DCIT, New Delhi v. Bharti Hexacom Ltd., Gurgaon

ITA 3786/DEL/2010 | 2007-2008
Pronouncement Date: 12-01-2011 | Result: Dismissed

Appeal Details

RSA Number 378620114 RSA 2010
Assessee PAN AAACH1766P
Bench Delhi
Appeal Number ITA 3786/DEL/2010
Duration Of Justice 5 month(s) 5 day(s)
Appellant DCIT, New Delhi
Respondent Bharti Hexacom Ltd., Gurgaon
Appeal Type Income Tax Appeal
Pronouncement Date 12-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 12-01-2011
Date Of Final Hearing 12-01-2011
Next Hearing Date 12-01-2011
Assessment Year 2007-2008
Appeal Filed On 06-08-2010
Judgment Text
ITA NO. 3786/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 3786/DEL/2010 A.Y. : 2007-08 DY. C.I.T. CIRCLE 2(1) ROOM NO.398D C.R. BUILDING NEW DELHI VS. BHARTI HEXACOM LTD. PLOT NO. 16 UDYOG VIHAR PHASE-IV GURGAON 122001 (PAN/GIR NO. : AAACH1766P ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. AMARJEET SINGH CA DEPARTMENT BY : MRS. ANUSHA KHURANA SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 4.5. 2010 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCO ME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 48 83 07 556/- ON ACCOUNT OF DISALLOWANCE OF VARIABLE LICENSE FEE IGNORING T HE FACT THAT PROVISIONS OF SECTION 35ABB ARE CLEARLY APPLICABLE IN THIS CAS E. 3. AT THE OUTSET LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT THE ISSUE IS COVERED BY THIS TRIBUNALS ORDER IN ITA NO . 150 AND 4522 FOR ASSESSMENT YEARS 2003-04 AND 2004-05 IN ASSESSEES OWN CASE VIDE ORDER DATED 24.7.2009. IN THE AFORESAID TRIBUNAL S ORDER RELIED BY THE ASSESSEE TRIBUNAL HAS RELIED UPON TRIBUNALS ORDE R IN THE CASE OF BHARTI ITA NO. 3786/DEL/2010 2 CELLULAR LTD. FOR ASSESSMENT YEAR 2000-01 IN ITA NO . 5335/DEL/2003 DATED 25.9.2009 WAS RELIED UPON. THE TRIBUNAL H ELD AS UNDER:- 3. WE HAVE CONSIDERED THE FACTS OF THE CASE AND RI VAL SUBMISSIONS. THE OPERATIVE PORTION OF THE ORDER OF THE TRIBUNAL IS CONTAINED IN PARAGRAPHS 9 AND 10 WHICH ARE REPRODUCED BELOW FOR READY REFERENCE:- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE ALSO PERUSED THE ORDER OF THIS TRIBUNAL IN THE CASE OF MTNL HAS AFTER CONSIDERING THE VARIOUS DETAILS AND SUBMISSIONS OF THE ASSESSEE AND THE REVENUE THEREI N HAS HELD THAT THE LICENSE FEE WAS PAID ONLY FOR THE USE OF THE RIGHT TO DO THE BUSINESS OF TELECOM PROVIDER. THE SAID RIGHT DID NOT GIVE RISE TO ANY CAPITAL ASS ET. FURTHER THE BOMBAY BENCH OF THIS TRIBUNAL HAS HELD AS FOLLOWS:- 8. REVOCATION OF LICENCES THE CENTRAL GOVERNMENT MAY AT ANY TIME REVOKE ANY LICENCE GRANTED U/S 4 ON THE BREACH OF ANY OF THE CONDITIO NS THEREIN CONTAINED OR IN DEFAULT OF PAYMENT OF ANY CONSIDERATION PAYABLE THEREUNDER: FROM PERUSAL OF S.8 OF THAT ACT IT IS NOW EVIDENT THAT UNDER THE CIRCUMSTANCES THE LICENCE IS REVOKED THE APPELLANT SHALL NOT BE ABLE TO CARRY ON ITS BUSINES S OF TELEPHONE SERVICES UNLESS IT HAD PAID SUCH A LICEN CE FEE TO THE GOVERNMENT. THE IRRESISTIBLE CONCLUSION THEREFORE WOULD BE THAT PAYMENT OF LICENCE FEE IS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF THE ITA NO. 3786/DEL/2010 3 BUSINESS CARRIED ON BY IT. THE SAME IS THEREFORE AN ALLOWABLE DEDUCTION U/S 37 OF THE ACT. SINCE THE LIABILITY STANDS PAID DURING THE YEAR UNDER CONSIDERATION WE DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION TO THE APPELLANT. 10. RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH OF THIS TRIBUNAL IN THE CASE OF MTNL REFERRE D TO SUPRA WE ASSESSEE OF THE VIEW THAT THE VARIABLE REVENUE SHARE LICENCE FEE PAID PURSUANT TO THE MIGRATION OF THE AASSESSEE TO THE NEW TELECOM POLICY OF 1999 IS LIABLE TO BE ALLOWED AS REVENUE EXPENDIT URE AND WE DO SO. IN THE CIRCUMSTANCES ASSESSING OFFI CER IS DIRECTED TO DELETE THE ADDITION MADE BY HOLDING THE VARIABLE REVENUE SHARE FEE PAID TO BE CAPITAL EXPENDITURE. IN THE CIRCUMSTANCES GROUND NO. 3 IN THE ASSESSEES APPEAL STANDS ALLOWED. AS IT IS ACCEPTED POSITION OF BOTH THE PARTIES THA T THE FACTS OF THIS CASE ARE IN PARI MATERIAL WITH THE FA CTS OF THE CASE THE AFORESAID ORDER IS FOLLOWED AND IT IS HEL D THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS OF REVENUE NATURE. 3.1 AS THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE EARLIER YEARS FOR ASSESSEES OWN CASE BOTH THE COUNSEL AGREED T HAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. ITA NO. 3786/DEL/2010 4 4. IN THE RESULT THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/01/2011 UP ON CONCLUSION OF HEARING. SD/- SD/- [R.P. TOLANI] [R.P. TOLANI] [R.P. TOLANI] [R.P. TOLANI] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 12/01/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES