M S Vodafone Essar East Limited Kolkata v. Acit Circle 7 Kolkata Kolkata

A In The Income Tax Appellate Tribunal Kolkata Bench A Kolkata Before Shri Aby T Varkey Judicial Member And Shri Waseem Ahmed Accountant Member Ita No 356 343 Kol 2009 Assessment Year 2004 05 M S Vodafone Essar East Ltd 11 Dr U N Brahmchari Road Kolkakta 17 Pan No Aaacu 3796 J Acit Circle 7 P 7 Chowringhe Square 5 Thfloor Kolkata 69 V S V S Jcit Range 7 Kolkata Hutchison Telecom East Ltd 11 Dr U Brahmachari Street Kolkata 17 Pan No Aaacu 3796 J Appellant Respondent Ita No 357 377 Kol 2009 Assessment Year 2005 06 M S Vodafone Essar East Ltd 11 Dr U N Brahmchari Road Kolkakta 17 Pan No Aaacu 3796 J Acit Circle 7 P 7 Chowringhe Square 5 Thfloor Kolkata 69 V S V S Acit Range 7 Kolkata Vodafone Essar East Ltd Formerly Known As Hutchison Telecom East Ltd 11 Dr U Brahmachari Street Kolkata 17 Pan No Aaacu 3796 J Appellant Respondent Ita No 485 482 Kol 2010 Assessment Year 2006 07 Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 2 M S Vodafone Essar East Ltd 11 Dr U N Brahmchari Road Kolkakta 17 Pan No Aaacu 3796 J Dcit Circle 7 P 7 Chowringhe Square 5 Thfloor Kolkata 69 V S V S Acit Range 7 Kolkata Vodafone Essar East Ltd Formerly Known As Hutchison Telecom East Ltd 11 Dr U Brahmachari Street Kolkata 17 Pan No Aaacu 3796 J Appellant Respondent Ita No 673 Kol 2011 Ita No 431 Kol Kol 2012 Assessment Years 2007 08 2008 09 M S Vodafone Essar East Ltd 11 Dr U N Brahmchari Road Kolkakta 17 Pan No Aaacu 3796 J V S Acit Circle 7 Aykar Bhawan P 7 Chowringhee Square Kolkata 69 Appellant Respondent By Assessee Shri Deepak Chopra Mrs Manas Vini Bajpai Ar By Revenue Shri G Hangshing Cit Dr Date Of Hearing 16 10 20017 Date Of Pronouncement 15 12 2017 O R D E R Per Waseem Ahmed Accountant Member Out Of Eight Appeals Six Are Cross Appeals By Asse Ssee As Well As Revenue And Remaining Two Appeals Ita No 673 Kol 2011 431 Kol 2012 Filed By Assessee Are Directed Against The Differen T Orders Of Commissioner Of Income Tax Appeals Viii Kolkata Of Different Dat Es I E 23 12 2009 Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 3 09 01 2009 14 01 2009 23 12 2010 27 02 2012 As Sessments Were Framed By Acit Dcit Circle Range 7 Kolkata U S 143 3 Of T He Income Tax Act 1961 Hereinafter Referred To As The Act Vide Their O Rders Dated 26 10 2006 07 12 2007 31 12 2008 30 12 2009 30 12 2010 For Assessment Years 2004 05 To 2008 09 Respectively Shri Deepaka Chopra Mrs Manas Vini Bajpai Ld A Uthorized Representative Appeared On Behalf Of Assessee And S Hri G Hangshing Ld Departmental Representative Appeared On Behalf Of R Evenue 2 All The Appeals Are Disposed Off By This Common Order For The Sake Of Convenience First We Take Up Revenues Appeal In Ita No 343 Kol 2009 For A Y 04 05 3 Revenue Has Raised The Following Grounds Of Appe Al 1 That The Cit Appeal Erred On Act And In Law In Allowing The Assessee To Adjust Unabsorbed Depreciation Of Rs 6 67 Crore In Computing Book Profit U S 115 J Beventhough The Provisions Are Unambiguous In Their Ambit 4 Sole Issue Raised By The Revenue In This Appeal Is That Ld Cit A Erred In Adjusting The Unabsorbed Depreciation Of Rs 6 6 7 Crores While Computing The Book Profit Under Section 115 Jb Of The Act 5 Briefly Stated Facts Are That The Assessee In Th E Present Case Is A Limited Company And Engaged In The Business Of Cell Ular Mobile Phone Service The Assessee For The Year Under Considerat Ion Has Filed Its Return Of Income On 01 11 2004 Declaring Total Income Of Rs 1 54 29 940 Under Normal Computation Of Income And Declared Book Prof It U S 115 Jb Of The Act For Rs 14 60 94 940 The Assessee Is Claiming De Duction Under Section 80 Ia Of The Act 6 The Assessee While Determining The Book Profit U S 115 Jb Of The Act Has Claimed The Deduction For Rs 37 35 12 000 On Account Of Unabsorbed Book Depreciation Being Less Than Book Loss Brought Forward The Assessee Furnished The Details Of Unabsorbed Deprecation As Well As Unabsorbed Book Loss As Detailed Under Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 4 As It Is Seen From The Above The Assessee Compan Y Has Claimed Set Off Of Unabsorbed Book Depreciation Of Rs 37 35 12 000 The Calculation Given By The Assessee Is As Follows Sl No F Y Profit Loss Before Depreciation Depreciation Book Profit Loss Unabsorbed Depreciation 1 1994 95 30 0 30 0 2 1995 96 17507 3 340 20 847 3 34 0 3 1996 97 243 968 38 844 282 812 38 844 4 1997 98 211 770 66 230 278 000 66 230 5 1998 99 393 286 60 746 454 032 60 746 6 1999 00 340 411 64 801 405 212 64 801 7 2000 01 514 294 72 822 587 116 72 822 8 2001 02 27 909 94 638 66 729 66 729 9 2002 03 372 096 283 715 88 381 0 1 721 267 685 136 2 006 398 373 512 Less Amount Of Deferred Tax Asset Created For The First Time In The Year Crediting The Profit Loss Account 158 117 373 512 Less Profit For The Year 2003 04 88 381 Amount Available For Set Off 1 474 769 Amount Available For Set Off In Future Year 964 897 The Ao During Assessment Proceedings Observed Certa In Facts From The Details Furnished By The Assessee As Detailed Under A In A Y 2002 03 The Profit Before Depreciation Is Of Rs 2 79 09 000 And Depreciation Is Of Rs 9 46 38 000 That Means Ther E Is No Loss For The Assessment Year 2002 03 However The Assessee Has Claimed Set Off Of Unabsorbed Depreciation Of Rs 6 67 29 000 Pertainin G To Ay 2002 03 With The Book Profit Of A Y 2004 05 Accordingly The Ao Sought Clarification From The As Sessee Regarding The Facts As Discussed Above In Compliance Thereto The Asses See Submitted That 8 The Assessee Has Submitted Its Explanation Vide Its Letter Dated 30 8 2006 In Respect Of The Issue Mentioned In Paragraph 6 A Above The Assessee Has Stated That He Provisions Of Section Are Not Clear And Therefore A View Favourable To The Assessee Must Be Accepted It Has Relied On Circular No 26 Dated 7 7 1955 In Support Of Its Claim However The Ao Disregarded The Contention Of The As Sessee For The Claim Made Of The Unabsorbed Depreciation Of Rs 6 67 29 0 00 00 By Observing As Under Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 5 The Assessee Will Get The Benefit Of The Loss Brou Ght Forward Excluding Depreciation Unabsorbed Depreciation Only When Bot H Of Them Are Present Even Otherwise There Are Several Material Differen Ces Between Old Section 115 J And Section 115 Jb 10 B In View Of The Above It Is Held That The Lowe R Of Loss Excluding Depreciation Unabsorbed Depreciation For Ay 2002 0 3 Will Be Nil Therefore The Aggregate Of Lower Of Loss Excluding Depreciat Ion Unabsorbed Depreciation Upto Ay 2002 03 Will Be Rs 30 67 83 00 0 10 C Therefore An Amount Of Rs 6 67 29 000 Is A Dded To Book Profit 7 Aggrieved Assessee Preferred An Appeal Before Ld Cit A The Assessee Before The Ld Cit A Submitted That As Pe R The Provisions Of The Act The Lower Of Unabsorbed Depreciation And Brought Fo Rward Loss Was To Be Worked Out For Each Year As Per Books There Can Be Profit In Any Of The Intervening Year Before After Claiming The Current Year Depreciation But The At The Same Time But There May Be Unabsorbed Depreciat Ion In Such A Case It Is Not Justified To Invoke Explanation B To Clause Iii And Ignore The Unabsorbed Depreciation For Such Year The Explanation To Clau Se Iii Reads As Under The Provisions Of This Clause Shall Not Apply If T He Amount Of Loss Brought Forward Or Unabsorbed Depreciation Is Nil The Assessee Also Submitted That The Explanation B Comes Into Force Only To Determine Brought Forward Loss Or Unabsorbed Deprec Iation On Cumulative Basis For Each Independent Year Comprising Therei N The Said Explanation Cannot Be Invoked The Assessee Further Before Ld Cit A Stated That Without Prejudice To Above Even If It Is Assumed Not Accep Ted That The Adjustment Made By The Assessing Officer On The Basis Of Each Year Is Correct Then Also In That Case It Needs To Be Pointed Out That The T Erms Used In The Explanation B Is Loss Brought Forward Or Unabsorbed Depreciation Therefore Even If Any Intervening Year Is To Be Ignored Then Also Comparison Should Be Made Between Carried Forward Losses And Unabsorbed Depre Ciation Of That Year Therefore In View Of The Foregoing It Should Be A Ppreciated That The Ao Grossly Erred In Invoking The Provisions Of Explana Tion B To Clause Iii For Ignoring The Unabsorbed Depreciation For The Ay 200 1 02 And Hence The Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 6 Action Of The Ao May Be Deleted The Ld Cit A Aft Er Considering The Submission Of The Assessee Has Deleted The Disallow Ance Made By The Ao While Determining The Book Profit Under Section 115 Jb Of The Act By Observing As Under There Is Nil Profit Loss In A Y 2002 03 And Unabs Orbed Depreciation Of Rs 6 67 Crore Therefore Nil Loss And Rs 6 67 Cr Ore Of Unabsorbed Depreciation Will Be Carried Forward To Subsequent Year The Question Of Set Off Of Past Losses Or Unabsorbed Depreciation From Profit Did Not Arise For Ay 2002 03 However For Carry Forward Of Unabsorbed De Preciation Of Assessment Year 2002 03 The Clause Iii Of Explan Ation 1 Of Section 115 Jb 2 Does Not Put Restriction Of Any Sort It I S Only When Profits Are Positive After Providing For Current Year Depreciat Ion That The Provision Of Clause Iii Of Explanation 1 Of Section 115 Jb 2 O F It Act Are Invoked Here Again The Cumulative Brought Forward Losses And Cum Ulative Unabsorbed Depreciation As Per Books Are Required To Be Compar Ed Before Allowing The Set Off Such Cumulative Unabsorbed Depreciation Wi Ll Include The Unabsorbed Depreciation Of Rs 6 67 Crore Of Assessment Year 20 02 03 For The Purpose Of Clause Iii Of Explanation 1 Of Section 115 Jb 2 F Or Ay 2004 05 6 In View Of The Above Discussion Impugned Order Hold That The Argument Of Appellant Is Correct In Ay 2002 03 There Is Positi Ve Profit Before Depreciation And The Entire Profit Is Set Off By The Depreciatio N Of That Year Itself And There Is Still Unabsorbed Depreciation Of Rs 6 67 Core After Such Setting Off It Is Not Justified On Part Of Assessing Officer To Invoke Ex Planation B To Clause Iii Of Explantion 1 Of 115 Jb 2 For The Purpose Of Restrict Ing The Quantum Of Unabsorbed Depreciation Of Assessment Year Z 2002 03 From Rs 6 67 Crore To Nil When Such Unabsorbed Depreciation Was Not Used For Setting Off Any Further Profit In That Year Under Clause Iii Of E Xplanation 1 Of Section 115 Jb 2 The Explanation B To Clause Iii Of Ex Planation 1 Of 115 Jb 2 Comes Into Force To Determine Quantum Of Set Off On The Basis Of Comparison Of Brought Forward Loss Or Unabsorbed Depreciation On Cumulative Basis And Not For Each Independent Year Comprising Therein The Revenue Being Aggrieved Is In Appeal Before U S 8 Ld Dr Before Us Vehemently Supported The Order O F Ao Whereas The Ld Ar Reiterated The Submissions As Made Before The Ld Cit A And Filed A Chart Depicting The Amount Of Unabsorbed Depreciation And Brought Forward Book Losses Of The Earlier Years The Ld Ar Before Us R Elied On The Order Of Ld Cit A 9 We Have Heard The Rival Contentions Of Both The Parties And Perused The Material Available On Record The Issue In The Inst Ant Case Relates To The Unabsorbed Depreciation For Rs 6 67 29 000 Pertai Ning To The Assessment Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 7 Year 2002 03 Which Was Not Allowed To Set Off While Determining The Book Profit For The Year Under Consideration As Per The Ao There Was No Loss In The Assessment Year 2002 03 And Therefore The Amount Of Depreciation Pertaining To That Assessment Year Is Not Eligible For Deducti On In The Subsequent Year While Determining The Book Profit U S 115 Jb Of The Act Thus The Ao While Determining The Book Profit For The Year Under Cons Ideration U S 115 Jb Of The Act Has Not Allowed The Deduction Of The Depreciati On For Rs 6 67 29 000 Pertaining To The Assessment Year 2002 03 However The Ld Cit A Reversed The Order Of Ao By Observing That Cumulative Brought Forward Losses And Cumulative Un Absorbed Depreciation As Per Books Are Required To Be Compared Before All Owing The Set Off While Determining The Book Profit Under Section 115 Jb Of The Act 9 1 Now The Issue Before Us Arises For Our Adjudica Tion So As To Whether The Unabsorbed Depreciation For Rs 6 67 29 000 Pertai Ning To The Assessment Year 2002 03 Is Eligible For Set Off While Determin Ing The Book Profit For The Year Under Consideration In The Given Facts Circu Mstances At This Juncture We Find Important To Reproduce The Provisions Of Section 115 Jb Of The Act Which Reads As Under 66 A Special Provision For Payment Of Tax By Certain Com Panies 67 115 Jb 1 Notwithstanding Anything Contained In Any Othe R Provision Of This Act Where In The Case Of An Assessee Being A Company The Income Tax Payable On The Total Income As Computed Under This Act In Resp Ect Of Any Previous Year Relevant To The Assessment Year Commencing On Or Af Ter The 1st Day Of April 2001 Is Less Than Seven And One Half Per Cent Of I Ts Book Profit 68 Such Book Profit Shall Be Deemed To Be The Total Income Of Th E Assessee And The Tax Payable By The Assessee On Such Total Income Shall Be The A Mount Of Income Tax At The Rate Of Seven And One Half Per Cent 2 Explanation For The Purposes Of This Section Boo K Profit Means The Net Profit As Shown In The Profit And Loss Account For The Releva Nt Previous Year Prepared Under Sub Section 2 As Increased By A B C D E F If Any Amount Referred To In Clauses A To F Is Debited To The Profit And Loss Account And As Reduced By Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 8 71 I Ii 72 Iii The Amount Of Loss Brought Forward Or Unabs Orbed Depreciation Whichever Is Less As Per Books Of Account Explanation For The Purposes Of This Clause A The Loss Shall Not Include Depreciation B The Provisions Of This Clause Shall Not Ap Ply If The Amount Of Loss Brought Forward Or Unabsorbed Depreciation Is Nil Or A Plain Look At The Above Statutory Provision Makes It Clear That The Assessee Is Entitled To Claim The Deduction Of Either Brough T Forward Losses Or Unabsorbed Appreciation Whichever Is Less As Per Th E Books Of Accounts In The Case On Hand We Find That The Amounts Of Brough T Forward Losses Are Greater Than The Amount Of Unabsorbed Depreciation Therefore The Assessee Is Entitled For Unabsorbed Depreciation Amounting T O 37 35 12 000 Only Indeed There Was A Profit In The Assessment Year 2 002 03 For Rs 2 79 09 000 Before The Claim Of The Depreciati On Pertaining To That Ay 2002 03 However In The Year Under Consideration T He Assessee Had Shown Brought Forward Business Losses Of Rs 1 60 85 45 00 0 And Unabsorbed Depreciation Of Rs 37 35 12 000 As The Unabsorb Ed Depreciation Is Lower Than The Amount Of Brought Forward Losses Therefore In Our Considered View The Assessee Is Entitled To Claim The Deduction Of Unabsorbed Depreciation While Determining The Profit U S 115 Jb Of The Act The Amount Of Unabsorbed Depreciation Is Inclusive Of The Deprecation Pertai Ning To The Assessment Year 2002 03 For Rs 6 67 29 000 Thus In The Given Fa Cts And Circumstances It Cannot Be Concluded That The Amount Of Unabsorbed D Epreciation Rs 6 67 29 000 Is Not Eligible For Deduction Whil E That Determining The Book Profit U S 115 Jb Of The Act In View Of Above We D O Not Find Any Infirmity In The Order Of Ld Cit A Hence The Ground Of Appeal Rai Sed By The Revenue Is Dismissed 9 In The Result Revenues Appeal Is Dismissed Coming To Assessees Appeal In Ita No 356 Kol 2009 10 The Grounds Raised By The Assessee Read As Unde R 1 On The Facts And Circumstances Of The Case And In Law The Learned Commissioner Of Income Tax Appeals Viii Kolkata Hereinafter Referred To Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 9 As The Learned Cit A Erred In Confirming The Ac Tion Of The Learned Additional Commissioner Of Income Tax Range 7 Kolkata Herei Nafter Referred To As The Act In Not Allowing Set Off Of Rs 83 881 000 Und Er Clause Iii Of Explanation 1 To Sub Section 2 Of Section 115 Jb Of The Income Tax Act 1961 Act Being The Lower Of Figures Of Brought Forward Los A Nd Unabsorbed Depreciation 2 On The Facts And Circumstances Of The Case And I N Law The Learned Cit A Erred In Confirming The Action Of The Learned Ao In Allowing Depreciation At The Rate Of 25 Per Cent On Computer Instead Of 60 Per Cent As Claimed By The Appellant 3 On The Facts And Circumstances Of The Case And I N Law The Learned Cit A Erred In Confirming The Action Of The Learned Ao In Not Allowing Deduction Of Rs 569 248 Being Contribution Paid To Life Insuran Ce Corporation Of India In Respect Of Gratuity Fund 4 As Interest Under Section 234 B Of The Act Is Not Leviable In Case Of Computation Of Income Under The Provisions Of Minim Um Alternate Tax The Learned Ao Be Directed To Cancel Interest Charged U Nder Section 234 B Of The Act All The Above Grounds Are Without Prejudice To Each Other The Appellant Craves Leave To Add Amend Vary Omit Or Substitute Any Of The Aforesaid Grounds Of Appeal At Any Time Before Or At The Time Of Hearing Of The Appeal The Appellant Prays That Appropriate Relief Be Gran Ted Based On The Said Grounds Of Appeal And The Facts And Circumstances O F The Case 11 First Issue Raised By Assessee In This Appeal I S That Ld Cit A Erred In Confirming The Order Of Ao By Not Adjusting The Una Bsorbed Depreciation Of Rs 8 38 81 000 While Computing The Book Profit U S 115 Jb Of The Act 12 The Ao During Assessment Proceedings Observed T Hat B The Assessee Has Already Claimed Set Off Of Una Bsorbed Depreciation Of Rs 8 83 81 000 In The Ay 2003 04 Out Of Total Una Bsorbed De Of Rs 37 35 12 000 Available In Ay 2003 04 Yet The Whole Amount Of Unabsorbed Depreciation Of Rs 37 35 12 000 Has Be En Again Claimed In Ay 2004 05 Accordingly The Ao Sought Clarification From The A Ssessee For The Facts As Discussed Above In Compliance Thereto The Assessee Submitted That In Respect Of The Issue Mentioned In Paragraph 6 B Above It Has Stated That As On 31 03 2003 It Had Unabsorbed Depreciation Am Ounting To Rs 37 35 12 000 And Brought Forward Losses Exclud Ing Depreciation Of Rs 1 47 47 69 000 Aggregating To Rs 1 84 82 81 00 0 Therefore Lower Of The Two Being Unabsorbed Depreciation Of Rs 37 35 1 2 000 Has Been Claimed As Deduction U S 115 Jb 2 Iii And That The Claim Made In The Previous Year Does Not Affect The Claim In The Subsequent Ye Ar As The Position Of Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 10 Unabsorbed Depreciation And Brought Forward Losses At Year End Has To Be Seen At The End Of That Particular Year However The Ao Disregarded The Contention Of The As Sessee Regarding The Unabsorbed Depreciation Of Rs 8 83 81 000 By Obse Rving As Under 11 A The Assessees Submission On The Issue In P Aragraph 6 B Above Is Now Considered 11 B As Mentioned Previously The Assessee Has Cla Imed Set Off Of Unabsorbed Depreciation Of Rs 8 83 81 000 In The A Y 2003 04 However The Assessee Has Claimed The Entire Amount Of Unabsorbed Depreciation Once Again In The Ay 2004 05 It Is Ve Ry Clear That When A Part Of Unabsorbed Depreciation Has Already Been Ab Sorbed With The Book Profit In Ay 2003 04 The Unabsorbed Depreciat Ion Has To Be Accordingly Less By The Amount Which Has Been Absor Bed In Ay 2003 04 Therefore It Is Held That The Assessee Company Cannot Claim The Benefit Of Unabsorbed Depreciation Which It Has Al Ready Claimed In A Y 2003 04 11 C The Assessees Auditor Who Has Given Certifi Cate As Required U S 115 Jb 4 Was M S Price Water House In Assessmen T Year 2003 04 In Their Report Dated 19 11 2003 They Have Clearly Stated That The Amount Of Set Off Available In Future Will Be Lesse R By The Amount Of Rs 8 83 81 000 A Copy Of This Report Is Enclosed Which Forms A Part Of This Order As Annexure Surprisingly The Assessee Company Has Changed Their Auditor In A Y 2004 05 For Giving Rep Ort U S 115 Jb In Ay 2004 05 One Saswati Ghosh Company Has Given The S Aid Report Which Is Clearly In Contravention Of The Provisions Of Sub Clause Iii Of Explanation Below Section 115 Jb 2 11 D In View Of The Above An Amount Of Rs 8 83 81 000 Is Added To Book Profit 13 Aggrieved Assessee Preferred An Appeal Before Ld Cit A The Assessee Before The Ld Cit A Submitted That The P Rovisions Of The Section 115 Jb Are To Be Applied At The End Of A Relevant Ye Ar And Accordingly The Book Loss Or Unabsorbed Depreciation As On That Dat E Needs To Be Classified To Compute The Book Profits Adjustment On Account O F Earlier Years Reduction From The Unabsorbed Depreciation Is Not Called For The Provision Of Section 115 Jb Envisages The Amount Of Loss Brought Forward Or Unabsorbed Depreciation Which Is Less As Per Books Of Account If In Any Earlier Year Reduction From Book Profits Is Made On Account Of U Nabsorbed Depreciation No Adjustments Are Made In The Books Of Account Of The Assessee Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 11 Accordingly The Loss Carried Forward And The Unabs Orbed Depreciation Remains Unaltered In The Books Of Account For Any Subsequent Years What Is Required By Section 115 Jb Is Loss Brought Forward O R Unabsorbed Depreciation As Per Books Of Account However In View Of The Fa Ct That No Adjustment Is Made In The Books Of Account While Claiming The Un Absorbed Depreciation In Earlier Years The Position Of Unabsorbed Depreciat Ion And Loss As Per Books Of Account Remains The Same The Act Does Not Provide For The Adjustment As Envisaged By The Ao If It Would Have Been So Then Specific Provisions Would Have Been Incorporated As In The Case Of Brought F Orward Losses Further While Interpreting The Law It Is Not Permissible T O Add The Words That Are Not In Existence In The Act However The Ld Cit A Afte R Considering The Submission Of The Assessee Has Confirmed The Order Of Ao By Disallowing The Amount Of Unabsorbed Depreciation Of Rs 8 83 81 000 While Determining The Book Profit U S 115 Jb Of The Act By Observing As Un Der 2 As Mentioned Above This Issue Has Been Discussed By Me In My Order Dated 9 1 2009 In The Appeal No 501 Cit A Viii Kol Range 7 07 08 For A Y 2005 06 In Appellants Own Case Under The Chang Ed Name Of M S Vodafone Eassareast Limited It Was Held In Para 5 Of Ground 1 Of The Above Mentioned Order For Ay 2005 06 That As P Er Proviso B Of Section 205 1 Of Company Act Appellant Is Bound To Set Of F The Lesser Of Brought Forward Loss Or Brought Forward Depreciation 2002 0 3 Against The Profits Of Fy 2002 03 And Fy 2003 04 The Lesser Of Brought Forwa Rd Loss Rs 172 13 Crore Or Brought Forward Depreciation Rs 37 35 Cr Ore Is Obviously The Brought Forward Depreciation Of Rs 37 35 Crore App Ellant Had No Option As Per Proviso B Of Section 205 1 Of Company Act Bu T To Set Off Brought Forward Depreciation Of Rs 37 35 Crore Against The Profits Of Fy 2002 03 Of Rs 8 84 And Profit Of Fy 2003 04 Of Rs 50 99 Crore Finally In The Decision For Ground No 1 Of The Appeal In Appellants Own Ca Se For A Y 2005 06 I Had Relied Upon The Method Of Carry Forward And Set Off Of Brought Forward Loss Or Unabsorbed Depreciation As Given In Para 36 5 Of Ci Rcular 495 Of Cbdt Dated 22 09 1987 Based On This Circular A Complete Table Of Set Off And Carry Forward Of Loss And Unabsorbed Depreciation Was Pre Pared In The Said Order Where It Was Clearly Shown That The Profit Of Fy 2002 03 Of Rs 8 84 Crore Is Required To Be Set Off Against The Brought Forward Depreciation Of Rs 37 35 Crore And Only The Balance Unabsorbed Depreciation Of Rs 37 35 Crore 8 84 Crore Rs 28 51 Crore Can Be Carried Forward To Fy 2003 04 In Sum And Substance This Ground Of Appellant Is Same As Groun D No 1 Of Appeal No 501 Cit A Viii Kol Rngte 7 07 08 For A Y 2005 06 In Appellants Own Case This Issue Has Been Decided By Me Against The Appellant In Ay 2005 06 Vide Order Dated 9 1 2009 For The Said Appeal Foll Owing My Own Decision I Hold That Claim Made In Respect Of Set Off Of Profi Ts Of Rs 8 84 Crore In Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 12 Assessment Year 2003 04 Under Clause Iii Of The E Xplanation To Section 115 Jb 2 Cannot Be Ignored By The Appellant In Ay 2 004 05 Ie The Instant Assessment Year Aggrieved By This The Assessee Has Come Up In Appe Al Before Us 14 The Ld Ar Reiterated The Submissions That Were Made Before The Ld Cit A The Ld Ar Relied On The Order Of Honble I Tat In The Case Of Dcit Vs Binani Industries Limited Reported In 178 Ttj 658 He Stated That The Issue May Be Decided On Merit On The Other Hand Ld Dr Before Us Vehemently Suppo Rted The Order Of Lower Authorities 15 We Have Heard The Rival Contentions Of Both The Parties And Perused The Material Available On Record And The Case Law Relie D Upon By The Assessee In The Instant Case The Assessee Has Shown Profit Of R S 8 83 81 000 For The Ay 2003 04 After The Depreciation The Assessee Claime D To Have Adjusted The Same I E Profit Of Rs 8 83 81 000 Against Brough T Forward Losses However The Ao Adjusted The Same Against The Unabsorbed Dep Reciation While Determining The Book Profit For The Year Under Cons Ideration Consequently The Ao Allowed Less Amount Of Deduction Of The Unab Sorbed Depreciation Being Lower Than The Brought Forward Loss By Rs 8 8 3 81 000 While Determining The Book Profit In Pursuance To Clause Iii Of Explanation 1 To Sub Section 2 Of Section 115 Jb Of The Act The View T Aken By The Ao Was Subsequently Confirmed By The Ld Cit A 15 1 Now The Issue Before Us Arises For Our Adjudic Ation So As To Whether The Unabsorbed Depreciation For Rs 37 35 12 000 Shoul D Be Reduced By The Amount Of Profit Of Rs 8 81 29 000 Pertaining To The Assessment Year 2003 04 While Determining The Book Profit For The Year U Nder Consideration In The Given Facts Circumstances At This Juncture We Find Important To Reproduce The Provisions Of Section 115 Jb Of The Act Which Reads As Under 66 A Special Provision For Payment Of Tax By Certain Com Panies 67 115 Jb 1 Notwithstanding Anything Contained In Any Othe R Provision Of This Act Where In The Case Of An Assessee Being A Company The Income Tax Payable On Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 13 The Total Income As Computed Under This Act In Resp Ect Of Any Previous Year Relevant To The Assessment Year Commencing On Or Af Ter The 1st Day Of April 2001 Is Less Than Seven And One Half Per Cent Of I Ts Book Profit 68 Such Book Profit Shall Be Deemed To Be The Total Income Of Th E Assessee And The Tax Payable By The Assessee On Such Total Income Shall Be The A Mount Of Income Tax At The Rate Of Seven And One Half Per Cent 2 Explanation For The Purposes Of This Section Boo K Profit Means The Net Profit As Shown In The Profit And Loss Account For The Rel Evant Previous Year Prepared Under Sub Section 2 As Increased By A B C D E F If Any Amount Referred To In Clauses A To F Is Debited To The Profit And Loss Account And As Reduced By 71 I Ii 72 Iii The Amount Of Loss Brought Forward Or Unabs Orbed Depreciation Whichever Is Less As Per Books Of Account Explanation For The Purposes Of This Clause A The Loss Shall Not Include Depreciation B The Provisions Of This Clause Shall Not Ap Ply If The Amount Of Loss Brought Forward Or Unabsorbed Depreciation Is Nil Or As Per The Provisions Of The Above Section We Note That The Assessee Is Entitled To Claim The Deduction Of Brought Forward Losses Or Unabsorbed Depreciation Whichever Is Less As Per The Books Of Accounts In The Instant Case Before Us The Assessee Has Claimed That The Pr Ofit Earned During The Assessment Year 2003 04 For Rs 8 83 81 000 Was Ad Justed Against The Unabsorbed Brought Forward Losses In The Books Of A Ccounts The Ld Dr Has Not Advanced Any Argument To Controvert The Argumen Ts Submitted By The Ld Ar Therefore We Are Of The View That The Assessee Is Very Much Entitled To Claim The Deduction Of The Unabsorbed Depreciation Of Rs 37 35 12 000 Without Adjusting The Amount Of Profit For Rs 8 83 81 000 In Holding So We Find Support And Guidance From The Order Of This Ho Nble Tribunal In The Case Of Binani Industries Limited Supra Reported In 178 Ttj 658 Which Reads As Under We Have Heard The Rival Submissions And Perused The Materials Available On Record We Are In Agreement With The Arguments Of T He Learned Ar That The Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 14 Losses Both Cash Loss And Depreciation Loss Would Continue To Remain In The Books Of Accounts Till It Is Wiped Off By Earning P Rofits By The Assessee Company And Accordingly The Same Would Be Available For Reduction From Book Profits U S 115 Jb Of The Act We Hold That The Least Of The Cash Loss Or Depreciation Loss Once Adjusted Reduced From Book Profits In Earlier Assessment Years Do Not Vanish Out Of The Books Un Til It Is Wiped Out By Profits In Subsequent Years Till Such Time The Lo Sses Would Only Continue To Remain In The Books We Hold That For The Purpose O F Computation Of Book Profits U S 115 Jb Of The Act Every Year The Situat Ion Of Least Of Cash Loss And Depreciation Loss Needs To Be Worked Out And Review Ed And Accordingly The Understanding Of The Learned Ao That Such Loss Once Adjusted In Earlier Year Is No Longer Available For Set Off Is Misconceived Hence We Do Not Find Any Infirmity In The Order Of The Learned Cit A In Thi S Regard The Ground No 2 Raised By The Revenue Is Dismissed In View Of Above We Have No Hesitation To Hold Tha T The Assessee Can Claim The Deduction Either Of Brought Forward Losses Or U Nabsorbed Depreciation Whichever Is Less As Per The Books Of Accounts Con Sequently The Ground Of Appeal Filed By The Assessee Is Allowed 16 Next Issue Raised By Assessee In This Appeal Is That Ld Cit A Erred In Upholding The Order Of Ao By Allowing Depreciation 25 On Computers Instead Of 60 Claimed By It 17 The Assessee In The Immediate Preceding Assessm Ent Year Claimed Depreciation On Computer For 39 11 254 60 On 65 18 756 However The Ao In That Year In Absence Of Any Supporting Ev Idence Sufficient Details Allowed Depreciation 25 On 65 18 756 I E 16 29 689 Only Thus Ao Disallowed The Depreciation Of 22 81 565 39 11 254 16 29 689 And Added To The Total Income Of Assessee In The Immedi Ate Preceding Assessment Year I E 2003 04 17 1 Similarly In View Of The Above Ao Observed Th At As Per The Assessee The Opening Written Down Value Wdv For Short Wou Ld Be At 26 07 502 65 18 756 39 11 254 Accordingly On The Wdv Of 26 07 502 Assessee Would Have Claimed Depreciation 60 I E 15 64 501 Only Whereas Assessee Is Entitled For Depreciation 25 Of 26 07 502 Which Comes Out To 6 51 876 Only Accordingly The Ao Further Observ Ed That Assessee Has Claimed Excessive Depreciation For 9 12 625 15 64 501 6 51 876 In View Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 15 Of Above Ao Disallowed The Excess Depreciation For 9 12 625 And Added To The Total Income Of Assessee 18 Aggrieved Assessee Preferred An Appeal Before Ld Cit A The Assessee Before Ld Cit A Submitted That The Depre Ciation Was Claimed On Computers As Per The Rates Specified In The Appendi X 1 Of The Income Tax Rule 1962 The Assessee Without Prejudiced To The Above Also Submitted That Incase Depreciation Is Allowed 25 Only Then The Opening Wdv Should Be Accordingly Modified As Discussed Above However L D Cit A Allowed The Appeal Of Assessee For Statistical Purpose By Obser Ving As Under 2 Assessing Officer Has Followed Theism Order Of A Y 2003 04 And Has Allowed Depreciation At A Rate Of 25 Instead Of 60 The Rate Of Depreciation Was Decided In Ay 2003 04 On The Basis Of Submissio N Of Insufficient Details In Respect Of The Nature Of The Asst Under Dispute Th E Appeal Against The Order Of Ay 2003 04 Is Lying Before Cit A Vi Kolkata Ad The Cit Has Not Yet Decided This Appeal Therefore It Is Not Possible T O Decide The Ground No 3 Of Appellant On The Basis Of Record Of Only Ay 2004 05 However The Assessing Officer Is Directed To Apply The Same Rate Of Depre Ciation As May Be Decided By Cit A Vi Kolkata For Ay 2003 04 3 The Arithmetical Calculation In Respect Of Cost Of Asset N Ay 2003 04 And The Depreciation 2003 04 Is Mentioned In Theism Ord Er For Ay 2004 05 Cost Of Asset Was Rs 65 18 756 Depreciation 25 Inste Ad Of 600 Was Allowed In Ay 2003 04 By Assessing Office Which Amou Nts To R 16 29 689 The Wdv Of This Asset For Ay 2004 05 Is Obviously Rs 65 18 756 Rs 16 29 689 Rs 48 80 067 Therefore The Claim Of Appellant In G Round No 4 Is Correct To A Certain Extent That Till The Appeal For Ay 2003 04 Is Decided The Depreciation On This Asset Can Be Calculate Only On Wdv Of Rs 48 80 067 And Not On Rs 26 07 502 Therefore Assessing Officer Is Requ Ired To Take Wdv At Rs 48 80 067 At Present And Which Shall Be Modified If So Required After The Decision In This Regard Is Received From Cit A Vi Kolkata For Ay 2003 04 4 These Grounds Of Assessee Are Allowed For Statis Tical Purpose Further Aggrieved By This Order Of Ld Cit A Asse Ssee Came Up In Appeal Before Us 19 Ld Ar For The Assessee Before Us Submitted Tha T The Computers And Its Accessories And Peripheries Such As Printer S Scan Ner S Etc Is Entitled For Depreciation 60 Ld Ar In Support Of Assessees Claim Has Relied On The Judgment Of Honble Delhi High Court In The Case Of Cit Vs Bses Yaumana Power Ltd Reported In 358 Itr 47 Del Ld Ar Requested The Bench To Decide The Issue On Merit Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 16 On The Other Hand Ld Dr Heavily Relied On The Ord Er Of Authorities Below 20 We Have Heard The Rival Contentions Of Both The Parties And Perused The Material Available On Record And The Case Law Cited By Ld Ar For The Assessee In The Instant Case The Issue Relates To The Rate Of Depreciation Claimed By Assessee On Computer S And Its Accessor Ies The Assessee In The Immediate Preceding Assessment Year I E 2003 04 Cl Aimed Depreciation On Computers 60 Whereas The Ao Allowed Depreciation 25 On The Computers S On The Ground That Sufficient Document Ary Evidence Were Not Produced By The Assessee During Assessment Proceedi Ngs Pertaining To The Ay 2003 04 The Assessee Has Filed The Documents Be Fore Ld Cit A Which Is Still Sub Judice The Ao On The Basis Of Disallowance Made In The I Mmediate Preceding Ay Also Made Similar Disallowance On The Opening Wdv In The Year Under Consideration 20 1 However On Perusal Of Impugned Appellate Orde R We Note That Ld Cit A In The Immediate Preceding Ay I E 2003 04 H As Directed The Ao To Verify The Necessary Records And Adjudicate The Iss Ue Accordingly As None Of The Party Has Brought To Our Notice About The Outco Me Of The Order Passed By Ld Cit A In The Immediate Preceding Assessment Ye Ar Therefore We Are Inclined To Restore The Matter Back To The File Of Ao For Fresh Adjudication In Accordance With Law And After Providing Reasonable Opportunity Of Being Heard To Assessee And After Considering The Direction Of Ld Cit A Issued In The Immediate Preceding Assessment Year 2003 04 We Also Note That The Ld Cit A In The Instant Case Has Given Very Clear Unambiguous Direction For Adjudication Of The Impug Ned Issue Of Depreciation Therefore We Do Not Find Any Infirmity In The Order Of Ld Cit A Thus The Ground Of Assessee Is Allowed For Statistical Purpo Se 21 Next Issue Raised By Assessee In This Appeal Is That Ld Cit A Erred In Confirming The Order Of Ao By Sustaining The Disall Owance Of 5 69 248 Paid To Lic On Account Of Contribution In Respect Of Gr Atuity Fund Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 17 22 The Assessee During The Year Has Contributed A Sum Of 5 69 248 Towards Gratuity Fund Maintained With Lic However The Ao During The Course Of Assessment Proceedings Observed That The Gratuit Y Fund Has Not Been Approved By The It Department Therefore The Same Was Disallowed And Added To The Total Income Of Assessee 23 Aggrieved Assessee Preferred An Appeal Before Ld Cit A The Assessee Before Ld Cit A Submitted That The Appro Val Of Gratuity Fund Is Pending Before The Commissioner Of Income Tax And O Nce Approved Then It Will Be Effective From The Date Of Application The Refore The Same Is Eligible For Deduction However Ld Cit A Disregarded The Cont Ention Of Assessee By Observing As Under 3 This Issue Is Same As Ground No 5 Of Appeal No 5 01 Cit A Viii Kol Ragnge 7 07 08 For Ay 2005 06 In Appellant S Own Case This Issue Has Been Decided By Me Against The Appellant In Ay 2005 06 Vide Order Dated 9 1 2009 For The Said Appeal Following My Ow N Decision I Hold That Appellant Cannot Claim Such Deduction U S 36 1 Iv Of It Act Read With Section 40 A 7 Of It Act Unless The Gratuity Fund I S Approved It Is An Admitted Fact That The Grauit 9 Y Fund Of Appellant Is Not App Roved And Therefore Appellant Cannot Claimed In Respect Of Contribution To This F Und A Proper Contribution Can Be Made Only After The Approval Further Aggrieved By This Order Of Ld Cit A Asse Ssee Has Come Up In Appeal Before Us 24 Ld Ar Before Us Submitted That The Payment Was Made To The Lic In Respect Of Gratuity Fund Which Was Pending For Appr Oval Before The Commissioner Of Income Tax The Purpose Of Not Allo Wing The Deduction In Respect Of Unapproved Gratuity Fund Was To Ensure T Hat The Fund Should Go From The Control Of The Assessee In The Instant Ca Se The Fund Has Already Been Paid To Lic And Assessee Has No Control Over I T Therefore It Should Be Allowed As Deduction Ld Ar In Support Of Assessee S Claim Relied On The Judgment Of Honble Supreme Court In The Case Of Cit Vs Taxtool Reported In 216 Taxman 327 Sc Pr Cit Vs Rajasthan State Seed Corporation 386 Itr 267 Raj And Cit Vs Continental Commercial Co Lt D 192 Itr 66 Cal Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 18 On The Other Hand Ld Dr Vehemently Relied On The Order Of Authorities Below 25 We Have Heard The Rival Contentions Of Both The Parties And Perused And Carefully Considered The Material On Record In Cluding The Judicial Pronouncements Cited And Placed Reliance Upon At T He Outset We Find That The Impugned Issue Is Duly Covered In Favour Of Ass Essee And Against The Revenue By The Judgment Of Honble Supreme Court In The Case Of Taxtool Supra The Relevant Extract Of The Judgment Is Re Produced Below Having Considered The Matter In The Light Of The Ba Ckground Facts We Are Of The Opinion That There Is No Merit In The Appeal T Rue That A Fiscal Statute Is To Be Construed Strictly And Nothing Should Be Added O R Subtracted To The Language Employed In The Section Yet A Strict Cons Truction Of A Provision Does Not Rule Out The Application Of The Principles Of R Easonable Construction To Give Effect To The Purpose And Intention Of Any Particul Ar Provision Of The Act See Shree Sajjan Mills Ltd V Cit 1985 156 Itr 585 23 Taxman 37 Sc From A Bare Reading Of Sectin 36 1 V Of The Act It Is Manifest That The Real Intention Behind The Provision Is That The Employer Should Not Have Any Control Over The Funds Of The Irrevocable Trust Created Exc Lusively For The Benefit Of The Employees In The Instant Case It Is Evident From The Findings Recorded By The Commissioner And Affirmed By The Tribunal That The Assessee Had Absolutely No Control Over The Fund Created By The Lic For The Benefit Of The Employees Of The Assessee And Further All The Contribution Made By The Assessee In The Said Fund Ultimately Came Back To The Textool Employees Gratuity Fund Approved By The Commissioner With Effect From The Following Previous Year Thus The Conditions Stipulated In Section 36 1 V Of The Ac T Were Satisfied Having Regard To The Facts Found By The Commissioner And A Ffirmed By The Tribunal No Fault Can Be Found With The Opinion Expressed By The High Court Warranting Our Interference 9 Resultantly The Appeal Is Dismissed With No Order As To Coasts In View Of The Aforesaid Facts And Respectfully Fol Lowing The Judicial Pronouncements Relied Upon Hereinabove We Reverse The Order Of Authorities Below Consequently Assessees Ground Is Allowed Accordingly Ao Is Directed To Delete The Same 26 Last Issue Raised By Assessee In This Appeal Is That The Interest U S 234 B Of The Act Is Not Leviable If Taxes Paid Under The Provision Of Minimum Alternate Tax Mat U S 115 Jb Of The Act Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 19 At The Time Of Hearing Ld Ar Very Fairly Conceded The Fact That The Issue Stand Covered Against The Assessee And In Favour Of Reven Ue By The Judgment Honble Supreme Court In The Case Of Jcit Vs Rolta India Ltd Reported In 330 Itr 470 The Relevant Extract Reads As Under Sections 115 J And 115 Ja Are Special Provisions Sec Tion 207 Envisages That Tax Shall Be Payable In Advance During Any Financia L Year On Current Income In Accordance With The Scheme Provided In Sections 208 To 219 Both Inclusive In Respect Of The Total Income Of The Assessee That Would Be Chargeable To Tax For The Assessment Year Immediately Following That Financial Year Section 215 5 Defines What Is Assessed Tax I E Tax Determined On The Basis Of Regular Assessment So Far As Such Tax Relates To In Come Subject To Advance Tax In The Instant Case The Evaluation Of The Cur Rent Income And The Determination Of The Assessed Income Had To Be Made In Terms Of The Statutory Scheme Comprising Section 115 J 115 Ja Hen Ce Levying Of Interest Was Inescapable In View Of The Aforesaid Facts And Respectfully Fol Lowing The Judicial Pronouncements Relied Upon Hereinabove We Do Not F Ind Any Infirmity In The Order Of Authorities Below Consequently Assessee S Ground Is Dismissed Therefore The Issue Decided Accordingly 27 In The Result Assessees Appeal Is Partly Allo Wed For Statistical Purpose Coming To Cross Appeal In Ita 377 Kol 2009 By The R Evenue And Ita 357 Kol 2009 By Assessee For The Ay 2005 06 28 The Revenue Has Raised The Following Grounds Of Appeal 1 That The Learned Cit Appeal Erred On Fact And In Law In Allowing The Assessee To Adjust Unabsorbed Depreciation Of Rs 37 35 12 000 In Computing Book Profit U S 115 Jb Even Though The Pro Visions Are Unambiguous In Their Ambit 2 That The Learned Cit Appeal Erred In Holding Th At The Assessee Was Liable To Get The Benefit Of Deduction U S 80 Ia To The Ex Tent Of 100 Cit Appeal Has Also Erred In Holding That The Assessee Has The Option To Choose Any Continuous Period Of Ten Years Out Of The Fifteen Y Ears In The Assessees Case The Initial Assessment Year 1996 97 And At The Poin T In Time There Was No Such Option To The Assessee And The Period Of Ten Y Ears Automatically Started From The Initial Assessment Year 3 That The Learned Cit Appeal Has Erred In Holdin G That The Assessee Was Eligible To Get Deduction U S 80 Ia On The Followin G Receipts A Interest On Margin Money Rs 4 74 875 B Provision Liabilities Written Back Rs 26 7 3 408 C Bad Debt Recovered Rs 7 77 123 Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 20 D Bounce Cheque Charges Rs 4 11 440 E Cellsite Sharing Revenue Rs 2 85 000 Even Though They Had No Intricate Or Proximate Nexu S To The Eligible Business The Assessee Has Raised The Following Grounds Of Ap Peal 1 On The Facts And Circumstances Of The Case And I N Law The Learned Commissioner Of Income Tax Appeals Viii Kolkata Hereinafter Referred To As The Learned Cit A Erred In Confirming The Act Ion Of The Learned Additional Commissioner Of Income Tax Range 7 Kolkata Herei Nafter Referred To As The Learned Assessing Officer In Not Allowing Set Of F Of Rs 373 512 000 Under Clause Iii Of Explanation 1 To Sub Section 2 Of Section 115 Jb Of The Income Tax Act 1961 Act Being The Lower Of Figures O F Brought Forward Loss And Unabsorbed Depreciation 2 On The Facts And In The Circumstances Of The Cas E And In Law The Learned Cit A Erred In Giving A Finding That The Appellant Is Necessarily Required To Claim Deduction For Full Ten Consecutive Years Unde R Section 80 Ia Of The Act Beginning From The Assessment Year In Which The App Ellant Stared Providing Telecommunication Services In Complete Disregard T O The Non Obstante Provisions Of Section 80 Ia 2 A Of The Act Which Sp Ecifically Provide For Deduction For Ten Consecutive Years Commencing At Any Time During Such Fifteen Years 2 1 On The Facts And Circumstances Of The Case And In Law The Learned Cit A Erred In Confirming The Action Of The Learne D Ao In Excluding Other Receipts Amounting To Rs 765 866 From The Pro Fits Of The Eligible Business While Computing Deduction Under Section 8 0 Ia Of The Act 3 On The Facts And Circumstances Of The Case And I N Law The Learned Cit A Erred In Confirming The Action Of The Learned Ao In Excluding Other Receipts Amounting To Rs 765 866 From The Profits Of The Eli Gible Business While Computing Deduction Under Section 80 Ia Of The Act 4 On The Facts And Circumstances Of The Case And I N Law The Learned Cit A Erred In Confirming The Action Of The Learned Ao In Excluding Interest Income Amounting To Rs 66 96 909 From The Profits Of The E Ligible Business While Computing Deduction Under Section 80 Ia Of The Act 5 On The Facts And Circumstances Of The Case And I N Law The Learned Cit A Erred In Confirming The Action Of The Learned Ao In Not Allowing De Of Rs 697 488 Being Contribution Paid To Life Insuran Ce Corporation Of India In Respect Of Gratuity Fund First We Take Up Revenues Appeal Ita 377 Kol 2009 29 The First Issue Raised By The Revenue In This A Ppeal Is That Ld Cit A Erred In Adjusting The Unabsorbed Depreciation Of R S 37 35 12 000 00 While Computing The Book Profit Under Section 115 Jb Of Th E Act Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 21 30 At The Outset It Was Observed That The Impugned Issue Has Already Been Decided In Favour Of Assessee By This Honble Tribu Nal In The Case Of Binani Industries Limited Supra Reported In 178 Ttj 658 Which Reads As Und Er We Have Heard The Rival Submissions And Perused The Materials Available On Record We Are In Agreement With The Arguments Of T He Learned Ar That The Losses Both Cash Loss And Depreciation Loss Would Continue To Remain In The Books Of Accounts Till It Is Wiped Off By Earning P Rofits By The Assessee Company And Accordingly The Same Would Be Available For Reduction From Book Profits U S 115 Jb Of The Act We Hold That The Least Of The Cash Loss Or Depreciation Loss Once Adjusted Reduced From Book Profits In Earlier Assessment Years Do Not Vanish Out Of The Books Un Til It Is Wiped Out By Profits In Subsequent Years Till Such Time The Lo Sses Would Only Continue To Remain In The Books We Hold That For The Purpose O F Computation Of Book Profits U S 115 Jb Of The Act Every Year The Situat Ion Of Least Of Cash Loss And Depreciation Loss Needs To Be Worked Out And Review Ed And Accordingly The Understanding Of The Learned Ao That Such Loss Once Adjusted In Earlier Year Is No Longer Available For Set Off Is Misconceived Hence We Do Not Find Any Infirmity In The Order Of The Learned Cit A In Thi S Regard The Ground No 2 Raised By The Revenue Is Dismissed In View Of Above We Have No Hesitation To Hold Tha T The Assessee Can Claim The Deduction Either Of Brought Forward Losses Or U Nabsorbed Depreciation Whichever Is Less As Per The Books Of Accounts Con Sequently The Ground Of Appeal Filed By The Revenue Is Dismissed 31 The Next Issue Raised By The Revenue In This Ap Peal Is That Ld Cit A Erred That The Assessee Is Entitled To Choose 10 Co Nsecutive Years Out Of 15 Years For Deduction U S 80 Ia Of The Act And Conseq Uently Allowing Deduction 100 Of The Profit 32 The Assessee Inter Alia Was Engaged In The Telecommunication Services Cellular Services Which Started In The Financial Year 1996 97 Accordingly The Assessee In Respect Of Cellular Services Was Entitl Ed For Deduction U S 80 Ia Of The Act As Per The Provisions Of Section 80 Ia Of The Act Upto Assessment Year 1999 2000 The Assessee Was To Avail The Deduct Ion Of The Profit From Telecommunication Business For A Continuous Period Of 10 Years From The Initial Year I E The Year In Which It Starts To Pr Ovide The Telecommunication Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 22 Services The Deduction U S 80 Ia Of The Act Was Av Ailable In The Following Manner 1 First 5 Years 100 2 Next 5 Years 30 However The Finance Act 1999 W E F Ay 2000 01 Allo Wed The Assessee To Choose The Ten Years Of Tax Holiday Out Of 15 Year Beginning From Initial Assessment Year However The Assessee Was Covered Under The Old Prov Ision Of The Section 80 Ia Of The Act Wherein The Deduction Was Available To It For 10 Continuous Years From The Initial Assessment Year Which Is Ay 1997 98 Thus The Assessee Was Eligible To Claim The Deduction U S 80 Ia Of The Act As Detailed Under S No Particulars Of Deduction 1 Ays 1997 98 To 2001 02 100 2 Ays 2002 03 To 2006 07 30 But The Assessee Claimed The Deduction Under Sectio N 80 Ia Of The Act For The Ay 2005 06 For Rs 132 70 62 114 00 100 Accordi Ngly The Ao Called Upon The Assessee To Seek Clarification As To Why T He Deduction Should Not Be Allowed 30 As Discussed Above In Compliance The Reto The Assessee Submitted That The Amended Provisions Of Section 80 Ia Of The Act Provides That The Profits Of An Undertaking Providing Telecommuni Cation Services After 1 St Day Of April 1995 But Before The 31 St Day Of March 2005 Shall Be Eligible For 100 Deduction For First Five Years In Respect Of Profits Derived From Such Business Out Of The Ten Years And 30 For Subsequen T Five Years Section 80 Ia Was Originally Inserted By The Finance No 2 Act 1991 W E F April 1 1991 Which Was Subsequently Divided Into Section 80 Ia An D 80 Ib By The Finance Act 1999 W E F 1 2000 Clause Ii Of Subsectio N 4 Of Amended Section 80 Ia Which Reads As Under Any Undertaking Which Has Started Or Starts Providi Ng Telecommunication Services Whether Basic Or Cellular Including Radi O Paging Domes Satellite Service Network Of Trunking Broadband Network And Internet Services On Or After The 1 St Day Of April 1995 But On Or Before The 21 St Day Of March 2005 Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 23 Further Clause 2 A Of Amended Section 80 Ia Reads A S Under Notwithstanding Anything Contained In Sub Section 1 Or Sub Section 2 The Deduction In Computing The Total Income Of An Undertaking Providing Telecommunication Services Specified In Clause Ii Of Sub Section 4 Shall Be Hundred Per Cent Of The Profi Ts Of The Eligible Business For The First Five Assessment Years Commen Cing At Any Time During The Periods As Specified In Sub Section 2 And Thereafter Thirty Per Cent Of Such Profits And Gains For Further Asse Ssment Years From The Above Quoted Provisions The Assessee Subm Itted That Though Amended Section Has Been Introduced W E F Assessme Nt Year 2000 01 But The Operative Paragraph Still Refers To Undertaking Engaged In Business Of Telecom Which Starts Its Operation On Or After Apri L 1 1995 Thus The Amended Section Also Contemplates Granting Of Deduction To Undertakings Providing Telecom Services After April 1995 And Not April 1 2000 If The Intension Of The Legislature Was To Extend The Benefits Only To Thos E Undertaking Which Begins To Provide Telecom Services After April 2000 It W Ould Have Provided For The Same Further If The Interpretation Of The Old Sec Tion 80 Ia Would Automatically Apply To The Assessee Is Upheld Then It Would Rende R The Language Of The Amended Section I E On Or After April 1 1995 Redu Ndant In This Regard We Also Invite Your Attention To The Language Used Is Clause Ii I E Any Undertaking Which Has Stared Or Starts Thus Even A Assessee Who Has Already Started The Telecom Operations Can Claim Th E Deduction Sub Section 2 A Read With Sub Section 2 Clearly Provide That Deduction Shall Be Available For Ten Consecutive Years Out Of A Period Of Fiftee N Years From The Year In Which Such Undertaking Starts To Provide The Telecom Serv Ices In The Present Case The Assessee Had Started The Telecom Operation In S Eptember 1995 I E Assessment Year 1996 97 But In View Of Carried For Ward Losses It Had Not Claimed Any Deduction U S 80 Ia Upto A Y 2003 04 In View Of Specific Provisions Of Section 2 To Section 80 Ia It Would Be Eligible To Claim Deduction For Any Ten Consecutive Years Out Of Fifteen Year Accordingly The Assessee Has Started Claiming Deduction For The First Time F Rom Assessment Year 2004 Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 24 05 Thus It Would Be Entitled To Claim 100 Deduct Ion Upto Ay 2008 09 And Subsequently It Would Claim 30 Deduction Only For Ay 09 10 And 10 11 This Is Further Supported By The Language Used In S Ub Section 2 A I E At Any Time During The Periods As Specified In Sub Section 2 Thus An Assessee Has The Liberty To Opt For A Consecutive Ten Years Exem Ption Out Of The Period Of 15 Years 32 1 It Is Settled Law That The Law To Be Applied I S That Enforce In The Relevant Assessment Year For This Proposition Reliance Is P Laced On The Following Decisions Maharajah Of Pithapuram Vs Cit 13 Itr 221 Pc Karim Tharuvi Tea Estate Ltd Vs State Of Kerala 6 0 Itr 262 Sc Reliance Vs Cit 120 Itr 921 Sc Goslino Mario Vs Cit 241 Itr 314 Sc The Honble Supreme Court In Bajai Tempos Case 19 6 Itr 188 Held That The Provision Granting Deduction Exemption Or Relief S Hould Be Construed Liberally And In Favour Of The Assessee The Above Test Has A Lso Been Laid Down In The Following Case Cit Vs South Arcot Soc 176 Itr 117 119 Sc Ct Vs Uo Co Op Fed 176 Itr 435 441 Sc Broach Soc Vs Cit 177 Itr 418 422 Sc In View Of The Foregoing Discussion The Assessee Hu Mbly Submitted That Hundred Per Cent Deduction Be Allowed For A Y 2005 06 However The Ao During The Assessment Proceedings Ma De Certain Observations As Detailed Under 16 A As Stated Above The Assessee Company Is Claim Ing Deduction Us 80 Ia On Mobile Cellular Services Provided By It This Se Rvices Started From A Y 1997 98 As Per The Provisions Of Law Applicabl E For A Y 1997 98 The Assessee Was Eligible For Deduction U S 80 Ia 100 Percent For Initial Five Am Years From Ay 1997 98 To 2001 02 And 30 Percent For The Next Five Assessment Years From Assessment Year 2002 03 To 0 6 07 There Was No Option In Choosing Period Of Deduction U S 80 Iain Assessment Year 1997 98 As The Provisions Stood At That Point In Time Ini Tial Assessment Year Was Defined In Section 80 Ia 12 C 4 Which Meant The A Ssessment Year Relevant To The Previous Year In Which The Undertaking Start S To Provide The Telecommunication Services Whether Basic Or Cellula R Including Radio Paging Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 25 And Domestic Services It Is Undisputed That The As Sessee Company Started Providing Cellular Services From Fy 1996 97 Theref Ore The Initial Assessment Year In This Case Will Be Ay 1997 98 In The Absenc E Of Any Provision In The Act To Choose Option The First Year Of Claim Of De Duction For The Assessee Was Ay 1997 98 16 B Whether The Assessee Actually Claimed The Ded Uction In The Ay 1997 98 Is Not Material There May Be A Huge Depreciati On Of Business Loss Or Both Due To Which There May Not Be Any Business Pr Ofit To Claim Deduction U S 80 Ia Cannot Change As It Has Been Specifically Defi Ned In The Act And In The Case Of The Assessee That Year Is Ay 1997 98 16 C The Assessee Ha Stated That The Section 80 Ia As It Stands Today Is Of Material Importance And That As Per The Provisions As They Stand Today The Assessee Will Be Eligible For 100 Percent Deduction For First Five Years And 30 Percent For The Next Five Year Within The Period Of Ten Years Chosen By It Out Of The Fifteen Years Commencing From The Start Of The Business For Such An Interpretation The Assessee Submits That Even Th Ough The Concept Of Option Was Introduced W E F Assessment Year 2000 01 The O Perative Paragraph Still Refers To The Business Of Telecom Which Starts Its Operation On Or Before April 1995 And Therefore Contemplates Granting Of Deduct Ion To Undertaking Providing Telecom Services After 01 04 1995 And Not After 01 04 2000 For This Purpose The Assessee Also Relies Upon Clause Ii O F Section 80 Ia 4 As It Stands Presently Which Uses The Phase Any Underta King Which Has Started Or Starts 16 D At This Point In Time It Must Be Remembered That By Finance Act 1999 W E F 1 St April 2000 Old Section 80 Iia Has Been Completely Replaced By New Section 80 Ia The Use Of The Phase Any Undertaking Which Has Started Or Starts Providing Telecommunication Services In Cla Use Ii Of Section 80 Ia 4 In Respect Of Those Services Which Started From 01 04 1995 If This Was Not Done Then The Telecommunication Services Which Star Ted In 1995 Would Have Lost Deduction Totally 16 E It Must Be Once Again Remembered That The Fac Ility Of Option To Chose A Period Of Ten Assessment Years Out Of Fifteen Asses Sment Years Has Not Been Granted With Retrospective Effect In Fact The New Section 80 Ia Puts Telecom Services On A Rather Lower Pedestal As Compared To Other Infrastructure Services As Per The Provisions Of Section 80 Ia As They Stand W E F 01 04 2000 All The Infrastructure Services Such As Roads Highway Projects Railway System Irrigation Projects Ports Air Por Ts Undertaking In Ezs Etc Are Eligible For 100 Percent Deduction For A Period Of Ten Years Out Of Fifteen Assessment Years However Section 80 Ia 2 A Restric Ts Deduction To The Undertakings Providing Telecommunication Services 100 Percent For Only First Five Year And Thereafter 30 Percent Only F Or The Remaining Five Assessment Years Therefore It Cannot Be Assumed T Hat The Facility For Exercising Option Has Been Granted With Retrospecti Ve Effect 16 F It Is Important To Not Here That With Regard To Deduction U S 80 I Initial Assessment Years Is Extremely Important The Commencement Of The Assessees Business Is In Ay 1997 98 And There Was No Option To Choose The Period Of Deduction At That Point In Time Therefor E The Ay 1997 98 Becomes The Initial Assessment Years For The Assessee Th E Fact That The Assessee Had Business Losses Or Huge Depreciation And Therefore It Could Not Avail Benefit Of Section 80 Ia Is Immaterial Let Us Take A Case That The Assessee Had Profit In Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 26 Ay 1997 98 Would Assessee Not Claim Deduction U S 80 Ia In Such Sit 9 Uaton Since The Provisions Of Law Allow Claim Of Deduction The Assessee Would Surely Have Claimed It 16 G In View Of The Above It Is Held That In Resp Ect Of The Ay 2005 06 The Assessee Is Not Eligible For Deduction U S 80 Ia Of The It Act 1961 100 Percent It Is Eligible For Deduction U S 80 Ia 3 0 Percent Penalty Proceedings U S 271 1 C Of The Income Tax Act 1 961 Read With Explanations There Under Are Initiated Separately For Furnishi Ng Inaccurate Particulars Of Its Income 33 Aggrieved Assessee Preferred An Appeal To Ld C It A The Assessee Before Ld Cit A Submitted That The Amended Provis Ions Of Section 80 Ia Of The Act Provides That The Profits Of An Undertaking Pro Viding Telecommunication Services After 1 St Day Of April 1995 But Before The 31 St Day Of March 2005 Shall Be Eligible For 100 Deduction For First Five Years In Respect Of Profits Derived From Such Business Out Of The Ten Years And 30 For Subsequent Five Years It Is Well Settled Law That The Law To Be Ap Plied Is That Which Is Enforce In The Assessment Year Unless Otherwise Provided Expre Ssly Or By Necessary Implication The Assessee In Support Of His Claim R Elied On The Following Judgments I Maharaja Of Pithapuram Vs Cit Reported In 13 I Tr 221 Ii Karim Tharuvi Tea Estate Ltd Vs State Of Keral A 60 Itr 262 Sc Iii Reliance Vs Cit 120 Itr 921 Sc Thus Since The Law As In The Captioned Assessment Year Provides For The Deduction To Be Claimed In Any 10 Years Out Of The Initial 15 Years The Appellant Would Be Entitled To Claim 100 Deduction In The Ay 2005 06 And Therefore The Restriction Of The Deduction To 30 Should Be Lifted Thus If The View Taken By The Ao That Since The Appellant Has S Tarted Its Operation In Ay 97 98 The Old Section 80 Ia Has To Be Applied It W Ould Render The Aforesaid Supreme Court Decisions Redundant Section 80 Ia Was Originally Inserted By The Financ E No 2 Act 1991 W E F April 1 1991 Which Was Subsequently Divided Into Section 80 Ia And 80 Ib By The Finance Act 1999 W E F April 1 2000 Clause Ii Of Sub Section 4 Of Amended Section 8 0 Ia Reads As Under Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 27 Any Undertaking Which Has Started Or Starts Providing Telecommunication Services Whether Basic Or Cellular Including Radi O Paging Domestic Satellite Service Network Of Trunking Broadband Network And Internet Services On Or After The 1 Std Day Of April 1995 But On Or Before The 21 St Day Of March 2005 Further Clause 2 A Of Amended Section 80 Ia Reads A S Under Notwithstanding Anything Contained In Sub Section 1 Or Sub Section 2 The Deduction In Counting The Total Income Of An Undertaking Providing Telecommunication Services Specified In Clause Ii Of Sub Section 4 Shall Be Hundred Per Cent Of The Profit S Of The Eligible Business For The First Five Assessment Years Commen Cing At Any Time During The Periods As Specified In Sub Section 2 And Thereafter Thirty Per Cent Of Such Profits And Gains For Further Asse Ssment Years The Clause 2 Of Section 80 Ia States That The Appell Ant May At His Option Claim Deduction For Any Ten Consecutive Assessment Years Out Of Fifteen Ye Ars Beginning The Year In Which The Undertaking Starts Providing Telecommunication Services I E The Assessee Has An Option To Claim For Any Ten Consecutive Year Out Of Fifteen Years 33 1 Now In Order To Further Substantiate The Appe Llant Claims Attention Is Invited To The Language Of Amended Section 80 Ia 4 Ii Any Undertaking Which Has Started Or Starts Providing Telecommunica Tion Services On Or After The 1 St Day Of April 1995 But On Or Before The 31 St Day Of March 2005 Thus Section Uses The Expression Has Started Or Starts And On Or After April 1 1995 Which Would Infer The Benefit Is Available Even To An Existing Undertaking Which Has Started Telecommunication Ser Vices On Or After April 1 1995 Now Had The Intention Of The Legislature Was To Confine The Benefit Of The Amended Section 80 Ia Only To A New Undertaking They Would Have Specified That It Should Be New Undertaking Which B Egins Operation Only After April 1 1999 I E Relevant To Assessment Year 2000 01 Thus Considering The Plain Language There Can Be No Doubt That The Appel Lant Is Entitled For Deduction As Per The Amended Section 80 Ia Of The Ac T Which Confers Option Of 10 Out Of 15 Assessment Year Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 28 Now Attention Is Also Invited To The Explanatory M Emorandum Explaining The Amendments Made By The Finance Act 1999 It Would Be Observed That It States That As These Undertakings Are Capital Intensive An D Get Delayed Returns On Investments It Is Proposed To Similarly Allow Then To Avail Of The Benefits In Any Ten Consecutive Years 33 2 Thus Clearly The Intention Was To Enable Even An Existing Undertaking That Has Commenced Operations But Is Incurring Loss Es To Select Its Claim Of Deduction Of Ten Consecutive Assessment Years Out O F 15 Years From The Date Of Commencement Of Operations In The Appellants Case It Had Started The Telecom Operations In September 1995 I E Asst Year 1996 97 In View Of Carried For Ward Losses The Appellant Had Not Claimed Any Deduction U S 80 Ia Upto Ay 2003 04 In View Of Specific Provisions Of Section 2 To Section 80 Ia The Appel Lant Would Be Eligible To Claim Deduction For Any Ten Consecutive Years Out Of Initial Fifteen Years Accordingly The Appellant Had Started Claiming Ded Uction For The First Time From Ay 2004 05 Thus The Appellant Would Be Entit Led To Claim 100 Deduction Upto Ay 08 09 And Thereby Would Claim 30 Deduction Only For Ay 09 10 And 10 11 Moreover The Assessee Also Relied On The Decision Of Mohan Breweries And Distilleris Ltd Vs Acit 24 Sot 170 Wherein The Tribunal In The Context Of Section Amended 80 Ia 2 Has Held That Section 80 Ia As Enacted By The Finance Act 1999 W E F 1 Std April 2000 Gives As Option To The Assessee W E F 1 St April 2000 To Claim Relief Under This Section For Any 10 Consecutive Assessment Years Out Of 15 Years Beginning From The Year Ending In Which The Undertaking Or En Terprise Develops Or Begins To Operate Any Infrastructure Facility Etc It Is Left To The Assessee At Its Will To Claim This Relief From The First Assessment Year Or From The Second Or From The Third Or So As It Might Think Fit Once The Assessee Has Opted For The First Year Of Relief Then It Continues For Further 9 Consecutive Years To Claim The Relief The Undertaking Is To Be Set Up During T He Period 1 Std April 1993 To 31 St March 2006 This Is As Per S 80 Ia 4 Iv Section 80 Ia 2 Clearly Stated That Assessee Can Opt For Year Of Deduction For Any 10 Consecutive Year Out Of 15 Years Taken From The First Year In Which The Und Ertaking Or Enterprise Develops And Begins To Operate Any Infrastructure A Ctivity It Can Be Seen That 80 Ia 2 Does Not Mandate That First Year Of 10 Cons Ecutive Assessment Years Should Be Always The First Year Of Set Up Of Enterp Rise If The Intention Of The Legislature Is That First Year Of Set Up Is The Ini Tial Assessment Year To Claim Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 29 Deduction U S 80 Ia Then There Is No Meaning Of Gi Ving Option To The Assessee To Claim Deduction For 10 Consecutive Assessment Ye Ars Out Of 15 Years The Ao Has Also Alleged That Whether The Appellant Has Actually Been Allowed Deduction U S 80 Ia For Earlier Years From Ay 1997 98 Is Irrelevant In This Regard May We Submit That The Expression Used In S Ection 80 Ia 1 Is Allowed In Computing The Supreme Court In Context Of Depreciation In Case Of Mahendra Mills 243 Itr 56 Has Interpreted The Said Term To Mean Actually Allowed Thus In The Present Case Since No Deduction Has Actually Been Allowed To The Appellant U S 80 Ia Of The Act I N Past Until Ay 2004 05 The Appellant Is Free To Choose 10 Out Of 15 Years For Claiming Deduction U S 80 Ia Of The Act In Past Until Ay 3004 05 The Appellant Is Free To Choose 10 Out Of 15 Years For Claiming Deduction U S 80 Ia Of The Act A S Per Amended Section 80 Ia Of The Act The Appellant Would Further Drew Our Attention Towa Rds Section 10 A And 10 Aa Of The Act Which Specifically Provide For Transiti On Of Deduction To An Eligible Undertaking From Secion 10 A To 10 Aa And Specifically Provides That Assessee Shall Be Entitled To Claim Deduction U S 10 A For Th E Balance Unexpired Years Now Had The Intention Of The Legislature Been To P Rovide That Even In Case Of Undertaking Who Have Been Allowed Deduction Under E Rstwhile Section 80 Ia Such Undertaking Would Be Entitled To Balance Unexp Ired Period Under The New Provision It Would Have Made Similar Amendments 33 3 Further The Appellant Would Most Humbly Submi T That The Supreme Court In Bajaj Tempos Case 196 Itr 188 Has Held That The Provision Granting Deduction Exemption Or Relief Should Be C Onstrued Liberally And In Favour Of The Assessee The Above Test Has Also Bee N Laid Down In The Following Cases Cit V South Arcot Soc 176 Itr 117 119 Sc Cit V Uo Co Op Fed 176 Itr 435 441 Sc Broach Soc V Cit 177 Itr 418 422 Sc In View Of The Foregoing The Appellant Humbly Summ Arizes As Under Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 30 Following The Ratio Laid Down By The Supreme Court In 120 Itr 921 The Ao Cannot Go To The Old Section 80 Ia Of Th E Act And Accordingly Cannot Rely Upon The Definition Of The Initial Assessment Year In Erstwhile Section 80 Ia Of The A Ct Considering The Language Of The Amended Act The L Egislative Intent As Can Be Gathered From The Explanatory Memo Randum And Settled Legal Position In Bajaj Tempos Case The Definition Of The Term Initial Assessment Yea R Has No Applicability Since That Provision Was Deleted Much Before The Appellant Started Its Claim For The Deduction U S 80 Ia In View Of Above The Assessee Prayed To Allow Deduc Tion U S 80 Ia Of The Act 100 As Claimed By It However The Ld Cit A After Considering The Submis Sion Of The Assessee Has Allowed The Deduction U S 80 Ia Of The Act By Obser Ving As Under 4 The Facts Of The Case Suggest That Appellant Had Claimed Deduction U S 80 Ia For The First Time Only In Assessment Year 200 4 05 Because This Was The First Year Since Assessment Year 1996 97 When Appel Lant Made The Profits The Main Contention Of Assessing Officer Is That Ev En If Appellant Had Not Claimed Deduction U S 80 Ia In Assessment Year 1996 97 Due To Losses In That Year It Will Be Deemed To Be The First Year For Whi Ch Deduction U S 80 Ia Was Allowed As Per The Law Which Existed In Assessment Year 1996 97 Accordingly The Assessing Officer It Is Immaterial Whether Appellant Could Claim 80 Ia Deduction In Assessment Year 1996 97 Or Not The Period Of Ten Years Was Fixed From Assessment Year 1996 97 To Ass Essment Year 2005 06 As Per The Provisions Of Section 80 Ia Which Existed In Assessment Year 1996 97 And This Period Cannot Be Changed By The Subsequ Ent Amendment From Assessment Year 2000 01 The Main Issue Is To Verif Y Whether Appellant Had An Option In Or After Assessment Year 2000 01 To Ch Oose The Period Of 10 Years For Claim Of Deduction U S 80 Ia If It Has No T Claimed Any Deduction U S 80 Ia Till Assessment Year 1999 00 There Is No Doub T That As Per Old Provisions Of Sec 80 I Appellant Was Entitled For A Fixed Period Of Claim Of Deduction U S 80 Ia From Assessment Year 1996 97 To Assessment Year 2005 06 However This Is Also A Fact That By Not C Laiming Deduction U S 80 Ia Till Assessment Year 2003 04 Appellant Had Not Exe Rcised Its Option Of Choosing Ten Years Which Was Available From Assessm Ent Year 2000 01 Moreover If There Was Any Intention Of The Legisla Ture To Exclude Such Undertakings Which Had Begun Options Before 1 4 199 9 From Exercising The Choice Of 10 Years Out Of 15 Year It Would Have Ex Pressed It In The Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 31 Amendment Itself The Industries Which Were Given E Xemption U S 80 Ia Form Assessment Year 1996 97 As Per The Provision Of Sec Tion 80 Ia Which Existed Till Assessment Year 1999 00 Were Capital Intensive Industries And Were Not Able To Make Any Profits In The First Few Years Th Erefore The Provisions Were Amended By Legislature And A Choice Of 10 Years Out Of First 15 Years Instead Of Fixed First 10 Years Was Given To All Such Under Takings Which Had Begun Operation Form 1 4 1995 The Intention Of Legislatu Re Was Clearly To Extend The Benefit Of Deduction U S 80 Ia For Full 10 Years Out Of Initial 15 Years To All Such Industry Which Had Begun Operations On Or After 1 4 1995 And Due To Substantial Capital Investment Were Not Able To Mak E Profits In The Initial Few Years Of Operation The Instant Case Of Appellant S Quarely Falls Within The Intention Of Legislature And Therefore If In Assess Ment Year 2004 05 Appellant Has Claimed The Deduction U S 80 Ia For The First T Ime Then For All Practical Purposes It Has Expressed Its Option Of Choosing Th E Period Of 10 Years Out Of 15 Years For The First Time In Assessment Year 2004 05 Appellant Has To Take A Choice Of The Period Of 10 Years Out The Six Opti Ons Available To It As Under I Assessment Year 1996 97 To Assessment Year 200 5 06 Ii Assessment Year 1997 98 To Assessment Year 200 6 07 Iii Assessment Year 1998 99 To Assessment Year 20 07 08 Iv Assessment Year 1999 00 To Assessment Year 200 8 09 V Assessment Year 2000 01 To Assessment Year 2009 10 Vi Assessment Year 2001 02 To Assessment Year 201 0 11 In The Written Submission The Appellant Has Clearly Stated That It Would Be Claiming The Deduction U S 80 Ia Till Assessment Ye Ar 2010 11 Therefore App Has Clearly Made A Choice Of 10 Years As Per Provis Ions Of Section 80 Ia 2 Of It Act And This Choice Is Shown Above At Sl No V I I E Assessment Year 5 In The Written Submission Appellant Has Submitte D That It Would Be Claiming 100 Deduction Of Profits Till Assessment Year 2008 09 And 30 Deduction Of Profits For Assessment Year 2009 10 Ad 2010 11 Thi S Contention Of Appellant Is Incorrect As Per The Provisions Of Law The Prov Isions Of Section 80 Ia 2 Give The Permission To Appellant To Chose The Period Of 10 Consecutive Year Out Of First 15 Years The Provisions Of Section 80 Ia 2 D O Not Allow The Appellant To Choose Only 7 Years Instead Of 10 Years Out Of Init Ial 15 Years The Submissions Of Appellant That It Would Be Claiming Deduction U S 80 Ia Till 2010 11 Is Correct As Per The Provisions Of Section 80 Ia 2 A Are Appli Cable In Case Of Appellant And Therefore For First Five Assessment Years I E Assessment Year 2001 02 To Assessment Year 2005 06 Appellant Is Entitled T O Claim 100 Deduction Of Profits And For Remaining Five Assessment Years I E Assessment Year 2006 07 To Assessment Year 2010 11 Appellant Is Entitled To 30 Deduction Of Profits The Instant Assessment Year Is Assessment Year 2005 06 Therefore Appellant Is Entitled To 100 Deduction U S 80 Ia Of It Act 6 The Ground No 3 Of Appeal Of Assessee Is Allowed Being Aggrieved By The Order Of Ld Cit A Both Re Venue Assessee Are In Appeal Before Us Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 32 34 The Grievance Of The Revenue Is That Ld Cit A Erred In Allowing Deduction 100 Of The Profit As Against 30 Of Th E Profit Allowed By The Ao 34 1 The Grievance Of The Assessee Is That Ld Cit A Erred In Giving Finding That The Assessee Has To Necessarily Claim The Dedu Ction U S 80 Ia Of The Act For 10 Consecutive Years The Assessee Also Assaile D The Order Of Ld Cit A By Submitting That The Impugned Issue For 10 Consec Utive Years Deduction Is Not Arising From The Order Of Ao The Ld Dr Before Us Submitted That The Assessee Wa S Entitled For The Deduction Under Section 80 Ia Of The Act For 10 Con Secutive Years Commencing From The Ay 1997 98 As Per The Old Provi Sion Of Section 80 Ia Of The Act The Ld Dr Relied On The Order Of Ao However In Case Of Assessee Appeal Ita 357 Kol 2009 The Ld Dr Submitted That The Assessee Has To Choose The Block Of Ten Ye Ars For Claiming The Deduction Under Section 80 Ia Of The Act The Ld D R Vehemently Supported The Order Of Authorities Below On The Other Hand The Ld Ar Reiterated The Submiss Ions As Made Before The Ld Cit A The Ld Ar Relied On The Order Of Ld C It A For Allowing The Deduction Under Section 80 Ia Of The Act 100 35 We Have Heard The Rival Contentions Of Both The Parties And Perused The Materials Available On Record In The Instant Case The Assessee Was Entitled To Claim Deduction U S 80 Ia Of The Act From The Ay 19 96 97 But It Did Not Do So As There Were Carried Forward Losses The Assessee Did Not Claim Any Deduction U S 80 Ia Of The Act Up To Ay 2003 04 In V Iew Of The Carried Forward Losses However The Assessee Claimed The Deduction U S 80 Ia Of The Act For The First Time In The Ay 2004 05 As Per The Assess Ee It Was Entitled To Choose Any Year For Claiming The Deduction Under Section 8 0 Ia Of The Act Out Of The Block Of 15 Years In This Regard We Find That The Honble Itat Has Already Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 33 Held That It Is At The Discretion Of The Assessee T O Choose The Initial Year For The Purpose Of Claiming The Deduction Under Section 80 Ia Of The Act In The Case Of Mohan Breweries And Distilleris Ltd Vs Acit 24 S Ot 170 Wherein The Tribunal In The Context Of Section Amended 80 Ia 2 Has Held That Section 80 Ia As Enacted By The Finance Act 1999 W E F 1 Std April 2000 Gives As Option To The Assessee W E F 1 St April 2000 To Claim Relief Under This Section For Any 10 Consecutive Assessment Years Out Of 15 Years Beginning From The Year Ending In Which The Undertaking Or En Terprise Develops Or Begins To Operate Any Infrastructure Facility Etc It Is Left To The Assessee At Its Will To Claim This Relief From The First Assessment Year Or From The Second Or From The Third Or So As It Might Think Fit Once The Assessee Has Opted For The First Year Of Relief Then It Continues For Further 9 Consecutive Years To Claim The Relief The Undertaking Is To Be Set Up During T He Period 1 Std April 1993 To 31 St March 2006 This Is As Per S 80 Ia 4 Iv Section 80 Ia 2 Clearly Stated That Assessee Can Opt For Year Of Deduction For Any 10 Consecutive Year Out Of 15 Years Taken From The First Year In Which The Und Ertaking Or Enterprise Develops And Begins To Operate Any Infrastructure A Ctivity It Can Be Seen That 80 Ia 2 Does Not Mandate That First Year Of 10 Cons Ecutive Assessment Years Should Be Always The First Year Of Set Up Of Enterp Rise If The Intention Of The Legislature Is That First Year Of Set Up Is The Ini Tial Assessment Year To Claim Deduction U S 80 Ia Then There Is No Meaning Of Gi Ving Option To The Assessee To Claim Deduction For 10 Consecutive Assessment Ye Ars Out Of 15 Years We Also Find Support Guidance From The Judgment O F The Honble Supreme Court In The Case Of Bajaj Tempos Case 196 Itr 18 8 Wherein It Was Held As Under A Provision In A Taxing Statute Granting Incentive S For Promoting Growth And Development Should Be Construed Liberally Since A Provision Intended For Promoting Economic Growth Has To Be Interpreted Lib Erally The Restriction On It Too Has To Be Construed So As To Advance The Object Ive Of The Section And Not To Frustrate It Under Clause I Of Sub Section 2 Of Section 15 C Formation Of The Undertaking By Splitting Up Or Reconstruction O F An Existing Business By Transfer To The Undertaking Of Building Raw Materi Al Or Plant Used In Any Previous Business Results In Denial Of The Benefit Contemplated Under Sub Section 1 The Amended Provisions Of Section 80 Ia Of The Act A Re Clear And Unambiguous And The Purpose Of The Amendment Has Al Ready Been Explained In The Memorandum As Explained In The Preceding Par Agraph In This Regard We Also Find That The Cbdt Has Clari Fied The Term Initial Assessment Year In Relation To Section 80 Ia Of The Act Which Reads As Under Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 34 The Matter Has Been Examined By The Board It Is Ab Undantly Clear From Sub Section 2 That An Assessee Who Is Eligible To Cla Im Deduction U S 80 Ia Has The Option To Choose The Initial First Year From W Hich It May Desire The Claim Of Deduction For Ten Consecutive Years Out Of A Slab Of Fifteen Or Twenty Years As Prescribed Under That Sub Section Similarly For The Issue Raised By The Assessee We H Old That The Assessee Has The Discretion To Choose