Y. 2011-1....
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....unt of write back of creditors for capital goods amounting to Rs. 2,33,12,548/-. 123. It is observed that the assessee had written back Rs. 2,33,12,548/- on account of creditors for capital goods which the assessee claimed to be not a trading liability and has not claimed the same as expenses in any earlier assessment years. The assessee contends that the same is a capital receipt and therefore was written back. The ld.AO held the same to be taxable u/s. 41(1) of the Act for the reason that the assessee has failed to respond to the show cause notice issued on the same. 124. In an appeal before the ld. CIT(A) it was held to be in the nature of capital receipt and not claimed as expenses by the assessee and further directed the ld. AO to delete disallowance as the same being a capital write back not chargeable to tax. 125. Aggrieved the revenue is in appeal before us, challenging the same. 126. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that Section 41(1) of the Act can be invoked only when any allowance or deduction has been granted in any assessment year pertaining to loss, expenditure or trading liability which subsequ....
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....or non-deduction of taxes; 1. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the disallowance of roaming charges amounting to Rs. 27,39,18,420/- on the alleged ground that the said payment is in the nature of Royalty u/s. 9(1)(vi) of the Act. 2. He further erred in not following his own order of the other years in absence of any change in facts. 3. He further erred in holding that the international roaming charges fall within the ambit of royalty as per the Double Tax Avoidance Agreements (DTAAs) without specifically examining the relevant DTAAs and also in holding that amendments made in the Act can be read into the DTAA Ground No. II: Disallowance of interconnection charges paid to the FTOs amounting to Rs. 170,70,00,000/-u/s, 40(a)(ia) of the Act for non-deduction of taxes: 1. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in enhancing the assessment made by the AO and additionally disallowing the international interconnection charges paid to the FTOs amounting to Rs. 170,70,00,000/- u/s. 40(a)(i) of the Act on the alleged ground that the said payme....
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....e intrinsic value of shares under the Employee Stock Option Plan ("ESOP") 3. "Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the disallowance made by the AO of Rs. 10,61,81,123/- u/s 14A of the Act r.w.r 80 of the Rules towards expenses incurred for making tax-free investment." 4 "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting disallowance of revenue share license fees (RSLF") amounting to Rs. 1507,61.42.241/-paid to the Department of Telecommunications ("the DOT") 5 "Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the disallowance of Lease Charges of Rs. 50,57,67,342/- paid to Quipo Telecom Infrastructure Ltd. 6 "The appellant prays that the order of CIT(A) on the above ground be set aside and that of the assessing be restored." 7. "The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 140. Ground no. 1 pertains to the disallowing the discount of Rs. 256.27.13.237/- allowed to the Distributors u/s 40(a)(ia) of the Act on the alle....
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....he assessee challenging the order of the learned Commissioner of Income Tax (Appeals) ('ld.CIT(A) for short), passed u/s. 250 of the Income Tax Act, 1961 ('the Act'), pertaining to the Assessment Year ('A.Y.' for short) 2015-16. 152. The assessee has raised the following grounds of appeal: Ground No. 1: Disallowance of International Roaming Charges paid/payable to the Foreign Telecom Operators (the FTO's') amounting to Rs. 24,95,66,459/- under Section 40(a)(i) of the Act for non-deduction of taxes: 1 On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the disallowance of International roaming charges amounting to Rs. 24,95,66,459/- on the alleged ground that the said payment is in the nature of Royalty under the normal provisions of the Act. 2 He further erred in holding that the international roaming charges fall within the ambit of royalty as per the Double Tax Avoidance Agreements (DTAAs') without specifically examining the relevant DTAAs and also in holding that amendments made in the Act can be read into the DTAAS. Ground No. II: Disallowance of interconnection charges paid to t....
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....zed for the first time only in the year under appeal. Without Prejudice to the outcome of the appeal filed by the Department for earlier years, Ground No. VI: Allowance of Discount amounting to Rs. 327,15,72,342/- pertaining to other vears against which payment of TDS under protest is made in the captioned year: The Appellant prays that the discount amounting to Rs. 327,15,72,342/- pertaining to other years against which payment of TDS under protest is made in the captioned year be allowed in the year under appeal on payment basis as per the provisions of Section 40(a)(ia) of the Act. The Appellant craves leave to add, to alter and / or amend all or any of the foregoing grounds of appeal." 153. Ground no. 1 pertains to the Disallowance of International Roaming Charges paid/payable to the Foreign Telecom Operators (the FTO's') amounting to Rs. 24,95,66,459/- under Section 40(a)(i) of the Act for non-deduction of taxes. As the facts of this ground is identical to that of ground no. 3 in ITA No. 1775/Mum/2018 for A.Y. 2011-12, the finding given in the said appeal shall apply mutatis mutandis to this ground also. 154. In the result, the ground n....
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....year under consideration. The ld. AO not being convinced by the assessee's submission for the reason that the assessee had been following mercantile system of accounting in which income and expenses had to be booked in the year to which it relates and accrues, thereby disallowed Rs. 10 crores towards the Director's commission as being expenses pertaining to earlier years which is to be disallowed as prior period expenses. 163. Aggrieved the assessee was in appeal before the first appellate authority, who then upheld the disallowance made by the ld. AO. 164. The assessee is in appeal before us, challenging the impugned disallowance. 165. The ld. AR for the assessee contended that the claim for prior period expenses are to be allowed during the relevant year in which it was crystalized inspite of the fact that the assessee was following Mercantile System of Accounting. The ld. AR extensively relied on the decision of the Hon'ble Jurisdictional Bombay High Court in the case of Mahanagar Gas Ltd. vs. DCIT 221 Taxman 80 (Bombay HC) were this issue has been decided in favour of the assessee. 166. The ld. DR on the other hand controverted the said fact and relied on the or....
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....462 ITR 247 (SC), pertaining to ground no. 1 of revenue's appeal, the assessee was at no obligation to deduct TDS on prepaid discount and the disallowance u/s. 40(a)(ia) of the Act for earlier assessment year have been deleted. The assessee contends that this should not be consequentially allowed deduction u/s. 40(a)(ia) of the Act in the year in which the demand in respect of non-deduction of TDS was deposited under protest. As this is a consequential ground pertaining to the payment of TDS under protest, the ld. AO is directed to allow the claim of the assessee subject to verification and hence this ground requires no separate adjudication. This ground of appeal raised by the assessee is hereby allowed for statistical purpose. 171. In the result, ground no. 6 raised by the assessee is hereby allowed for statistical purpose. 172. In the result, the appeal filed by the assessee is hereby partly allowed. ITA No. 2987/Mum/2019; (Assessment Year: 2015-16) 173. This appeal has been filed by the revenue challenging the order of the learned Commissioner of Income Tax (Appeals) ('ld.CIT(A) for short), passed u/s. 250 of the Income Tax Act, 1961 ('the Act'), pertaining to t....