The ACIT, Circle-8,, Ahmedabad v. M/s. Vodafone Essar(Gujarat) Limited, Ahmedabad

ITA 951/AHD/2011 | 2007-2008
Pronouncement Date: 27-11-2014 | Result: Dismissed

Appeal Details

RSA Number 95120514 RSA 2011
Assessee PAN AAACF1190P
Bench Ahmedabad
Appeal Number ITA 951/AHD/2011
Duration Of Justice 3 year(s) 7 month(s) 26 day(s)
Appellant The ACIT, Circle-8,, Ahmedabad
Respondent M/s. Vodafone Essar(Gujarat) Limited, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 27-11-2014
Date Of Final Hearing 11-11-2014
Next Hearing Date 11-11-2014
Assessment Year 2007-2008
Appeal Filed On 31-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI N. S. SAINI ACCOUNTANT MEMBER. ITA. NOS. 949 & 951/AHD/2011 (ASSESSMENT YEAR:2005-06 & 2007-08) ACIT CIRCLE 8 AHMEDABAD. APPELLANT VS. VODAFONE ESSAR GUJARAT LIMITED VODAFONE HOUSE 4 TH FLOOR CORPORATE ROAD PRAHLADNAGAR OFF. S.G. ROAD AHMEDABAD. RESPONDENT PAN: AAACF1190P / BY REVENUE :SHRI SUBHASH BAINSH CIT D.R. / BY ASSESSEE : SHRI DHINAL SHAH A.R. /DATE OF HEARING :11.11.2014 !'# /DATE OF PRONOUNCEMENT : 27.11.2014 I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 2 ORDER PER SHAILENDRA KUMAR YADAV J.M: THESE APPEALS OF REVENUE ARE ARISING OUT FORM THE CONSOLIDATED ORDER OF CIT(A)-XIV AHMEDABAD DATED 18.01.2011 FOR THE ASSESSMENT YEARS 2005-06 & 2007- 08. SO THEY ARE BEING DISPOSED OF BY WAY OF THIS COMMON OR DER FOR THE SAKE OF CONVENIENCE. 2. IN I.T.A. NO. 951/AHD/2011 FOR A.Y. 2007-08 REV ENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1). THE LD. CIT(A)-XIV AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.89 35 61 741/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LICENCE FEES. 2A). THE LD. CIT(A)-XIV AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO CONS IDER THE YEAR IN WHICH THE ASSESSES STARTED PROVIDING TELECOMMUNICATION SERVICES AS A.Y.: 1997-98 INSTEAD OF A.Y.: 1996-97. 2B). THE LD. CIT(A)-XIV AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO APPL Y THE AMENDED PROVISIONS APPLICABLE FROM A.Y.:01-02 AND ALLOWING THE DEDUCTION U/S.80IA OF THE ACT. 3). THE LD. CIT(A)-XIV AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN DELETING THE DISALLOWANCE OF RS.5 07 20 198/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF REVENUE FROM SHARING OF CELL SITE FOR CL AIM OF DEDUCTION U/S.80IA OF THE ACT. 4). THE LD. CIT(A)-XIV AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO REDU CE THE PROVISION FOR DOUBTFUL DEBTS WRITTEN BACK WHILE COMPUTING DEDUCTION U/S.115JBOF THE ACT. 5). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE ID. COMMISSIONER OF INCOME-TAX (A)-XIV AHMEDABAD I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 3 OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 2.1 IN ITA NO. 949/AHD/2011 REVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1) THE LD. CIT(A)-XIV AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN DELETING THE DISALLOWANCE OF RS.46 08 18 462/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LICENCE FEES. 2) ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE THE LD. COMMISSIONER OF INCOME-TAX (A)-XIV AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. ASSESSEE VODAFONE ESSAR GUJARAT LIMITED (HEREINA FTER REFERRED TO AS APPELLANT AND FORMERLY KNOWN AS FA SCEL LIMITED) A SUBSIDIARY COMPANY OF VODAFONE ESSAR LI MITED (VEL) WAS INCORPORATED IN INDIA ON MARCH 14 1995 UNDER THE COMPANIES ACT 1956 AND IS ENGAGED IN PROVIDING CEL LULAR MOBILE TELEPHONY SERVICES (CMTS). ASSESSEE CLAIM S TO QUALIFY ITS BUSINESS AS INDUSTRIAL UNDERTAKING AS DEFINED U /S. 80IA(4) OF THE ACT. 4. FIRST ISSUE IS WITH REGARDS TO DISALLOWANCE OF RS.89 35 61 741/-. ASSESSING OFFICER MADE DISALLOW ANCE OF LICENSE FEES OF RS.49.92 CRORE PAID TO THE DEPARTME NT OF TELECOMMUNICATION BY HOLDING THAT SAME TO BE EXPEND ITURE ON CAPITAL NATURE. ASSESSEE CHARGED LICENSE FEE PAID T HE DEPARTMENT OF TELECOMMUNICATION AS REVENUE EXPENSES AND CLAIMED DEDUCTION WHILE COMPUTING INCOME UNDER THE ACT. HOWEVER ASSESSING OFFICER HELD THAT SAID PAYMENT O F LICENSE I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 4 FEE IS A CAPITAL EXPENDITURE AS SAME WAS INCURRED T O ACQUIRE AND KEEP IN FORCE LICENSE/RIGHT TO OPERATE THE TELECOMMUNICATION SERVICES AND ACCORDINGLY GRANTED PRO RATA DEDUCTION U/S. 35ABB OF ACT. 4.1 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHO RITY WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE. HAVING CONSIDERED THE SAME AND FOLLOWING THE DECISI ON OF ITAT FOR A.Y. 2006-07 ON THE SIMILAR ISSUE IN ASSESSEES OWN CASE HELD THAT EXPENDITURE ON LICENSE FEES WERE REVENUE EXPENSES AND ELIGIBLE FOR DEDUCTION U/S. 37(1) OF THE ACT. ACCORDINGLY DISALLOWANCE IN QUESTION WAS DELETED. WE FOUND THA T IN FACT ITAT AHMADABAD BENCH A IN A.Y. 06-07 IN ASSESSEE S OWN CASE HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 21. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON . WE HAVE BEFORE US A COMPANY ENTRUSTED WITH THE OBJECT OF P ROVIDING TELECOMMUNICATION SERVICES BY THE GOVERNMENT OF IND IA. THE VERY PURPOSE OF INCORPORATION OF THE COMPANY IS THA T. OBVIOUSLY THE OBJECT OF INCORPORATING THE COMPANY IS TO ESTABLISH AND RUN IT AS A COMMERCIAL VENTURE. IN OR DER TO PROVIDE SERVICES TO THE GENERAL PUBLIC THE COMPANY HAS BEEN PERMITTED TO USE THE TELECOM NETWORK FOR PAYME NT OF A PRICE. WE FIND ON PERUSAL OF A COPY OF THE LICENSE AGREEMENT EXECUTED ON 11 TH JANUARY 1996-PG. 7 TO 43 OF THE PAPER BOOK] THAT LICENSE HAS BEEN DEFINED IN CLAUSE (M) T O MEAN A LICENSE GRANTED OR DEEMED TO HAVE BEEN GRANTED UNDE R SECTION 4 OF THE INDIAN TELEGRAPH ACT 1885 & INDIAN WIRELESS TELEGRAPHY ACT 1993. A PERUSAL OF THE RELE VANT PROVISIONS OF THE TELEGRAPH ACT 1885 AND THE AFORE SAID AGREEMENT REVEALS THAT THE LICENSE HAS BEEN GRANTED TO I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 5 ESTABLISH MAINTAIN AND OPERATE CELLULAR MOBILE TEL EPHONE SERVICES UP TO SUBSCRIBER'S TERMINAL CONNECTION IN THE GUJRAT CIRCLE INITIALLY FOR A PERIOD OF TEN YEARS EXTENDABLE BY FIVE YEARS UNLESS TERMINATED UNDER THE TERMS AND CO NDITIONS OF THE AGREEMENT. THE PAYMENT OF 'LICENCE FEE' AS P ER CONDITION NO. 19 SCHEDULE B TO THE AGREEMENT IS @ RS. 163.10 CRORES FOR THE FIRST FIVE YEARS AND @ RS. 19 5.72 CRORES FOR THE SUBSEQUENT 5 YEARS THE LICENSE FEES FOR THE FIRST YEARWAS REQUIRED TO PAID IN LUMP SUM PRIOR T O THE SIGNING OF THE AGREEMENT WHILE FOR THE SUBSEQUENT Y EARS IN QUARTERLY INSTALMENTS IN ADVANCE. UNDISPUTEDLY DED UCTION FOR LICENSE FEES HAS BEEN ALLOWED IN THE PRECEDING ASSESSMENT YEARS UNTIL THE AY 2005-06. HOWEVER WH EN THE ASSESSING OFFICER SOUGHT TO REOPEN THE ASSESSMENT F OR THE AY 2005-06 THE ASSESSEE MOVED HON'BLE JURISDICTION AL HIGH COURT AND PROCEEDINGS RELATING TO REOPENING OF THE ASSESSMENT WERE STAYED. FOR THE YEAR UNDER CONSIDER ATION THE ID. CIT(A) UPHELD THE DISALLOWANCE OF CLAIM T REATING THE AMOUNT AS CAPITAL EXPENDITURE. . 21.1. IN THE LIGHT OF AFORESAID FACTS WE NOW PROC EED TO AN INDEPENDENT CONSIDERATION AS TO WHETHER THE LICE NSE FEE OF RS. 67.51 CRORES PAID BY THE ASSESSEE ON REVENUE SHARING BASIS IS ALLOWABLE AS BUSINESS EXPENDITURE. IN ORDE R TO PROVIDE THE TELECOM SERVICES IT IS ESSENTIAL THAT THE ASSESSEE MAKES USE OF THE TELECOM NETWORK OWNED BY DOT. UNDE R SECTION 4 OF THE INDIAN TELEGRAPH ACT 1885 THE EX CLUSIVE PRIVILEGE OF ESTABLISHING MAINTAINING AND WORKING TELEGRAPHS REMAINS WITH THE CENTRAL GOVERNMENT WHIC H UNDER THE FIRST PROVISO MAY BE PARTED WITH BY GRANT ING A LICENSE TO ANY PERSON ON SUCH CONDITIONS AND IN CONSIDERATION OF SUCH PAYMENTS AS IT THINKS FIT. I T IS ONLY IN ACCORDANCE WITH THIS PROVISO THAT THE ASSESSEE WAS GIVEN A NON-EXCLUSIVE LICENSE TO MAKE USE OF THE TELECOM NE TWORK OWNED BY DOT SO AS TO ESTABLISH MAINTAIN AND OPERA TE CELLULAR MOBILE SERVICE. IT IS FOR ACQUIRING THE US E OF THE NETWORK THAT THE ASSESSEE HAS BEEN REQUIRED TO PAY CONSIDERATION IN THE NAME OF LICENSE FEE. THE LICEN SE AGREEMENT DATED 11-1-1996 EXPRESSLY STATES THAT THE LICENSE WAS GRATED IN EXERCISE OF THE POWERS CONFERRED UNDE R SECTION 4 OF THE INDIAN TELEGRAPH ACT. IN HARI SHANKAR V. D Y. EXCISE I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 6 AND TAXATION COMMISSIONER AIR 1975SC 1121 IT WAS H ELD THAT LICENSE FEE IS THE PRICE FOR THE CONSIDERATION WHICH THE GOVERNMENT CHARGES TO THE LICENSEES FOR PARTING WIT H ITS PRIVILEGES AND GRANTING THEM TO THE LICENSEE AND AS THE STATE CAN CARRY ON A TRADE OR BUSINESS SUCH A CHARGE IS THE NORMAL INCIDENT OF A TRADING OR BUSINESS TRANSACTIO N. THE AMOUNT CHARGED TO THE LICENSEES IS IN THE NATURE OF THE PRICE OF THE PRIVILEGE WHICH THE PURCHASER HAS TO PAY IN ANY TRADING OR BUSINESS TRANSACTION. SIMILAR VIEW WAS T AKEN IN PANNALAL & ORS. V. STATE OF RAJASTHAN (AIR 1975 SC 2000} STATE OF HARYANA V. JAGE RAIN AIR 1980 SC 2018 GOVERNMENT OF ANDHRA PRADESH V. ANABESHAHI WINE & DISTILLERIES (P.) LTD AIR 1988 SC 771. ALL THESE JU DGMENTS WERE CONSIDERED BY THE HON'BLE CALCUTTA HIGH COURT IN CIT V. VARAS INTERNATIONAL (P.) LTD. [1997] 225 ITR 831 IN THE CONTEXT OF SECTION 43B OF THE ACT. AFTER REFERRING TO THE AFORESAID FOUR JUDGMENTS OF THE SUPREME COURT THE HON'BLE CALCUTTA HIGH COURT HELD THAT THE LICENSE FEE WHICH AN ASSESSEE WAS REQUIRED TO PAY TO THE WEST BENGAL GOVERNMENT UNDER THE BENGAL EXCISE ACT FOR GETTING THE LICENSE FOR THE MANUFACTURE OF COUNTRY LIQUOR IS NO T A TAX OR CESS OR FEE AND THEREFORE CANNOT BE DISALLOWED ON THE GROUND OF NON-PAYMENT UNDER SECTION 43B OF THE ACT . THESE AUTHORITIES SHOW THAT THE AMOUNT PAID BY THE ASSESS EE FOR THE GRANT OF THE LICENSE UNDER THE FIRST PROVISO TO SECTION 4 OF THE INDIAN TELEGRAPH ACT IS A PRICE PAID IN CONSID ERATION FOR THE PRIVILEGE GRANTED TO IT AND IS THEREFORE PART O F THE BUSINESS OR TRADING EXPENDITURE. THE PAYMENT OF LIC ENSE FEES UNDISPUTEDLY HAS BEEN MADE FOR THE USE OF THE FACILITIES PROVIDED BY THE DOT AND DERIVES ITS AUTHORITY ONLY FROM THE STATUTE. THE PAYMENT IS THEREFORE INEXTRICABLY BOUN D UP WITH THE VERY BUSINESS OF THE ASSESSEE AND WHEN IT COMES TO THE QUESTION OF TAXING THE PROFITS OF THAT VERY BUS INESS IT CANNOT BE SAID THAT THE CLAIM TO DEDUCT THE PAYMENT OF THE LICENSE FEE WILL NOT BE ALLOWED. IN OUR OPINION TH E AMOUNT CAN NOT BE TREATED AS CAPITAL IN NATURE THE AO HIM SELF HAVING ALLOWED THE CLAIM IN THE PRECEDING ASSESSMEN T YEARS. THE ASSESSEE HAS BEEN CARRYING ON THE BUSINESS OF P ROVIDING TELECOM SERVICES SINCE THE AY 1997-98 . THERE IS NO CHANGE IN THE NATURE OF THE SERVICES RENDERED BY THE ASSES SEE SINCE THEN. THE ASSESSEE IS ALREADY IN THE BUSINESS OF PR OVIDING I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 7 TELECOM SERVICES TO THE PUBLIC WHILE THE LICENSE FE E IS FOR GRANTING THE ASSESSEE PERMISSION TO MAKE USE OF THE TELECOM NETWORK OWNED BY THE DOT. FURTHER IN THE YEAR UNDER CONSIDERATION THE LICENSE FEE IS NOT A FLAT OR FIX ED FEE BUT IS LINKED TO THE REVENUE GENERATED. THUS IT IS DIRECT LY RELATED TO ACTUAL WORKING OF THE ASSESSEE'S BUSINESS. IN BO MBAY STEAM NAVIGATION'S CO. 1953 LTD'S CASE IT WAS HELD THAT THE QUESTION WHETHER A PARTICULAR EXPENDITURE IS REVENU E EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS MU ST BE VIEWED IN THE LARGER CONTEXT OF BUSINESS NECESSITY OR EXPEDIENCY. IT WAS HELD THAT IF THE OUTGOING OR EXP ENDITURE IS SO RELATED TO THE CARRYING ON OR THE CONDUCT OF THE BUSINESS THAT IT MAY BE REGARDED AS AN INTEGRAL PART OF THE PROFIT EARNING PROCESS AND NOT FOR ACQUISITION OF AN ASSET OR A RIGHT OF A PERMANENT CHARACTER THE POSSESSION OF WHICH I S A CONDITION TO THE CARRYING ON OF THE BUSINESS THE E XPENDITURE MAY BE REGARDED AS REVENUE EXPENDITURE. THE PAYMENT MADE BY THE ASSESSEE IN THE PRESENT CASE SATISFIES THIS TEST. THE PAYMENT IS RELATED TO THE CARRYING ON OR OF THE CONDUCT OF THE BUSINESS. UNLESS THE NETWORK IS UTILISED BY THE ASSESSEE THE ASSESSEE IN TURN CANNOT PROVIDE THE TELECOMMUNICATION SERVICES TO THE PUBLIC AT LARGE. THUS THE UTILISATION OF THE NETWORK OF THE DOT IS CLOSELY RE LATED TO THE ACTUAL CARRYING ON OR THE CONDUCT OF THE BUSINESS. THE PAYMENT DOES NOT SECURE FOR THE ASSESSEE ANY ASSET OR RIGHT OF A PERMANENT CHARACTER. THE LICENSE IN OUR OPINI ON DOES NOT CONFER ANY SUCH ENDURING ADVANTAGE BECAUSE UNDE R CONDITION NO. 15 OF THE SCHEDULE B THE LICENSE GRA NTED UNDER SECTION 4 CAN BE REVOKED ON THE BREACH OF ANY OF THE CONDITIONS SUBJECT TO WHICH IT WAS ISSUED OR ANY DE FAULT OF PAYMENT OF ANY CONSIDERATION PAYABLE FOR THE LICENS E. FURTHER THE LICENSE IS A NON-EXCLUSIVE LICENSE AND IT IS OPEN TO THE GOVERNMENT OF INDIA TO GRANT SIMILAR LICENSE S TO OTHER PERSONS AS WELL BY VIRTUE OF POWERS CONFERRED UPON IT UNDER SECTION 4 OF THE TELEGRAPH ACT. THUS THERE IS NO M ONOPOLY RIGHT CONFERRED UPON THE ASSESSEE. 21.2. THE AFORESAID VIEW WHICH WE HAVE TAKEN IS SUPPORTED BY THE DECISION OF A CO-ORDINATE BENCH IN THE CASE OF COMSAT MAX LTD. VS. DCIT 29 SOT36(DELHI). FOLLOW ING THIS DECISION AS ALSO THE DECISION IN THE CASE OF M AHANAGAR I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 8 TELEPHONE NIGAM LTD. 100 TTJ 1 THE ITAT DELHI BEN CH IN THEIR ORDER DATED 29.5.2009 ALLOWED A SIMILAR CLAIM IN THE CASE OF BHARTI CELLULAR LTD. VS. DCIT IN ITA NO.5335/DEL./2003 IN THE AY 2000-01. 21.3. IN VIEW OF THE FOREGOING ESPECIALLY WHEN THE AO HIMSELF ALLOWED THE CLAIM IN THE PRECEDING ASSESSME NT YEARS WE HOLD THAT THE AMOUNT OF RS. 67.51 CRORES PAID BY THE ASSESSEE TO DOT AS LICENSE FEES IS AN ALLOWABLE EXPENDITURE UNDER SECTION 37(1) OF THE ACT IN COMPU TING THE PROFITS OF THE ASSESSEE'S BUSINESS. 4.2 NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLE DGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR SO FOLL OWING THE SAME REASONING WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS DELETED THE DISALLOWANCE OF RS.89 35 61 741/- MADE BY ASSESSING OFFICER ON ACCO UNT OF LICENSE FEE BECAUSE PAYMENT IN QUESTION IS RELATED TO CARRYING OR ALL CONDUCT OF ITS TELECOMMUNICATION BUSINESS. W ITHOUT UTILIZING NETWORK ASSESSEE CANNOT PROVIDE TELECOMM UNICATION SERVICE PUT TO AT LARGE. MEANING THEREBY UTILIZAT ION OF NETWORK OF DOT IS CLOSELY RELATED TO THE ACTUAL CARRYING ON OR CONDUCT OF ASSESSEES BUSINESS. THE PAYMENT IN QUESTION DOES NOT SECURE FOR ASSESSEE ANY ASSET OR RIGHT OF PERMANENT CHARAC TER. THE LICENSE DOES NOT ACQUIRE ANY ENDURING ADVANTAGE BEC AUSE THE CONDITION NO.14 OF SCHEDULE B LICENSE GRANTED U/S. 4 CAN BE REVOKED FOR BREACH OF ANY OF THE CONDITION SUBJECT TO WHICH IT WAS ISSUED OR ANY DEFAULT OF PAYMENT OF ANY CONSIDE RATION PAYABLE FOR LICENSE. LICENSE IS A NON EXCLUSIVE LI CENSE AND IT IS OPEN TO GOVERNMENT OF INDIA TO GRANT SIMILAR LICENS E TO OTHER ENTERPRISES AS WELL BY VIRTUE OF POWER CONFERRED UP ON IT U/S. 4 I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 9 OF TELEGRAPH ACT. THUS ASSESSEE IS NOT EXCLUSIVE USE OF THE FACILITY IN QUESTION. THIS VIEW IS FORTIFIED BY DE CISION OF CIT VS. BHARTI CELLULAR LTD. (ITA 515/2013) (DELHI HIGH COU RT) AND BY DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF J YOTI ELECTRICAL LTD. 255 ITR 345. SAME IS UPHELD. 5. NEXT ISSUE IS WITH REGARDS TO INITIAL YEAR OF PR OVIDING TELECOMMUNICATION SERVICES. ASSESSING OFFICER OBSE RVED THAT IN ASSESSMENT ORDER FOR A.Y. 06-07 THE THEN ASSESSING OFFICER HELD THAT COMPANY HAD STARTED PROVIDING TELECOMMUNI CATION SERVICES WITH EFFECT FROM A.Y. 1996-97 AND NOT 1997 -98 AS HAS BEEN CLAIMED BY ASSESSEE. ACCORDINGLY ASSESSING O FFICER FOLLOWED ASSESSING OFFICERS ORDER IN 05-06 AND DIS ALLOWED THE CLAIM OF ASSESSEE. THE CLAIM OF DEDUCTION U/S. 80I A HAD EXPIRED IN A.Y. 05-06. 5.1. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME CIT(A) ALLOWED THIS CLAIM BY OBSERVING THAT ITAT IN ASSESSEES OWN CASE FOR A.Y. 06-07 HAS HELD THAT ASSESSEE STARTED PROVIDING TELECOMMUNICAT ION SERVICES IN A.Y. 1997-98 AND NOT IN 96-97 FOLLOWIN G THE SAID ORDER OF CIT(A) CIT(A) DIRECTED THE ASSESSING OFFI CER TO CONSIDER THE YEAR IN WHICH THE ASSESSEE STARTED PRO VIDING TELECOMMUNICATION SERVICES AS A.Y. 97-98. I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 10 5.2 SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF RE VENUE. WE FIND THAT ITAT AHMADABAD BENCH A VIDE ITS ORD ER DATED 29.01.2010 FOR A.Y. 06-07 IN PARA 6 TO 6.3 HAS DECI DED ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS REFERRED TO BEFORE US. THE ISSUE BEFORE US IS AS TO WHEN THE ASSESSEE STAR TED PROVIDING TELECOM SERVICES IN TERMS OF PROVISIONS O F SECTION 80IA(4}(II) OF THE ACT. THE ISSUE IS NOT AS TO WHEN THE ASSESSEE SET UP OR COMMENCED BUSINESS AS HAS BEEN CONSIDERED BY THE ID. CIT(A). UNDISPUTEDLY AFTER S IGNING THE LICENSE AGREEMENT ON JANUARY 11 1996 THE ASSESSEE STARTED THE PROCESS OF INSTALLATION OF VARIOUS INFR ASTRUCTURAL FACILITIES LIKE TELECOM TOWERS LEASED LINES DATA CIRCUITS AND OTHER COMMUNICATION EQUIPMENTS ETC. AT VARIOUS SITE S. MERE RECEIPT OF LICENSE TO PROVIDE TELECOMMUNICATION SER VICES WITHOUT ANY INFRASTRUCTURE OR RESOURCES WOULD NOT R ESULT IN PROVIDING TELECOMMUNICATION SERVICES. IN THIS CONNE CTION IT WOULD BE RELEVANT TO READ THE FOLLOWING NOTE B-1 TO THE ANNUAL ACCOUNTS FOR F.Y. 1995-96 WHICH REVEALS AS UNDER; 'AS THE COMPANY HAS NOT COMMENCED ITS COMMERCIAL SERVIC ES DURING THE YEAR UNDER REVIEW NO SEPARATE PROFIT AN D LOSS ACCOUNT HAS BEEN PREPARED. INSTEAD THE STATEMENT ON INCIDENTAL EXPENDITURE DURING CONSTRUCTION PERIOD P ENDING ALLOCATION HAS BEEN PREPARED.' FURTHER THE NOTE B-6 READS AS UNDER: 'AS THE COMPANY HAS NOT STARTED COMMERCIAL SERVICES DURING THE YEAR UNDER REVIEW INFORMATIONS STATED IN PARAG RAPH 3 AND 4A OF PAN II OL SCHEDULE VI TO THE COMPANIES ACT 1956 ARE NOT APPLICABLE.' 