The Initial Year Out Of Th E Block Of 15 Years Thereafter The Assessee Would Claim The Deduction As Per The P Rovision Of Section 80 Ia Of The Act For The Remaining Year But Subject To Th E Block Of 15 Years In View Of The Ground Of Appeal Filed By The Revenue Is Dis Missed And The Ground Of Appeal Filed By The Assessee Is Allowed 36 The Next Issue Raised By The Revenue In Ground No 3 Is That Ld Cit A Erred In Allowing Certain Receipts As Deduction U S 80 Ia Of The Act 37 The Assessee Inter Alia Has Shown Certain Receipts Of Rs 1 20 84 621 00 In Its Profit Loss Account And Cla Imed The Deduction For The Same Under Section 80 Ia Of The Act The Breakup Of The Receipts Stands As Under I Interest Income Rs 71 71 784 Ii Provision Liabilities Written Back Others Rs 26 73 408 Iii Bad Debt Recovery Rs 7 77 123 Iv Bounce Cheque Charges Rs 4 11 440 V Other Receipts Rs 7 65 866 Vi Cellsite Sharing Revenue Rs 2 85 000 Rs 1 20 84 621 The Ao Was Of The View That The Above Receipts Are Not Eligible For Deduction Under Section 80 Ia Of The Act And Accordingly Soug Ht Clarification From The Assessee The Assessee Has Made The Submission As D Etailed Under As Regards Interest It Was Submitted That It Has Earned Interest On Loa Ns And Deposits Which Were Given Out Of The Surplus Fund Arising In The Normal Course Of Business And Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 35 Hence It Should Be Considered As Income From Telec Om Business And Eligible For Deduction U S 80 Ia Of The Act As Regards Provision Liabilities Written Back The Assessee Has Stated That These Amounts Represen T Previous Claim And Allowed As Business Expenditure In The Earlier Year And They Should Be Taxed As Business Income U S 41 1 And Deduction U S 80 I A Of The Act Should Not Be Denied As Regards Bad Debt Recovery The Assessee Has Submitted That Bad Debt Was Claime D As Business Expenses In The Earlier Years And Therefore Any Rec Overy Of The Same Is A Receipt From Business And Hence Eligible For Deduc Tion U S 80 Ia Of The Act In Respect Of Bounce Cheque Charges It Was Submitted That The Amount Has Been Recovered From Subscribers On Bouncing Of Cheques Received From Them The Charges Were Received In The Course Of The Business And Therefore Eligible For D Eduction Under Section 80 Ia Of The Act The Assessee In Support Of His Claim Ha S Also Relied On The Judgment Of Madras High Court In The Case Of Cit Vs Madras Motors Ltd Reported In 257 Itr 60 Mad As Regards The Cell Site Sharing Revenue It Was Submitted That The Activity Of Cell Site Sha Ring Reduces The Cost And The Amount Is Received From Other Telecom Operators In The Course Of Business Therefore The Same Is Eligible For Deduction U S 80 Ia Of The Act In Respect Of Other Receipts It Was Claimed That They Are Inextricably Linked To The Business And Therefore The Same Is Eligible For Deduction U S 80 Ia Of The Act However The Ao Observed That The Term Used In Secti On 80 Ia Is Derived And Not Attributed To Or Referable To And Therefore Only Those Receipts Which Have Direct And Immediate Nexus With The Industrial Undertaking Will Be Eligible For Deduction U S 80 Ia In Fact Same Is The Case I N Respect Of Other Sections Granting Deduction Such As Section 80 Hh Section 8 0 Hhc Etc Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 36 37 1 The Ao Also Observed That The Assessee Has Cla Imed Deduction U S 80 Ia On Interest Receipt In The Year Under Consider Ation Whereas In The Immediately Preceding Assessment Year I E Ay 2004 05 The Assessee Had Considered That Interest Income As Income From Othe R Sources And Had Not Claimed Deduction U S 80 Ia The Assessee Itself Ha S Stated That This Interest Has Been Earned On The Surplus Fund Kept In The Ban K The Interest Earned Has No Immediate Nexus With The Industrial Undertak Ing Whose Activity Is Providing Telecom Services The Ao Also Observed In Respect Of Provisions For L Iabilities Written Back And Bad Debt Recovery These Expenses Were Claimed In T He Earlier Years And Since They Have Been Recovered In The Current Year It Has Become The Income Of The Current Year The Total Income Under The Inc Ome Tax Act Is To Be Computed On Year To Year Basis This Income Has Not Been Derived From The Industrial Undertaking Having Eligible Business In The Current Assessment Year And Therefore Deduction U S 80 Ia Is Not Allowed As Regards Bounced Cheque Charges Again The Immedi Ate Source Of This Receipt Is Not The Industrial Undertaking But The A Ctivity Of Collection Resulting In The Event Of Return Of The Cheque Due To Inadequate Balance In The Customers Accounts Since There Is No Immediate And Proximate Nexus With The Industrial Undertaking Deduction U S 80 Ia Is Not Allowed On These Receipts In Respect Of Other Receipts The Assessee Has Not S Pecified The Nature Of The Receipt Therefore It Is Again Held That The Recei Pt Has Not Immediate And Proximate Nexus With The Industrial Undertaking And Therefore Deduction U S 80 Ia Is Not Allowed In Respect Of Cell Site Sharing Revenue It Is Pert Inent To Note That He Assessee Has Included This Income Under The Head Other Income And Not Under The Head Business Income Therefore Deduction U S 80 Ia Is Not Allowed On This Income 38 Aggrieved Assessee Preferred An Appeal To Ld C It A The Assessee Before Ld Cit A Submitted As Under Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 37 I As Regards Interest Income During The Captioned Year The Appellant Earned Cer Tain Interest Income Which Has Been Treated By The Appellant As Income Chargea Ble To Tax Under The Head Business It Being The Income Derived From T He Business By The Telecom Undertaking The Appellant Claimed Deductio N U S 80 Ia In Respect Of Such Interest Income As Well The Ao Ha Disallowed The Claim For Such Deduction The Ao Has Relied Upon The Decision Of The Supreme Court In The Case Of Pandian Chemicals Ltd V Cit 262 Itr 278 To Hold That Interest Income Is Not Eligible For The Tax Holiday In This Behalf The Appellant Most Humbly Submits T Hat The Decision Of The Supreme Court In The Case Of Pandian Chemicals Was Rendered In The Context Of Provisions Of Sec 80 Hh Whereas The Pres Ent Case Is Concerned With Provisions Of Sec 80 Ia The Appellant Submit S That Under Sec 80 Hh 1 The Tax Holiday Is Available Where The Gross Total Income Of An Assessee Includes Any Profits And Gains Derived From An Ind Ustrial Undertaking As Against The Foregoing Deduction Under Sec 80 Ia Is Available When The Gross Total Income Of An Assessee Includes Any Profits An D Gains Derived By An Undertaking Or An Enterprise From Any Business Referred To Sub Section 4 Thus It Can Be Observed That While Deduction U Nder Sec 80 Hh Requires The Income To Be Derived From Industrial Undertakin G The Provision Of Sec 80 Ia Requires The Income To Be Derived From Any Business By The Undertaking Having Regard To The Clear Shift In Language Of The Provision The Intention Of The Legislature Is Clear That All Income Derived Fr Om The Business Of The Undertaking Should Be Eligible For Deduction The A O Himself Has Taxed Interest Income As Income Under The Head Business And Not Under The Head Other Sources It Is Submitted That The Decision Of The Supreme Court In Pandian Chemicals Case Which Relates To Section 8 00 Hh Cannot Be Applied To The Provision Of Sec 80 I Which Is Differently Worded In Fact Attention Is Drawn To A Recent Decision Of The Delhi High Court In Cit V Eltel Sgds P Ltd 300 Itr 6 Del Where It Has Be En Held As Under A Perusal Of The Above Would Show That There Is A Material Difference Between The Language Used In Section 80 Hh Of The Act And Section 80 Ib Of The Act While Section 80 Hh Requires That The Profits And Gains Should Be Derived From The Industrial Underta King Section 80 Ib Of The Act Requires That The Profits And Gains Shou Ld Be Derived From Any Business Of The Industrial Undertaking In Othe R Words There Need Not Necessarily Be A Direct Nexus Between The Acti Vity Of An Industrial Undertaking And The Profits And Gains The Appellant Relies Upon The Following Decisions I N Which The Tribunal Benches As Well As High Courts Have Drawn Distincti On Between The Provisions Of Section 80 Hh And Section 80 Ia 80 Ib And Have Held Various Receipts Including Interest Income In Some Cases As Eligible For Deduction Under The New Sections Acit V Maxcare Laboratories Ltd 92 Itd 11 Cuttac K Ii Page Nos 136 143 Itc Hotels V Dcit 107 Ttj 955 Bang Pb Ii Page Nos 144 154 Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 38 Ito V Kiran Enterprises 92 Ttj 1 4 Chd Pb Ii Page Nos 155 159 Cit V Eltek Sgs P Ltd 300 Itr 6 Del Pb Ii Pag E Nos 126 130 Cit V Eastern Tar P Ld 301 Itr 427 Jarkhand Pb Ii Pages Nos 131 135 The Honble Cuttack Tribunal In The Case Of Maxcare Supra After Considering The Difference In The Language Of Section 80 Hh And 80 Ia Held That All Sorts Of Income Which Are Inextricably Related To Carrying O N The Business Of Industrial Undertaking Are To Be Considered For Deduction U S 80 Ia Of The Act And Accordingly Interest Income And Miscellaneous Inco Me Were Eligible For Deduction U S 80 Ia Of The Act It Is True That Some Of The Above Decisions Were Re Ndered In The Context Of Section 80 Ia As It Stood Prior To Its Bifurcation I Nto Two I E Section 80 Ia And 80 Ib However That Cannot Make Any Difference Sinc E The Splitted Section Also Talks Of The Profits Derived From The Business By The Undertaking In Fact The Cbdt While Explaining The Rationale Behind The Splitting Of The Section Has Categorically Stated In Para 39 1 Of Its Circular No 779 Dated September 14 1999 That The Erstwhile Provision Of Section 80 Ia In The Inc Ome Tax Act Has Been Restructured And Incorporated As Two New Distinct S Ections Section 80 Ia And 80 Ib The Restructured Section Seek To Ret Ain The Benefits Hitherto Provided In Section 80 Ia However The Amend Ed Provisions Extend The Benefits To Certain Sectors The Above Paragraph Clearly Articulates The Intenti On Of The Legislature That The Benefits Available Under The Pre Splitted Sections Would Be Retained Now If The Courts And Tribunals Have Held In The Context O F The Pre Splitted Section That Interest And Certain Other Receipt Can Be Rega Rded As Income Derived From The Business And Hence Eligible For The Deduction The Same Would Equally Hold Good Also For The Post Splitted Sections The Old Benefits Are Not Intended To Be Taken Away But Are Retained Further Had The Intension Of The Legislature Was T O Exclude Such Interest Receipts It Would Have Inserted An Explanation Si Milar To Explanation Baa To Section 80 Hhc 3 Of The Act Having Regard To The Above The Appellant Most Humb Ly Submits That Interest Income Beheld As Income Derived From The Business B Y The Telecom Undertaking And Hence Eligible For Deduction U S 8 0 Ia Without Prejudice The Appellant Prays That If At A Ll The Action Of The Ao Is Confirmed Then In That Case The Interest Income O Ught To Be Adjusted Against Interest Expenses As Also The Expenses Incurred Fo R Earning Such Interest Income And The Disallowance Be Restricted To Net I Nterest Income Only If Any Following The Principle Laid Down By The Delhi High Court In Shree Ram Honda 289 Itr 475 2 3 Provisions Liabilities Written Back Others And Bad Debts Recovery The Appellant Is In The Sole Business Of The Provid Ing Cellular Mobile Phone Services There Is No Business Of The Appellant Exc Ept That Of Providing Cellular Mobile Phone Services The Provisions Liab Ilities Made And Bad Debts Were Allowed As Deduction From The Business I Ncome In Previous Assessment Years The Said Provisions Liabilities W Ere In The Relevant Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 39 Previous Year Were Written Back As Offered And Asse Ssed As Business Income And So Is The Bad Debts Recovered The Appellant Submits That Once A Write Back Is Tax Ed U S 41 1 It Is Deemed To Be The Bu 9 Profits Of The Current Year It Autom Atically Would Qualify For Deduction U S 80 Ia Of The Act In The Following Dec Isions In The Context Of Section 80 Hhc The Courts Have Held That Deduction U S 80 Hhc Of The Act Is Available In Respect Of Amount Taxes U S Section 4 1 1 Of The Act O Alfa Laval India Limited 266 Itr 418 Bom Affirm Ed By The Supreme Court In 295 Itr 451 O Extrusion Process P Ltd V Ito 106 Itd 336 Tb Om Pb Ii Page Nos 160 163 O Cit V Abdul Rahaman Industries 293 Itr 475 Mad Pb I Page Nos 164 166 Thus Once The Write Back Are Taxed U S 41 1 Of T He Act Following The Delhi High Court Decision In Eltek Supra It Would Undi Sputedly Be Considered As Receipt Directly Connected With The Business Of The Telecommunication Carried On By The Appellant And Thus Eligible For Deduction U S 80 Ia Of The Act The Appellant Therefore Prays That Ao Be Directed T O Allow Deduction U S 80 Ia On The Provisions Written Back And Bad Debts Recove Red 4 Amount Received As Bounce Charges The Appellant Recovers A Fixed Amount Of Bounce Ch Arges From The Customers Who Makes Default In Making Payment And W Hose Cheques Get Bounced The Receipt Is In The Nature Of Penal Char Ges Recovered From The Customer Who Fails To Pay On Time The Appellant Relies On The Following Cases Were It Is Held That The Interest Received On Delayed Payment From Debtors Is Eligibl E For Deduction U S 80 Ia Of The Act O Nirma Industries Ltd V Dcit 283 Itr 402 Guj O Cit V Sidheswari Paper Udyog Ltd 94 Itd 187 Tm Del The Gujarat High Court Decision In The Case Of Ni Rma Industries Ltd V Dcit 92006 283 Itr 402 Supra Held That It Is An Incorrect Proposition To State That Inter Est Paid By The Debtors For Late Payment Of The Sale Proceeds Would Not Form Part Of The Eligible Income For The Purpose Of Computing Relief Under Section 80 I Of The Act The Reliance On The General Meaning Of The Term Interest As Well As Raising Distinction Between The Source Of Sale Proceeds And The Source Of Inter Est Is Erroneous In Law 6 Cell Site Sharing Revenue For Rendering Services To Various Subscribers Avai Ling Subscribing For Cellular Services Of The Ape The Appellant Has To Develop T He Sites At These Sites The Appellant Constructs Infrastructure Facilities In T He Form Of Civil Work Setting Up Of Towers Installation Of Batteries Air Condition Ers And D G Sets And Such Other Assets Which Are Used For Providing Network C Onnection To The Appellants Subscribers These Are Regarded As Pass Ive Supporting Assets In The Business Of Telecommunication Services At Thes E Sites Additionally The Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 40 Appellant Is Required To Install Antenna And Bts So That Network Connection Becomes Functional And Would Carry Verbal Date From One Subscriber To Other Subscriber And Vice Versa Through Such Antennas T Hese Are Regarded As Active Functional Assets The Appellant Has Developed Various Sites In The Ci Rcles Allotted To It In The State Of West Bengal The Other Operators Have Appr Oached The Appellant To Make Use Of Its Sites Vis A Vis The Use Of Various Supporting Assets Referred To Above Which Were Installed At These Sites These Other Operators Have Entered Into Agreements With The Appellant Whereby They Are Liable To Pay Certain Charges For Using Various Supporting Assets At These Sites From Having Access To A Netw Ork Of Their Own By Setting Up Their Own Antennas Bts At Such Sites Whereby T Hey Can Render Telecommunication Services To The Subscriber Of The Ir Networks The Income Is Treated As Income From Business Bot H By The Assessee And By The Ao The Appellant Claimed Deduction U S 80 Ia In Respect Of The Said Income But The Assessing Officer Has Disallowed The Same The Appellant Relies On The Decisions And The Submi Ssions Made In Regards Interest Income Eligibility For The Deduction U S 80 Ia Of The Act As Stated At Para 1 Above There Can Be No Dispute On The Proposition That A B Usinessman May Exploit His Commercial Assets Either By Using The Same On His Own Account Or Allowing Others To Use The Same So Far As The Same Is Used For Rendering Telecommunication Services In Either Case The Inco Me Generated Would Be Regarded As Income From Providing Telecommunication Services Section 80 Ia 4 Is A Provision Which Is Enacted T O Confer Tax Relief For Socio Economic Objectives It Is A Settled Rule Of Interp Retation That A Provision Like Section 80 Ia Tax Holiday Should Therefore Rece Ive An Interpretation That Accords With The Objective Behind The Tax Holiday This Has Indeed Been Settled By The Supreme Courts Decision In Bajaj Te Mpos Case 196 Itr 188 Pb Ii 0 Page Nos 167 174 Without Prejudice To Above If At All The Income From Site Sharing Is Not To Be Treated A Eligible For 80 Ia The Appellant Prays That The Expenses To That Effec T On Account Of Site Sharing Also Ought To Be Excluded However The Ld Cit A After Considering The Submis Sion Of The Assessee Has Partly Allowed The Relief To The Assessee By Observ Ing As Under 4 The Language Of Section 80 Ia Has Been Analyzed B Y Various Courts And It Has Been Distinguished From The Language Of Section 80 Hh Where The Term Profits And Gains Derived From Industrial Undertak Ing Has Been Used Honble Delhi High Court Has Held In Case Of Eltel Sgs P Ltd 300 Itr 6 Del That The Profits And Gains Derived From Any Busine Ss Of The Industrial Undertaking Is Not As Broad As The Expression Pro Fits And Gains Attributable Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 41 To Industrial Undertaking Nor Is It As Narrow As Th E Expression Profits And Gains Derived From Industrial Undertaking It Is So Mewhere In Between Therefore Each Receipt Is Analyzed On This Principl E As Under Fact That The Interest Income Has Been Earned Out O F Surplus Funds Out Of Total Sources Of Fund Of Rs 550 4 Core Appe Llant Had Rs 273 30 Crore Of Surplus Funds The Detail Of Interest Income Was Called For During The Appellate Proceedings And The Appellant Has Submitt Ed The Details As Under Nature Of Interest Income Amount In Rs Interest On Fixed Deposits With Banks On Temporary Investment Out Of Surplus Funds Arising Out Of Normal Course Of Business 66 96 909 Interest Earned On Margin Money Of Rs 53 85 000 Against Guarantee Given To Customs Under Epcg Scheme 4 74 875 Total 71 71 784 Appellant Has Submitted That The Interest Income Is Earned Mostly Out Of The Fixed Deposits In Bank Made Out Of Surplus Funds T Herefore There Is Apparently No Cost For Earning Such Interest A Sur Plus Fund May Be Earned Out Of An Eligible Business However If It Is Subs Equently Invested In A Bank For The Purpose Of Earning Interest It Cannot Form Part Of Profit And Gains Derived From Business Of Cellular Services Howeve R The Interest Earned On Margin Money Against Guarantee Given To Customs Sun Der Epcg Scheme Will Fall In The Category Of Profits And Gains Der Ived From Business Of Cellular Services Therefore I Hold That Assessing Officer Has Rightly Excluded Interest Income Of Rs 66 96 909 From The Profits And Gains Derived From Business Of Cellular Services As Stated Above The Investment To Earn Interest Income Has Been Made Out Of Free Reserve Or Surplus Funds Which Have Not Cost Therefore No Expenditure Can Be Allowed To Appellan T To Earn Such Income Provisions Liabilities Written Back Others And Ba D Debts Recovery The Appellant Is In The Sole Business Of The Provid Ing Cellular Mobile Phone Services Once A Write Back Is Taxed U S 41 1 It Is Deemed To Be The Business Profits Of The Current Year Therefore The Argument Of Assessing Officer That This Income Is Related To A Liability Or Debt Which Was Created In An Earlier Year Has No Force The Details Of Such Liab Ilities Written Off Were Submitted By Appellant During The Appellate Proceed Ings The Entire Liability Was Written Off Against Siemens Ag The Liability Was Against The Purchases Made From Siemens Ag In Respect Of Various Fast F Ile Transfer Implementation Of Sms Hardware Software Switches Up Gradation Etc The Nature Of Such Deemed Income On Account Of Writing Off The Liability Falls Under The Category Of Profits And Gains Derived From Bus Iness Of Cellular Services Therefore Assessing Office Is Directed To Include R S 26 73 408 Of Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 42 Provisions Liabilities Written Back And Rs 7 77 123 Of Bad Debt Recovery In Profit And Gains Derived From Business Of Cellular Services Amount Received As Bounce Charges The Appellant Recovered A Fixed Amount Of Bounce Ch Arge From The Customers And The Receipt Is In The Nature Of Penal Charges The Arrangement Of Charging On Bounced Cheques Is An Arrangement To Ensure Prop Er Payment From Customers For Sales Or Services This Receipt Is In Extricably Related To Carrying On The Business Of Cellular Services Therefore Ass Essing Officer Is Directed To Include Rs 4 11 440 In Profits And Gains Derived F Rom Business Of Cellular Services Cell Site Sharing Revenue The Appellant Has Developed Various Sites In The Ci Rcles Allotted To It In The State Of West Bengal The Other Operators Make Use Of Its Sites And Various Supporting Assets Which Are Installed At These Site S These Other Operators Pay Certain Charges For Using Various Supporting As Sets At These Sites For Having Access To A Network Of Their Own By Setting Up Their Own Antennas Bts At Such Sites Whereby They Can Render Telecomm Unication Services To The Subscriber Of Their Networks In Short The Cel L Site Haring Income Is An Income From Subletting Of The Business Asset To Oth Er Operators And Is A Necessary Requirement In This Kind Of Business App Ellant Has Submitted That In Income Tax Return This Income Has Been Considere D As Business Income Therefore Assessing Officer Is Directed To Include Rs 2 85 000 Of Cell Site Sharing Income In Profits And Gains Derived From B Us Of Cellular Services Other Receipts Appellant Has Not Submitted Any Argument In Respec T Of These Receipts Even During The Appellate Proceeding S Therefore I Approve The View Of Assessing Officer To Exclude Other Receipts Of Rs 7 65 866 From Profits And Gains Derived From Business Of Cellular Service S 5 In View Of The Above Discussion The Amount Which Is Required To Be Excluded From Eligible Profit Derived From Bu 9 Of C Ellular Services U S 80 Ia Of It Act Is Rs 66 96 909 Rs 7 65 866 Rs 74 62 775 And Assessing Officer Is Directed To Include The Remaining Amount Of Rs 1 20 84 621 Rs 74 62 775 Rs 46 21 846 In The Eligible Profit Derived From Bu Siness Of Cellular Services U S 80 Ia Of It Act Aggrieved By The Order Of Ld Cit A Both Revenue Assessee Are In Appeal Before Us 39 The Grievance Of The Revenue Is That Ld Cit A Erred In Allowing Deduction U S 80 Ia Of The Act In Respect Of The Fo Llowing Receipts I Interest On Margin Money Rs 4 74 875 00 Ii Provision Liabilities Written Back Others Rs 26 73 408 00 Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 43 Iii Bad Debt Recovery Rs 7 77 123 00 Iv Bounce Cheque Charges Rs 4 11 440 00 V Cellsite Sharing Revenue Rs 2 85 000 00 The Grievance Raised By The Assessee In Its Appeal Ita No 357 Kol 2009 In Ground No 3 4 Is That Ld Cit A Erred In Not Al Lowing Deduction Under Section 80 Ia Of The Act In Respect Of Interest Inc Ome And Other Receipts Amounting To Rs 66 96 909 00 And 7 65 866 00 Only 40 The Ld Dr Before Us Submitted That The Income Which Has Direct Nexus With The Cellular Business Of The Assessee Is Eligi Ble For Deduction Thus The Income From Interest On Margin Money Provision Lia Bilities Written Back Bad Debt Recovery Bounce Cheque Charges Cell Site Sh Aring Revenue Are Not Eligible For Deduction Under Section 80 Ia Of The A Ct The Ld Dr Vehemently Supported The Order Of The Ao Similarly The Ld Dr Supported The Order Of Lower A Uthorities For Not Allowing The Deduction In Respect Of Interest Receipts Of Rs 66 96 909 00 And Other Receipt Of Rs 7 65 866 00 Only On The Other Hand The Ld Ar Submitted That The Ass Essee Is Eligible For Deduction In Respect Of All Its Receipt Income As Discussed Above The Ld Ar In Support Of His Claim Relied On The Order Of Hon Ble Tribunal In The Case Of Bsnl Vs Dcit Reported In 156 Itd 847 Which Was Sub Sequently Affirmed By The Honble Delhi High Court Reported In 388 Itr 37 1 The Ld Ar Supported The Order Of Ld Cit A For The Deduction Allowed U S 80 Ia Of The Act In Respect Of Certain Receipts As Discussed In Ground No 3 In Ita No 377 Kol 2009 For Revenues Appeal 41 We Have Heard The Rival Contentions Perused T He Materials Available On Record In The Instant Case The Issues Relates T O The Deduction Claimed By The Assessee But Denied By The Ao In Respect Of Cer Tain Receipts As Discussed On The Ground That These Receipts Were Not Derived From The Industrial Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 44 Undertaking However The Ld Cit A Granted Relief In Part To The Assessee By Allowing The Deduction U S 80 Ia Of The Act 41 1 We Find That Similar Issues Were Raised By The Revenue In The Case Of Bsnl Vs Dcit Reported In 156 Itd 847 As Detailed Under 1 The Ld Cit A Has Erred In Law And On Facts In Ho Lding That Receipts Amounting To Rs 76 71 90 000 On Account Of Liquidated Damages Are Entitled For Deduction U S 80 Ia Of The I T Act Ignoring The Fact That It Is Necessary To Prove That The Receipt Generated Shoul D Be Of First Degree Source Of Special Activity But Not Of Ancillary And Incidental Activity Of The Undertaking 2 The Ld Cit A Has Erred In Law And On Facts In Hol Ding That Receipts Amounting To Rs 16 86 63 72 000 On Account Of Excess Provision Written Back Are Entitled For Deduction U S 80 Ia Of The I T Act Ignoring The Fact That Write Back Of Provision Pertaining To Earlier Years Which Is No Longer Required Is Not An Income Derived From The Business Operatio Ns Of The Undertaking For The Year Under Consideration 3 The Ld Cit A Has Erred In Law And On Facts In Holding That Other Receipts Amounting To Rs 1 42 90 32 000 On Account Of Sale Of Directories Publications Forms Waste Paper Etc Are Entitled For Deduction U S 80 Ia Of The I T Act Ignoring That These Receipts Are On A Ccount Of In Come Connected With The Business And Cannot Be Termed To Be Explic Itly Derived From The Principal Business Of The Undertaking The Honble Itat Was Pleased To Allow The Deduction U S 80 Ia Of The Act In Respect Of The Above Receipts Income By Observing As Under 13 8 A Plain Reading Of Sub Section 2 A It Is Seen Sho Ws That It Starts By Giving Effect To The Legislative Intent By Insertin G The Well Understood Word Notwithstanding The Meaning And The Consequent L Egislative Intent Can Clearly Be Understood By The Subsequent Words Used Anything Contained In Thus As Literally As It Can Be Read The Legislative Intent Of Notwithstanding Anything Contained In Sub Sectio N 1 Or Sub Section 2 Is Plain And Clear The Clear Meaning Of This Non Obst Ante Clause Which Is Reflected Upto This Stage Is That Whatever May Have Been Contained In Sub Section 1 Or Sub Section 2 Of Section 80 Ia Is To Be Excluded This Position Is Fortified By The Conscious Inclusion Of The Word Anything Contained In Which Qualifies Notwithstanding The Meaning And Import Of The Term Notwithstanding Is Well Settled And Understood An D By Itself Cannot Be Said To Be Leading To Any Ambiguity The Said Term By It Self Would Have Been Sufficient And Complete To Convey The Legislative I Ntent That Whatever May Have Been Said In Sub Sections 1 And 2 But The Legislature Has Not Rested There And Has Taken Care To Qualify The Word With T He All Encompassing All Inclusive Well Understood Word Anything Containe D In Sub Section 1 Or 2 The Meaning Use And Import Of The Said Word Does N Ot Lead To Any Confusion Or Ambiguity Thus Prima Facie To Our Understanding When Considering The Para Phrasing Used By The Legislature In Its Plain And Literal Meaning There Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 45 Cannot Be Any Doubt About What The Intention Of The Legislature Is As It Is Loud And Clear In Stating That While Considering And Dec Iding The Intent Of Sub Section 2 A The Mandate Of Sub Sections 1 And Su B Section 2 Are Not Required To Be Imported In Respect Of The Referent Undertaking Or Enterprises Providing Telecommunication Services 13 9 A Further Reading Of The Said Sub Section Makes It Clear That The Deduction In Computing The Total Income Is Availabl E Only To An Undertaking Which Is Providing Telecommunication Services And T Hat Too Which Have Been Specified In Clause Ii Of Sub Section 4 Thus B Y Virtue Of This Sub Section A Specified Class Of Undertakings Have Been Identifie D And The Fact That The Assessee Falls Under This Category Is An Accepted F Act And Thus Not An Issue In The Present Proceedings Reverting Back To The Said Sub Section It Is Seen That The Legislature Sets Out That The Deduction Is To B E Allowed At Hundred Per Cent Of The Profits And Gains Of The Eligible Business For A Period Of Five Years As Opposed To The Enterprise Undertakings In Sub Secti Ons 1 And 2 Wherein Hundred Per Cent Of Deduction Is Available For Ten Consecutive Years The Deduction After Five Years In The Case Of An Assess Ee In Section 2 A Is To Be For The Remaining Five Years Upto 30 Per Cent Of Th E Amount Available For Deduction Having Over Ridden The Requirements Of S Ub Sections 1 And 2 By Use Of The Words Profits And Gains Of Eligible Bus Iness In Sub Section 2 A And Not Profit And Gains Derived By An Undertaking Or An Enterprise From As Used In Unequivocal Terms In Sub Sections 1 And 2 The Legislature Makes Its Intention Known Loud And Clear The Fact That After Specifying The Period And Apportionment Of The Profits Available For Deductio N As Hundred Per Cent In The First Five Assessment Years And Thereafter Thirty P Er Cent For The Next Five Assessment Years It Is Seen That The Legislature Al So Alive To The Nature And Extent Of Deductions Wanted To Give To Specified En Terprise Or Undertaking Therefore Makes A Conscious Reference To The Ousted Sub Section 2 In The Opening Lines For The Purposes Of Bringing Into Pla Y The Extended Timeline Of 15 Years For Exercising The Option Contained In Sub Section 2 By Making A Specific Reference To It Thus Conscious Of The Fac T That Sub Sections 1 And 2 Had Completely Been Over Ridden For An Assessee Falling In Section 2 A Reference To Sub Section 2 Is Made Only For The P Urposes Of Increasing The Timeline From Which The Assessee Could Opt For Sele Cting Ten Consecutive Years Out Of The Total 15 Years 13 10 Thus The Dispute Of Bringing Sub Section 1 Into Play For A Tax Payer Falling In Sub Section 2 A Of Section 80 Ia To Our Minds Cannot Arise According To The Assessee Sub Section 2 A Does Not Put The Restriction Contemplated In Sub Section 1 Of Section 80 Ia In The Face Of The Non Obstante Clause Coupled With The Specific Omission To Use The Well Understood Term Derived From This Argument Is Notwithstandi Ng The Argument That Considering The Assessees Nature Of Business The D Irect Nexus Presumed By Sub Section 1 Of Section 80 Ia Is Also Fulfilled On A Careful Reading Of The Above Provisions We Find That The Legislature Has Left No Ambiguity In The Wording Of The Sub Section 2 A Having Started Wit H The Non Obstante Clause In Sub Section 2 A Which Over Rides The Mandate Of Sub Sections 1 And 2 The Legislature Is Well Aware That The Phrase Deri Ved From Has Been Used Only In Sub Section 1 The Meaning Of The Said Te Rms Is Judicially Well Accepted And Understood And It Is Not The Case Of T Hat Revenue That The Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 46 Legislature Was Not Conscious Of The Said Term It Is Seen That The Import Of This Term Continues To Exist For An Assessee Covered Und Er Sub Section 2 Of Section 80 Ia The Legislature Has Consciously Reta Ined It For Enterprise Undertaking Falling In Sub Section 2 A Nd The Proviso Thereto Only Keeping In Mind The Nature Of The Enterprises Under Takings Contemplated Under Sub Section 2 The Option Of Claiming Deduct Ion In Any Ten Consecutive Years Is Given To Be Claimed From The First Fifteen Years Of Beginning Operation Is Given 13 11 Thus We Find That The Legislature Being Alive To Providing Tax Deductions To Business Enterprises And Undertakings Wherever It Wanted To Curtail The Timeline During Which Deduction Can Be Claimed And Also Addressing The Extent Upto Which It Can Be Claimed Has Consciously Carved Out An Exception To Specified Undertakings Enterprises Whose Needs A Nd Priorities Differ Has Taken Care To Expand The Time Line For Claiming Ded Uctions It Has Consciously Enabled Those Undertakings Enterprise Who Fall Unde R Sub Section 2 A To Claim 100 Deduction Of Profits And Gains Of Eligib Le Business For The First Five Years And Upto 30 For The Remaining Five Years In The Ten Consecutive Assessment Years Out Of The Fifteen Years Starting From The Time The Enterprise Started Its Operation The Legislature Having Ouste D Applicability Of Sub Sections 1 And 2 In The Opening Sentence Brough T In For The Purposes Of Time Line Sub Sections 2 Into Play But Made No Ef Forts Whatsoever To Put The Assessee Under Sub Section 2 A To Meet The Stringe Nt Requirements That The Profits So Contemplated Were To Be Derived From The Requirements Of The First Degree Nexus Of The Profits From The Eligible Business Has Not Been Brought Into Play 13 12 The Cardinal Rule Of Interpretation Is That The St Atute Must Be Construed According To Its Plain Language Neither Should Any Thing Be Added Nor Anything Be Subtracted Therefrom Unless There Are A Dequate Grounds To Justify The Inference That The Legislature Clearly So Inten Ded It Is Also Well Settled That In A Taxing Statute One Has To Look Merely At What Is Clearly Stated The Meaning And Extent Of The Statute Must Be Collected From The Plain And Unambiguous Expression Used Therein Rather Than Fro M Any Notions Which May Be Considered To Be Just Or Expedient To Put I N The Words Of Rowlatt J As Held In Cape Brandy Syndicate V Commissioners O F Inland Revenue 1921 1 Kb 64 71 In A Taxing Act One Has To Look Merely At What Is Clearly Said There Is No Room For Any Intendmen T There Is No Equity About A Tax There Is No Presumption As To A Tax Nothing Is To Be Read In Nothing Is To Be Implied One Can Only Look Fairly At The Lang Uage Used 13 13 Interpretation Postulates The Search For The True Meaning Of The Words Used In The Statutes As A Medium Of Expression To C Ommunicate A Particular Thought The Task Is Not Easy As The Language Used Even In Ordinary Conversation Or Correspondence Is Capable Of Being Mis Understood However In Such Cases The Person Using The Language Can Be Approached For A Clarification The Language Used In A Statute Till It Is Amended Repealed Or Modified Remains Static As The Legislature Cannot B E Approached For Clarification After Having Enacted A Law Or An Act The Legislature Becomes Functus Officio As Far As The Particular Act Is Con Cerned And It Cannot Itself Thereafter Interpret It Though The Legislature Ret Ains The Power To Amend Or Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 47 Repeal The Law So Made And Can Also Declare Its Mea Ning But This Can Be Done Only By Making Another Law Or Statute After Underta King The Whole Process Of Law Making Once Again Accordingly Statutory Interp Retation Requires The Courts To Seek Ascertain The Meaning Of The Words Used By The Legislature Through The Medium Of Authoritative Forms In Which It Is Expressed Interpretation Differs From Construction Whereas I Nterpretation Is Finding Out The True Sense Of Any Form Construction Would Mean Drawing Of A Conclusion In Respect Of Subjects That Lie Beyond The Direct E Xpression Of The Text 13 14 It Is Well Understood That The Court Only Interpre Ts The Law And Cannot Legislate Even If A Provision Of Law Is Presumed T O Be Misused And Subjected To The Abuse Of The Process Of Law It Is For The L Egislature To Amend Modify Or Repeal It If Deemed Necessary As Held In Padmasund Ara Rao Supra At Pages 154 To 155 Sc Prakash Nath Khanna V Cit 2004 266 Itr 1 135 Taxman 327 Sc Union Of Indiav Rajeev Kumar Air 2003 Sc 2917 C Ourts Cannot Reframe The Words Used By The Legislature As They Have No Powers To Legislate A Matter Which For The Sake Of An Argum Ent Should Have Been Provided For In A Statute Cannot Be Supplied By The Courts As To Do So Will Be An Act Of Legislation And Not Of Interpretation Re Liance May Be Placed On Smt Kanta Devi V Union Of India 2003 4 Scc 753 13 15 A Legal Fiction Treating Something Not Done As Don E Requires Legislative Authority And Without It It Can Neither Be Indulge D In By Courts Nor It Can Be Created By An Administrative Order No Doubt It Is The Bounden Duty And Obligation Of The Court To Interpret The Statute Bu T The Duty Is To Interpret The Statute As It Is And Not By Adding Or Supplying Wor Ds To It It Is Contrary To All Rules Of Construction To Read Words Into Statute Wh Ich The Legislature In Its Wisdom Has Deliberately Not Incorporated As Held In Cit V Tara Agencies 2007 292 Itr 444 162 Taxman 337 Sc 13 16 The True Function Of The Court Is To Interpret The Law Not To Make It It Is Well Settled That Even If The Legislature Falls Sho Rt Of The Mark The Court Can Do Nothing More Than Declare It Be Thus Giving Its Re Asons So That The Legislature May Take Notice And Promptly Remedy The Situation Reliance Can Be Placed On Standard Chartered Bank V Directorate Of Enforcement 2005 275 Itr 81 145 Taxman 154 Sc 13 17 The Settled Principles Of Interpretation Are That The Court Must Proceed On The Assumption That The Legislature Did Not Make A Mistake And That It Did What It Intended To Do The Court Must As Far As P Ossible Adopt A Construction Which Will Carry Out The Obvious Inten Tion Of The Legislature Undoubtedly If There Is A Defect Or An Omission In The Words Used By The Legislature The Court Would Not Go To Its Aid To C Orrect Or Make Up The Deficiency The Court Could Not Add Words To Statut Es Or Read Words Into It Which Are Not There Especially When The Literal Re Ading Produces Intelligible Results Reference May Be Made To Dadi Jagannadham V Jamulu Ramulu Air 2001 Sc 2699 Any Presumption To The Con Trary In The Absence Of Any Ambiguity Would Be Contrary To The Settled L Egal Position As The Legislature As Far As Possible Is Presumed To Know What It Intends To Stay 13 18 Thus Reverting Again To Considering The Words Used In Sub Section 2 The Proviso Thereto And Sub Section 2 A It Is Seen That Whereas In Sub Section Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 48 2 And The Proviso Thereto The Restrictions On The Profits As Set Out In Sub Section 1 Is Retained And Intended Businesses Are Given To Option Of Any Ten Years From Fifteen Years The Proviso Introduced To Sub Section 2 Of Section 80 Ia It Is Seen That For An Assessee Who Is Devel Oping Or Operating And Maintaining Infrastructure Referred To In Clause A Or Clause B Or Clause C Of Explanation To Clause I Of Sub Section 4 Is Giv En A Further Leeway Of Exercising Its Option In Any Of The Ten Consecutive Years From The First Twenty Years Instead Of Fifteen Years As Contemplated Unde R Sub Section 2 Of Section 80 Ia From The Beginning Developing Or Oper Ation And Maintaining The Infrastructure Facility Thus The Legislature In It S Wisdom Giving Due Consideration To Still Longer Gestation Periods Whi Ch May Be Required By Such High Investment Infrastructure Related Enterprises Which May Need More Time For Generating Profits However The Requirements O F Derived From As Set Out In Sub Section 1 Has Not Been Done Away With Whe N Juxta Posed With This The Language Used In Sub Section 2 A Is Considered The Legislature Has Been Very Clear In Its Mandate And Has Consciously Used Not Only The Well Accepted And Judicially Well Settled Phrase Of Notwithstand Ing But Has Also Underlined The Import And Extent Of The Over Ride Provided By Adding The Word Anything Contained In Sub Section 1 Or Sub Section 2 In Its Opening Lines Thereby Removing All Doubts There Was Nothing Stopping The Legislature To Use The Term Notwithstanding Sub Section 1 Or Sub Sectio N 2 And Proceeded To Lay Down The Period And Apportion The Per Centages To T He Extent Of Which Deduction Was To Be Allowed The Use Of The Term A Nything Contained In Pre Fixed By Notwithstanding By The Legislature Makes T He Meaning And Intention Of The Legislature Crystal Clear The Arguments To The Contrary Advanced By The Revenue Relying On Case Laws Based On Different Set S Of Provisions Is Of No Help As The Clear Meaning Of The Words Used By The Legislature Leads To Only One Conclusion Namely That Sub Sections 1 And 2 Of Section 80 Ia For The Purposes Of An Undertaking Providing Telecommunicat Ion Services Which Are Covered Under Clause Ii Of Sub Section 4 Have T O Be Ignored And Have No Play There Is No Doubt That The Assessee Falls Und Er Clause Ii Of Sub Section 4 And Is Such An Enterprise Providing Telecommuni Cation Services After Having Over Ridden The Requirements Of Sub Sections 1 And 2 Completely The Legislature In Its Wisdom Has Directed That Hun Dred Per Cent Of The Profits And Gains Of The Eligible Business And Not The Pr Ofits And Gains Derived From Can Be Claimed As A Deduction In The First Five Ass Essment Years By Such An Enterprise Commencing At Any Time During The Period S As Specified In Sub Section 2 And Thereafter Thirty Per Cent Of Such Profits For Further Five Assessment Year Thus Giving Due Recognition For Th E Peculiarities Of The Telecommunication Services Where Heavy Investment C Osts In The Initial Years Are A Necessity They Have Been Allowed To Be Recove Red By Way Of Profits To The Extent Of Hundred Per Cent From That Activity I N The First Five Years And Thereafter The Allowable Deduction Is Substantially Reduced To Thirty Per Cent In The Next Five Years Presuming That By Then The Heav Y Infrastructural Costs Would Have Been Recovered And Or The Objectives Of The Governmental Policy Would Have Been Attained Keeping In Mind The Servi Ces And Functions Performed By Such An Assessee Towards The Aims Of T He Government Policy Wherein Gestation Period Necessarily Looking At The Nature Of The Undertaking Is Very Long Thus For The Purposes Of The Timefra Me The Legislature Has Given The Timeline Of Fifteen Years From Which Ten Consec Utive Years Could Be Opted Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 49 The Fact Remains That The Legislature Aware Of The Differences In The Use Of Terms Used Consciously Ensures That Profits And Ga Ins Derived From Used In Sub Section 1 Is Not Used In Sub Section 2 A In Stead In Sub Section 2 A The Term Used Is Profits And Gains Of Eligible Business Juxta Posed With The Glaring Fact That The Sub Section 2 A Starts With A Non Obstante Clause Namely Notwithstanding Qualified Further By The Use Of The Words Anythi Ng Contained In In The Face Of The Clear And Unambig Uous Statutory Provisions We Find Ourselves Unable To Agree With The Argument S Advanced By The Ld Cit Dr However Valiantly As What The Law Is Has Ver Y Clearly Been Enunciated And Set Out In The Relevant Provision Giving Cause To No Debate Whatsoever 13 19 We Find That In The Course Of The Arguments Both T He Sides Have Advanced Their Case Duly Supported By Case Laws Re Lying On Principles Of Interpretation As Settled By The Magnum Opus Of Jus Tice G P Singhs Principles Of Statutory Interpretation And Kanga Palkivala Vyas The Law And Practice Of Income Tax And Various Decisions O F The Courts Wherein Applying Those Yardsticks The Decisions Have Been R Endered Reference To The Specific Principles Invoked And The Proposition Of Law And The Ratio Laid In The Decisions Relied Upon Are Not Being Separately Addr Essed As In The Facts Of The Present Case We Find That The Meaning Of The Statu Te Does Not Lay Itself Open To Any Other Meaning Thus Though Reference Is Not Being Made To The Decisions We Have Given Our Careful Consideration To The Ratios Of The Decisions Relied Upon By The Parties And The Princi Ples Laid Down In The Two Texts Cited Before Us We Are Indebted To The Erudi Te And Well Prepared Effective Representation Made By Both The Sides By Way Of Greater Caution We Have Required The Parties To Address Their Respe Ctive Stands By Written Submission And Synopsis Being Conscious Of The Fact That The Preliminary Argument If Allowed Would Address The Issues Raised In Both The Appeals And More So Since These Arguments Admittedly On The Leg Al Issue Were Not So Argued Before The Tax Authorities We Record Our Ap Preciation For The Confident And Effective Representation Of Ld Cit Dr Ms A Mishra We Also Put On Record Our Appreciation For The Well Seasoned And T Empered Arguments Advanced By Sr Advocate Mr P Pardiwala Supporte D By The Synopsis And Updated Synopsis Prepared And Filed By His Team Of Lawyers However Having Minutely Gone Through The Case Laws And The Proposi Tion Relied Upon Which We Have Brought Out In The Earlier Part Of This Ord Er We Find That In The Face Of The Clear Mandate Of Law Addressing The Case Laws W Hich Are On Entirely Different Facts And Considering Different Set Of Pr Ovisions Reference Thereto Would Be Out Of Context As It Would Be Of No Help T O Decide The Issue Which We Find Is Clear From The Very Language Used By The Le Gislature In The Statutory Provisions Under Consideration The Meaning Which T He Revenue Would Want Us To Read Into The Said Provision Would Be In Viol Ation Of The Basic Fundamental Principles Of Interpretation Of Statute S Namely That The Courts Cannot Write The Laws As Legislation Is The Domain Of The Legislature The Courts Can Only Interpret The Law Any Interpretati On Which Negates The Very Purpose Of Introducing The Sub Section Cannot Be Gi Ven As The Courts While Interpreting Cannot Supply The Words Which The Legi Slature In Its Wisdom Has Chosen To Exclude Etc On Which We Have Deliberated Upon In Passing In The Earlier Paras Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 50 14 In View Of The Detailed Discussion Hereinabove We Find That The Assessee Succeeds In Its Preliminary Argument Raised In Grou Nd No 4 Thus The Issues Raised In The Departmental Appeal And The Additions Sustained In The Assessees Appeal Become Academic Accordingly The Departmental Appeal Is Dismissed Grounds No 1 To 3 Raised In Assessees Appeal Also In View Of Our Detailed Finding In Ground No 4 Become Academic As The Assessee Succeeds In Its Preliminary Arguments Canvassed Under Ground No 4 15 In The Result Assessees Appeal Is Allowed To The Extent As Mentioned Above On The Preliminary Issue And The Departmental Appeal Is Dismissed 41 1 We Also Note That The Order Of Honble Tribuna L In The Case Of Bsnl Vs Dcit Reported In 156 Itd 847 Was Subsequently Affir Med By The Honble Delhi High Court Reported In 388 Itr 371 The Relevant Ex Tract Of The Order Is Reproduced Below 10 The Assessee Filed Appeals And The Revenue Filed C Ross Appeals Before The Itat The Itat In The Impugned Orders Concluded That With Sub Section 2 A Beginning With A Non Obstante Clause The Legi Slative Intention Of Making Available To An Undertaking Providing Telecommunic Ation Services The Benefit Of Deduction Of 100 Of The Profits And Gains Of T He Eligible Business Was Explicit Indeed The Legislature Appears To Have M Ade A Conscious Departure In Adopting For Sub Section 2 A A Wording Differen T From That Appearing In Sub Section 1 Under Section 80 Ia 1 What Is Av Ailable For Deduction Are Profits And Gains Derived By An Undertaking Or An Enterprise From Any Business Referred To In Sub Section 4 Whereas In Section 80 Ia 2 A What Is Available For Deduction Is Hundred Percent Of The Profits And Gains Of The Eligible Business The Following Conclusion Reache D By The Itat In Para 13 11 Of The Impugned Order Correctly Encapsulates The Le Gal Position As Far As The Interpretation Of Section 80 Ia 2 A Is Concerned 13 11 Thus We Find That The Legislature Being Ali Ve To Providing Tax Deductions To Business Enterprises And Undertakings It Wanted To Curtail The Time Line During Which Deduction Can Be Claimed And Also Addressing The Extent Upto Which It Can Be Claimed Has Consciously Carved Out An Exception To Specified Undertakings E Nterprises Whose Needs And Priorities Differ Has Taken Care To Expan D The Time Line For Claiming Deductions It Has Consciously Enabled Tho Se Undertakings Enterprise Who Fall Under Sub Section 2 A To Claim 100 Deduction Of Profits And Gains Of Eligible Business For The First Five Years And Upto 30 For The Remaining Five Years In The Te N Consecutive Assessment Years Out Of The Fifteen Years Starting From The Time The Enterprise Started Its Operation The Legislature H Aving Ousted Applicability Of Sub Section 1 And 2 In The Ope Ning Sentence Brought In For The Purposes Of Time Line Sub Section 2 In To Play But Made No Efforts Whatsoever To Put The Assessee Under Sub Se Ction 2 A To Meet The Stringent Requirements That The Profits So Cont Emplated Were To Be Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 51 Derived From The Requirements Of The First Degre E Nexus Of The Profits From The Eligible Business Has Not Been Brought Int O Play 11 As A Result The Orders Of Both The Ao And The Cit A To The Extent They Deny The Assessee Which In This Case Is In The Bus Iness Of Providing Telecommunication Services Deduction In Respect Of The Above Items In Terms Of Section 80 Ia 2 A Are Unsustainable In Law And H Ave Rightly Been Reversed By The Itat 12 Learned Counsel For The Revenue Sought To Urge Tha T While The Assessee In This Case Is Engaged Only In The Business Of Teleco Mmunication Services There Could Be An Enterprise Which Has More Than On E Undertaking And One Such Undertaking Could Be In The Telecommunication Services According To Him In Such An Event A Question Might Arise Wheth Er Such An Enterprise Would Be Able To Seek Deduction Both Under Section 80 Ia 2 A As Far As The Telecommunication Business Is Concerned And Under Section 80 Ia 1 As Far As Any Other Eligible Business Is Concerned 13 In The First Place As Far As The Present Appeals A Re Concerned The Above Issue As Posed By Learned Counsel For The Revenue I S Purely Hypothetical In Any Event Section 80 Ia 2 A Treats An Undertaking Providing Telecommunication Services As A Separate Species Wa Rranting A Separate Treatment As Is Evident From The Non Obstante Claus E With Which It Begins The Court Sees No Reason Why Such An Undertaking Would Not Be Able To Take The Benefit Of Deduction In Terms Of Section 80 Ia 2 A Notwithstanding That The Enterprise Of Which It Forms Part May Have Other El Igible Businesses For Which The Deduction Would Have To Be Calculated In Terms Of Section 80 Ia 1 Of The Act 14 The Court Finds No Reason To Differ From The View Expressed By The Itat In The Impugned Orders As Far As The Interpretation Of Section 80 Ia 2 A Of The Act Is Concerned 15 No Substantial Question Of Law Arises For Consider Ation The Appeals Are Dismissed The Facts Of The Present Case Are Identical To The Case Bsnl Supra Which Was Decided In Favour Of Assessee In The Case On H And The Ao Made The Disallowance Of The Deduction Claimed By The Assess Ee Under Section 80 Ia Of The Act In Respect Of Certain Receipts Income I E Interest On Money Deposited Provision Liabilities Written Back Bad Debt Recovery Bounce Cheque Charges Cell Site Sharing Revenue And Other Income Thus Respectfully Following The Judgment Of Honble Delh I High Court In The Case Of Bsnl Supra We Direct The Ao To Allow The Deduction Under Sect Ion 80 Ia Of The Act In Respect Of Its Receipts As Discussed Abo Ve Thus The Ground Of Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 52 Appeals Raised By The Revenue Is Dismissed And The Grounds Of Appeals Raised By The Assessee Is Allowed Now Coming To Ita No 357 Kol 2009 Appeal By The As Sessee 42 The First Issue Raised By The Assessee In This Appeal Is That Ld Cit A Erred In Not Allowing Setoff Of The Unabsorbed Depr Eciation Of Rs 37 35 12 000 00 While Computing The Book Profit Und Er Section 115 Jb Of The Act Being Lower Of The Brought Forward Loss 43 We Have Already Dealt This Issue Elaborately Wh Ile Adjudicating The Ground Of Appeal Of Assessee In Ita No 356 Kol 2009 And Allowed The Issue In Favour Of Assessee 43 1 Besides The Above We Also Observed That The Im Pugned Issue Has Already Been Decided In Favour Of Assessee By This Honble Tribunal In The Case Of Binani Industries Limited Supra Reported In 178 Ttj 658 Which Reads As Under We Have Heard The Rival Submissions And Perused The Materials Available On Record We Are In Agreement With The Arguments Of T He Learned Ar That The Losses Both Cash Loss And Depreciation Loss Would Continue To Remain In The Books Of Accounts Till It Is Wiped Off By Earning P Rofits By The Assessee Company And Accordingly The Same Would Be Available For Reduction From Book Profits U S 115 Jb Of The Act We Hold That The Least Of The Cash Loss Or Depreciation Loss Once Adjusted Reduced From Book Profits In Earlier Assessment Years Do Not Vanish Out Of The Books Un Til It Is Wiped Out By Profits In Subsequent Years Till Such Time The Lo Sses Would Only Continue To Remain In The Books We Hold That For The Purpose O F Computation Of Book Profits U S 115 Jb Of The Act Every Year The Situat Ion Of Least Of Cash Loss And Depreciation Loss Needs To Be Worked Out And Review Ed And Accordingly The Understanding Of The Learned Ao That Such Loss Once Adjusted In Earlier Year Is No Longer Available For Set Off Is Misconceived Hence We Do Not Find Any Infirmity In The Order Of The Learned Cit A In Thi S Regard The Ground No 2 Raised By The Revenue Is Dismissed In View Of Above We Have No Hesitation To Hold Tha T The Assessee Can Claim The Deduction Either Of Brought Forward Losses Or U Nabsorbed Depreciation Whichever Is Less As Per The Books Of Accounts Con Sequently The Ground Of Appeal Filed By The Assessee Is Allowed Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 53 44 The Second Issue Of The Assessee Is That Ld Ci T A Erred In Giving Finding That The Assessee Has To Necessarily Claim The Deduction U S 80 Ia Of The Act For 10 Consecutive Years The Assessee Also Assailed The Order Of Ld Cit A By Submitting That The Impugned Issue For 10 Consecutive Years Deduction Is Not Arising From The Order Of Ao 45 We Have Already Dealt This Issue Elaborately Wh Ile Adjudicating The Ground Of Appeal Of Revenue In Ita No 377 Kol 2009 And Since We Have Dismissed This Ground Of Appeal Of Revenue Followin G The Same Analogy We Also Allow This Ground Of Appeal Of Assessee 46 The 3 Rd Issue Raised By The Assessee Is That Ld Cit A Er Red In Not Allowing Deduction U S 80 Ia Of The Act In Respect Of Other Receipts Amounting To Rs 7 65 866 00 Only 47 We Have Already Dealt This Issue Elaborately Wh Ile Adjudicating The Ground Of Appeal Of Revenue In Ita No 377 Kol 2009 And Since We Have Dismissed This Ground Of Appeal Of Revenue Followin G The Same Analogy We Also Allow This Ground Of Appeal Of Assessee Accor Dingly Ao Is Directed 48 The 4 Th Issue Raised By The Assessee Is That Ld Cit A Er Red In Not Allowing Deduction U S 80 Ia Of The Act In Respect Of Interest Income Amounting To Rs 66 96 909 00 Only 49 We Have Already Dealt This Issue Elaborately Wh Ile Adjudicating The Ground Of Appeal Of Revenue In Ita No 377 Kol 2009 Supra And Since We Have Dismissed This Ground Of Appeal Of Revenue Fol Lowing The Same Analogy We Also Allow This Ground Of Appeal Of Assessee 50 The Last Issue Raised By The Assessee Is That L D Cit A Erred In Not Allowing Deduction For The Contribution Made Gratui Ty Fund Maintained With Lic For Rs 6 97 488 00 Only Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 54 51 We Have Already Dealt This Issue Elaborately Wh Ile Adjudicating The Ground Of Appeal Of Assessee In Ita No 356 Kol 2009 And Since We Have Allowed This Ground Of Appeal Of Assessee Following The Same Analogy We Also Allow This Ground Of Appeal Of Assessee 52 In The Result Assessees Appeal Is Allowed Coming To Ita 482 Kol 2010 Appeal By The Revenue An D Ita 485 Kol 2010 Appeal By Assessee For The Ay 2006 07 53 The Grounds Of Appeal Raised By The Revenue Ar E Reproduced As Under That The Ld Cit Appeals Has Erred In Holding That The Assessee Was Eligible To Get Deduction U S 80 Ia On The Following Receipt S 1 Cellsite Sharing Revenue Rs 3 77 60 000 2 Bounce Cheque Charges Rs 8 70 000 3 Interest From Cese Rs 50 62 780 4 Interest From Bsnl Rs 47 59 955 Even Though They Had No Intricate Or Proximate Nexu S To The Eligible Business The Grounds Of Appeal Raised By Assessee Are Reprod Uced As Under The Appellant Respectfully Submits That 1 On The Facts And In The Circumstances Of The Cas E And In Law The Learned Commissioner Of Income Tax Appeals Viii Kolkata Hereinafter Referred To As The Learned Cit A Erred In Following The Ord Er Issued By His Predecessor For Assessment Year Ay 2005 06 And Giving A Fin Ding That The Appellant Is Necessarily Required To Claim Deduction For Full Te N Consecutive Years In Block Of 15 Years Thereby Holding That The Appellant Nec Essarily Needs To Start Claiming Tax Holiday From Assessment Year 2001 02 In Complete Disregard To The Non Obstante Provisions Of Section 80 Ia 2 A Of The Act Which Specifically Provide For Deduction For Ten Consecutive Years Com Mencing At Any Time During Such Fifteen Years 1 2 On The Facts And Circumstances Of The Case And In Law The Learned Cit A Has Erred In Exceeding His Jurisdiction By Giving A Finding Referred To In Ground No 2 Above On An Issue Which Was Not A Sub Ject Matter Of Appeal Before The Learned Cit A 2 On The Facts And Circumstances Of The Case And I N Law The Learned Cit A Erred In Confirming The Action Of The Learned Ao In Excluding The Following Income Receipts From The Profits Of The Eligible Business While Computing Deduction Under Section 80 Ia Of The Act I Interest Income Amounting To Rs 2 327 265 Ii Other Receipts Amounting To Rs 710 000 And Iii Provision Liabilities No Longer Required Writ Ten Back Amounting To Rs 22 140 000 Comprising Of Rs 8 470 000 Booked Un Der The Head Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 55 Other Income And Rs 13 670 000 Booked Under The H Ead Miscellaneous Receipts 3 On The Facts And In The Circumstances Of The Cas E And In Law The Learned Cit A Erred In Confirming The Action Of The Learne D Ao In Not Allowing Set Off Of Rs 72 148 000 Under Clause Iii Of Explanation 1 To Sub Section 2 Of Section 115 Jb Of The Act Being The Lower Of Figure S Of Brought Forward Loss And Unabsorbed Depreciation All The Above Grounds Are Without Prejudice To Each Other The Appellant Craves Leave To Add Amend Vary Omit Or Substitut E Assessment Year Of The Aforesaid Grounds Of Appeal At Any Time Before Or A T The Time Of Hearing Of The Appeal First We Take Up Revenue Appeal Ita 482 Kol 2010 54 The Inter Related Issue Raised By The Revenue I N This Appeal Is That Ld Cit A Erred In Allowing The Deduction U S 80 Ia Of The Act In Respect Of Certain Receipts Not Eligible For Deduction 55 We Have Already Dealt This Issue Elaborately Wh Ile Adjudicating The Ground Of Appeal Of Revenue In Ita No 377 Kol 2009 And Since We Have Dismissed This Ground Of Appeal Of Revenue Followin G The Same Analogy We Also Dismissed The Inter Related Issue Of Appeal Of Revenue Accordingly Ao Is Directed 56 In The Result Revenues Appeal Is Dismissed Now Coming Assessees Appeal Ita 485 Kol 2010 57 The Assessee Vide Letter Dated 06 07 2015 Has R Evised The Ground No 1 Which Reads As Under The Appellant Respectfully Submits That 1 On The Facts And In The Circumstances Of The Case And In Law The Learned Cit A Erred In Following The Order Issued By His P Redecessor For Assessment Year Ay 2005 06 And Giving A Finding That The A Ppellant Is Necessarily Required To Claim Deduction For Full Ten Consecutiv E Years Under Section 80 Ia Of The Act During The Block Of Fifteen Years There By Directing That For Ays 22006 07 To 2010 11 Deduction Under Section 80 Ia W Ould Be Available To The Appellant 30 Of The Eligible Profits In Doing So He Has Also Disregarded The Non Obstante Provisions Of Section 80 Ia 2 A Of The Act Which Specifically Provide For Deduction For Ten Consecutive Years Com Mencing At Any Time During Such Fifteen Years 1 1 The Learned Cit A Ought To Have Held That The Deduction Under Section 80 Ia In Respect Of Profits And Gains Of The Busines S Of Providing Cellular Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 56 Services Should Be Available 100 For Ays 2004 05 To 2008 09 And 30 Thereafter For Next Five Years 1 2 On The Facts And Circumstances Of The Case And In Law The Learned Cit A Has Erred In Exceeding His Jurisdiction By Giving A Finding Referred To In Ground No 1 Above On An Issue Which Was Not A Sub Ject Matter Of Appeal Before The Learned Cit A And Had No Relevance For The Assessment Year Under Consideration Other Grounds Of Appeal Filed By The Assessee Are A S Under 2 On The Facts And Circumstances Of The Case And I N Law The Learned Cit A Erred In Confirming The Action Of The Learned Ao In Excluding The Following Income Receipts From The Profits Of The Eligible Bu Siness While Computing Deduction Under Section 80 Ia Of The Act I Interest Income Amounting To Rs 2 327 265 Ii Other Receipts Amounting To Rs 710 000 And Iii Provision Liabilities No Longer Required Writ Ten Back Amounting To Rs 22 140 000 Comprising Of Rs 8 470 000 Booked Un Der The Head Other Income And Rs 13 670 000 Booked Under The H Ead Miscellaneous Receipts 3 On The Facts And In The Circumstances Of The Cas E And In Law The Learned Cit A Erred In Confirming The Action Of The Learne D Ao In Not Allowing Set Off Of Rs 72 148 000 Under Clause Iii Of Explanation 1 To Sub Section 2 Of Section 115 Jb Of The Act Being The Lower Of Figure S Of Brought Forward Loss And Unabsorbed Depreciation All The Above Grounds Are Without Prejudice To Each Other The Appellant Craves Leave To Add Amend Vary Omit Or Substitut E Any Of The Aforesaid Grounds Of Appeal At Any Time Before Or At The Time Of Hearing Of The Appeal 58 The First Issue Raised By The Assessee In Its R Evised Ground Of Appeal Is That Ld Cit A Erred In Giving Finding That The As Sessee Has To Necessarily Claim The Deduction U S 80 Ia Of The Act For 10 Con Secutive Years The Assessee Also Assailed The Order Of Ld Cit A By S Ubmitting That The Impugned Issue For 10 Consecutive Years Deduction Is Not Ari Sing From The Order Of Ao 59 We Have Already Dealt This Issue Elaborately Wh Ile Adjudicating The Ground Of Appeal In Ground No 2 Of Revenue In Ita No 377 Kol 2009 And Since We Have Dismiss This Ground Of Appeal Of Reve Nue Following The Same Analogy We Also Allow This Ground Of Appeal Of Asse Ssee Accordingly Ao Is Directed Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 57 60 The 2 Nd Issue Raised By The Assessee Is That Ld Cit A Er Red In Not Allowing Deduction Under Section 80 Ia Of The Act I N Respect Of Certain Income 61 We Have Already Dealt This Issue Elaborately Wh Ile Adjudicating The Ground Of Appeal No 3 Of Revenue In Ita No 377 Kol 2009 And Since We Have Dismissed This Ground Of Appeal Of Revenue Fol Lowing The Same Analogy We Also Allow This Ground Of Appeal Of Assessee Ac Cordingly Ao Is Directed 62 The 3 Rd Issue Raised By Assessee In This Appeal Is That Ld Cit A Erred In Confirming The Order Of Ao By Not Adjusting The Una Bsorbed Depreciation Of Rs 7 21 48 000 00 While Computing The Book Profit Under Section 115 Jb Of The Act 63 We Have Already Dealt With This Issue Elaborate Ly While Adjudicating The Ground No 3 Of Assessees Appeal In Ita 356 Kol 2009 For The Ay 2004 05 Since We Have Allowed This Ground Of Raised By Asse Ssee Following The Same Analogy We Also Allow The Ground Of Appeal Of Asses See Ao Is Directed Accordingly 64 In The Result Assessees Appeal Is Allowed Now Coming To Ita 673 Kol 2011 Appeal By Assessee F Or The Ay 2007 08 65 The Assessee Vide Letter Dated 6 Th July 2015 Has Revised The Grounds Of Appeal Which Reads As Under 1 On The Facts And In The Circumstances Of The Case And In Law The Learned Cit A Erred In Following The Order Issued By His P Redecessor For Assessment Years Ay 2005 06 And 2006 07 And Giving A Findi Ng That The Appellant Is Necessarily Required To Claim Deduction For Full Te N Consecutive Years Under Section 80 Ia Of The Act During The Block Of Fifte En Years Thereby Directing That For Ays 2006 07 To 2010 11 Deduction Under Section 80 Ia Would Be Available To The Appellant 30 Of The Eligible Profits In Doing So He Has Also Disregarded The Non Obstante Provisions Of Section 80 Ia 2 A Of The Act Which Specifically Provide For Deduction For Ten Consecut Ive Years Commencing At Any Time During Such Fifteen Years 1 1 The Learned Cit A Ought To Have Held That The Deduction Under Section 80 Ia In Respect Of Profits And Gains Of The Busines S Of Providing Cellular Services Should Be Available 100 For Ays 2004 05 To 2008 09 And 30 Thereafter For Next Five Years 1 2 On The Facts And Circumstances Of The Case And In Law The Learned Cit A Has Erred In Exceeding His Jurisdiction By G Iving A Finding Referred To In Ground No 1 Above On An Issue Whic H Was Not A Subject Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 58 Matter Of Appeal Before The Learned Cit A And Had No Relevance For The Assessment Year Under Consideration 66 The First Issue Raised By The Assessee In Its R Evised Ground Of Appeal Is That Ld Cit A Erred In Giving Finding That The As Sessee Has To Necessarily Claim The Deduction U S 80 Ia Of The Act For 10 Con Secutive Years The Assessee Also Assailed The Order Of Ld Cit A By S Ubmitting That The Impugned Issue For 10 Consecutive Years Deduction Is Not Ari Sing From The Order Of Ao 67 We Have Already Dealt This Issue Elaborately Wh Ile Adjudicating The Ground Of Appeal No 2 Of Revenue In Ita No 377 Kol 2009 And Since We Have Dismissed This Ground Of Appeal Of Revenue Fol Lowing The Same Analogy We Also Allow This Ground Of Appeal Of Assessee Ao Is Directed Accordingly 68 In The Result Assessees Appeal Is Coming To Assessees Appeal In Ita 431 Kol 2012 For The Ay 2008 09 69 The Assessee Vide Letter Dated 8 Th July 2015 Has Filed The Additional Ground No 2 2 In Its Appeal Which Reads As Under Ground No 2 2 On The Facts And In The Circumstanc Es Of The Case And In Law The Learned Cit A Has Erred In Upholding T He Allegation Of The Learned Deputy Commissioner Of The Income Tax Circ Le 7 Kolkata Learned Assessing Officer That Interest Income Amounting To Inr 66 Laksh Is Assessable To Tax As Income From Other So Urces And Not As Profits And Gains From Business And Profession Other Grounds Of Appeal Are As Under 1 Ground No The Appellant Is Eligible For Deduc Tion 100 Of Eligible Business Profits Under Section 80 Ia Of The Ic Tax A Ct 1961 Act On The Facts And I The Circumstances Of The Case An D In Law The Learned Commissioner Of Income Tax Appeals Viii Kolkata Hereinafter Referred To As The Learned Cit A Erred In Upholding The Ord Er Of The Assistant Commissioner Of Income Tax Circle 7 Kolkata Lea Rned Ao That The Appellant Is Necessarily Required To Claimed For Fu Ll Ten Consecutive Years Under Section 80 Ia Of The Act During The Block Of Fifteen Years Thereby Directing That For Ays 2006 07 To 2010 11 Deduction Under Section 80 Ia Would Be Available To The Appellant 30 Of The Eligible Profits In Doing So He Has Also Disregarded The Non Obstante Provisions Of Sec Tion 80 Ia 2 A Of The Act Which Specifically Provide For Deduction For Ten Co Nsecutive Year Commencing At Any Time During Such Fifteen Years 1 1 The Learned Cit A Ought To Have Held That The Deduction Under Section 80 Ia In Respect Of Profits And Gains Of The Busines S Of Providing Cellular Services Should Be Available 100 From Ays 2004 0 5 To 2008 09 And 30 Thereafter For Next Five Years Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 59 1 2 On The Facts And In The Circumstances Of The Ca Se And In Law The Learned Cit A Has Erred In Observing That The Appe Llant Stared Providing Telecom Services In The Assessment Year 1 996 97 Whereas The Appellant Started Rendering Cellular Services I N Assessment Year 1997 98 And Accordingly Assessment Year 1997 98 Ne Eds To Be Considered As The Initial Assessment Year Of The Ap Pellant For The Purpose Of Deduction Under Section 80 Ia Of The Act 2 Ground No 2 The Appellant Is Liable To Deduct Ion Under Section 80 Ia On Interest Income 2 1 On The Facts And In The Circumstances Of The Ca Se And In Law The Leaned Cit A Has Erred In Upholding That Interest Income Of Inr 66 Lakhs Is Required To Be Reduced From The Profits Of The Eligible Busi Ness While Computing The Deduction Under Section 80 Ia Of The Act 3 Ground No 3 The Appellant Is Not Liable To De Duct Tax On Roaming Charges 3 1 On The Facts And In The Circumstances Of The Ca Se And In Law The Learned Cit A Has Erred In Upholding The Addition On Accou Nt Of Domestic Roaming Charges Of Inr 443 105 283 Paid To Other Telecom Operators During The Financial Year Relevant To The Subject Assessment Y Ear Under Section 40 A Ia Of The Act 3 2 On The Facts And In The Circumstances Of The Ca Se And In Law The Learned Cit A Has Misplaced Reliance On The Supreme Court S Judgment In The Case Of Bharti Cellular Ltd 2011 330 Itr 239 Since The Same Was Pronounced In The Context Of Interconnect Charges And Not Roam Ing Charges 4 Ground No 4 Interest Under Section 234 B And 234 D Without Prejudice And In Addition On The Facts And In The Circumstances Of The Case And In Law The Learned Cit A Has Erred In Up Holding The Levy Of Interest Under Section 234 B And 234 D Of The Act 5 Ground No 5 Levy Of Penalty Under Section 271 1 C On The Facts And Circumstances Of The Case And In Law The Learned C It A Has Erred In Not Adjudicating On The Ground Raised By The Appellant Against The Intimation Of Penalty Proceedings Under Section 271 1 C Of The Act The Cit A Ought To Have Held That The Proceedings Under Section 271 1 C Of The Act Are Not Justified In The Instant Case All The Above Grounds Are Without Prejudice To Each Other The Appellant Craves Leave To Add Amend Vary Omit Or Substitute Any Of The Aforesaid Grounds Of Appeal At Any Time Before Or At The Time Of Hearing Of The Appeal The Appellant Prays That Appropriate Relief Be Gran Ted Based On The Said Grounds Of Appeal And The Facts And Circumstances O F The Case 70 The First Issue Raised By The Assessee In Its G Round Of Appeal Is That Ld Cit A Erred In Giving Finding That The Assessee Ha S To Necessarily Claim The Deduction U S 80 Ia Of The Act For 10 Consecutive Y Ears The Assessee Also Assailed The Order Of Ld Cit A By Submitting That The Impugned Issue For 10 Consecutive Years Deduction Is Not Arising From The Order Of Ao Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 60 71 We Have Already Dealt This Issue Elaborately Wh Ile Adjudicating The Ground Of Appeal No 2 Of Revenue In Ita No 377 Kol 2009 And Since We Have Dismiss This Ground Of Appeal Of Revenue Follo Wing The Same Analogy We Also Allow This Ground Of Appeal Of Assessee Ao Is Directed Accordingly 72 The Second Issue Raised By The Assessee Is That Ld Cit A Erred In Not Allowing Deduction U S 80 Ia Of The Act In Respect Of Interest Income Amounting To Rs 66 Lacs Only 73 We Have Already Dealt This Issue Elaborately Wh Ile Adjudicating The Ground Of Appeal No 3 Of Revenue In Ita No 377 Kol 2009 And Since We Have Dismissed This Ground Of Appeal Of Revenue Fol Lowing The Same Analogy We Also Allow This Ground Of Appeal Of Assessee Ao Is Directed Accordingly 74 The Last Issue Raised By The Assessee Is That L D Cit A Erred In Confirming The Order Of Ao By Sustaining The Disall Owance For Rs 44 31 05 283 00 On Account Of Non Deduction Of T Ds On Domestic Roaming Charges Under Section 40 A Ia Of The Act 75 At The Outset It Was Observed That The Impugne D Issue Has Already Been Decided In Favour Of Assessee In Its Own Case By This Honble Jurisdictional Tribunal In Ita No 1864 Kol 2012 Wherein It Was Held As Under We Hold That 194 C Is Applicable Only Where Any Sum Is Paid For Carrying Out Any Work Including Supply Of Labour For Carrying Ou T Any Work Thus Carrying Out Any Work Is The Substance For Making The Payme Nt Relating To Such Work Liable For Deduction Of Tax At Source U S 194 Cof Th E Act For Carrying Out Any Work Manpower Is Sine Qua Non And Without Manpower It Cannot Be Said That Work Has Been Carried Out Under Section 194 C Each And Every Work Service Is Not Covered Hence The Nature Of Work Done Or Se Rvice Performed Is Required To Be Seen Moreover The Term Work Is Defined In Section 194 C Of The Act The Word Work In Section 194 C Referred To And Comprehends Only The Activities Of Workman It Is The Physical Force Which Has Comprehended In The Word Work We Have Already Held That The Pay Ment Of Roaming Charges Does Not Require Any Human Intervention Hence In T He Absence Of Human Intervention The Services Rendered In The Context Of The Impugned Issue Does Not Fall Under The Definition Of Work As Defined In Section 194 C And Hence The Provisions Of Section 194 C Are Not Applicable To Th E Impugned Issue 4 19 Let Us Now Get Into The Applicability Of Prov Isions Of Section 1941 Of The Act To The Facts Of The Impugned Issue The Term R Ent Is Defined In Section 194 As Below For The Purposes Of This Section Rent Means Any Payment By Whatever Name Called Under Any Lease Sublease Te Nancy Or Any Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 61 Other Agreement Or Arrangement For The Use Of Eith Er Separately Or Together Any A Land Or B Building Including Factory Building Or C Land Appurtenant To A Building Including Facto Ry Building Or D Machinery Or E Plant Or F Equipment Or G Furniture Or H Fittings Whether Or Not Any Or All Of The Above Are Owned By The Payee The Real Test To Be Considered Is Whether It Is Pos Sible To Say That It Is The Assessee Who Has Used The Equipment And Has Paid Th E Roaming Charges To The Other Service Provider With Whom It Has Entered Into A National Roaming Agreement We Hold That It Is Not Possible To Say S O Because If At All Anyone Can Be Said To Have Used The Equipment It Can Only Be The Subscriber Of The Assessee But Not The Asses See If Anything The Ass Essee Is Placed In A Position Of A Mere Faciiitator Between Its Subscrib Er And The Other Service Provider Facilitating A Roaming Call To Be Made By The Subscriber The Assessee Cannot Be Said To Have Used The Equipment Which Is Involved In Providing The Roaming Facility The Assessee Collec Ts The Roaming Charges From Its Subscriber And Passes It On To The Other S Ervice Provider It Is Relevant At This Juncture To Get Into The Judgement Of The A Pex Court In The Case Of Bsnl And Another Vs Union Of India And Others 2006 282 Itr 273 Se One Of The Questions Which Arose For Consideration Was Whether There Was Any Transfer Of A Right To Use Any Goods By Providi Ng Access Or Telephone Connection By The Telephone Service Provider To A S Ubscriber Referring To Section 4 Of The Telegraph Act 1885 Which Respect Of Exclusive Privilege Gives In Telecommunication And The Power To Grant L Icences To The Central Government It Was Contended By The Service Provide Rs That They Provided Only A Service By The Utilization Of Telegraph Lice Nsed To Them For The Benefit Of The Subscribers The Supreme Court Proceeded On The Assumption That Incorporeal Rights May Be Goods For The Purpose Of Levying Sales Tax And P Osed To Itself The Question Whether The Electromagnetic Waves Through Which The Signals Are Transmitted Can Fulfill The Criteria For Being Described As Goods The Court Held That The Electromagnetic Waves Cannot Be Called Goods They Were Held To Be Merely The Medium Of Communication The Waves Are Neither Abstracted Nor Consumed They Are Not Delivered Stored Or Possess Ed Nor Are They Marketable What Was Transmitted Is Not An Electrom Agnetic Wave But The Signal Through Such Means The Supreme Court Therea Fter Gave A More Basic Reason To Hold That The Electromagnetic Waves Canno T Be Considered As Goods And It Is This Reason Which Is Relevant For Our Pur Pose It Was Held That A Subscriber To A Telephone Service Could Not Reasona Bly Be Taken To Have Intended To Purchase Or Obtain Any Right To Use Ele Ctromagnetic Waves Or Radio Frequencies When A Telephone Connection Is Gi Ven Nor Does The Subscriber Intend To Use Any Portion Of The Wiring The Cable The Satellite The Telephone Exchange Etc As Far As The Subscriber I S Concerned No Right To The Use Of Any Other Goods Incorporeal Or Corporeal I S Given To Him Or Her With Ita No 356 343 357 377 Kol 2009 485 482 Kol 20 10 673 K 11 431 K 12 Hutchison Telcom East Ltd Vs Acit Dcit Cir Rng 0 7 Kol Ays 04 05 To 08 09 Page 62 The Telephone Connection In View Of The Above We Hold That The Payment Of Roaming Charges By The Assessee To Other Service Pr Ovider Cannot Be Considered As Rent Within The Meaning Of Section 19 4 I Of The Act 4 20 Accordingly We Hold That The Payment Of Roam Ing Charges Of Rs 55 41 01 320 Does Not Fall Under The Ambit Of Tds Provisions Either U S 194 C 194 I Or 194 J Of The Act And Hence We Have No Hesitation In Directing The Learned Assessing Officer To Delete The Additi On Made U S 40 A Ia On This Account Respectfully Following The Above Order We Reverse The Order Of Lower Authorities Thus The Ground Of Appeal Of The Asses See Was Allowed 77 To Summarise Ita No A Y Appeal By Result 343 K 2009 04 05 Revenue Dismissed 356 K 2009 04 05 Assessee Part Allowed For S Tatistical Purpose 377 K 2009 05 06 Revenue Dismissed 357 K 20009 05 09 Assessee Allowed 482 K 2010 06 07 Revenue Dismissed 485 K 2010 06 07 Assessee Allowed 673 K 011 07 08 Assessee Allowed 431 K 2012 08 09 Assessee Allowed Order Pronounced In The Open Court 15 12 2017 Sd Sd Aby T Varkey Waseem Ahmed Judicial Member Accountant Member Kolkata Dkp 15 12 201 7 Copy Of Order Forwarded To 1 Assessee M S Vodafohe Essar East Ltd 11 Dr U N Brahmchari Road Kolkata 17 2 Revenue Acit Jcit Cir Range 7 Aaykar Bhawan P 7 Chowringhee Square 5 Th Floor Kolkata 69 3 1 2 Concerned Cit Kolkata 4 2 Cit A Kolkata 5 5 881 1 Dr Itat Kolkata 6 Guard File By Order True Copy Sr Private Secretary Head Of Office Ddo 1