6.1 AS POINTED OUT BY THE ID. AR WE FIND THAT AS ON 31-03- 1996 ONLY CAPITAL ADVANCE OF RS. 1 06 50 000/- SHOW N UNDER THE HEAD 'FIXED ASSETS' WAS GIVEN BESIDES PAY MENT OF LICENSE FEE OF RS. 46 34 54 000/-. THE COMPANY STAR TED THEIR I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 11 COMMERCIAL OPERATIONS IN AHMEDABAD/GANDHINAGAR ONLY ON 24-01-1997 AND ACCORDINGLY SALES AND SERVICE REVEN UE WAS REFLECTED FOR THE FIRST TIME IN THE BALANCE SHEET A S ON 31-03- 1997 TO THE EXTENT OF RS. 4 32 28 337/- THE LIST OF CELLULAR PROVIDERS AS ON 31-03-2006 ( COPY PLACED ON PAGE 4 OF THE PAPER BOOK) ALSO MENTIONS THE DATE OF START OF INIT IAL SERVICES AS 21-01-1997. EVEN THE ASSESSMENT ORDER DATED 29-0 1- 1999 IN THE ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 1996-97 CONCLUDED THAT NO BUSINESS ACTIVITIES WERE CARRIED OUT. THESE EVIDENCES LEAD ONLY TO ONE CONCLUSION TH AT THE ASSESSEE DID NOT START PROVIDING TELECOMMUNICATION SERVICES IN THE PERIOD RELEVANT TO THE AY 1996-97.WE ARE FUR THER OF THE OPINION THAT WHETHER OR NOT THE ASSESSEE STARTE D PROVIDING TELECOMMUNICATION SERVICES IN ANY YEAR HAS TO BE DECIDED IN THE ASSESSMENT PROCEEDINGS FOR THAT YEAR IN THE LIGHT OF THE RELEVANT FACTS AND CIRCUMSTANCES OBTAI NING IN THAT ASSESSMENT YEAR ALONE. HERE WE MAY REFER TO TH E FOLLOWING PASSAGE OCCURRING IN NEW JEHANGIR VAKIL M ILLS CO. LTD. V. CIT [1963] 49 ITR 137 (SC) 142: ' THE EXTENT TO WHICH A DECISION GIVEN BY AN INCOME-T AX OFFICER FOR ONE ASSESSMENT YEAR AFFECTS OR BINDS A DECISION FOR ANOTHER YEAR HAS BEEN CONSIDERED BY COURTS SEVERAL TIMES AND SPEAKING GENERALLY IT MAY BE STATED THAT THE DO CTRINE OF RES JUDICATA OR ESTOPPEL BY RECORD DOES NOT APPLY T O SUCH DECISIONS; IN SOME CASES IF HAS BEEN HELD THAT THOUGH THE INCOME-TAX OFFICER IS NOT BOUND BY THE RULE OF RES JUDICATA OR ESTOPPEL BY RECORD HE CAN REOPEN A QUESTION PREVIO USLY DECIDED ONLY IF FRESH FACTS COME TO LIGHT OR IF THE EARLIER DECISION WAS RENDERED WITHOUT TAKING INTO CONSIDERA TION MATERIAL EVIDENCE ETC.' 6.2 IN THE CASE UNDER CONSIDERATION THE AO HAS NO T REOPENED THE ASSESSMENT PROCEEDINGS FOR THE AY 1996 -97. INSTEAD THE FINDINGS RECORDED IN THE AY 1996-97 AR E BEING RECONSIDERED IN THE YEAR UNDER CONSIDERATION. THIS APPROACH OF THE AO IS AGAINST THE SETTLED POSITION IN LAW. A S OBSERVED BY THE HON'BLE APEX COURT IN THEIR AFORESAID DECISI ON AO CAN REOPEN A QUESTION PREVIOUSLY DECIDED ONLY IF FR ESH FACTS COME TO LIGHT OR IF THE EARLIER DECISION WAS RENDER ED WITHOUT TAKING INTO CONSIDERATION MATERIAL EVIDENCE ETC. N O SUCH I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 12 MATERIAL HAS BEEN PLACED BEFORE US ON BEHALF OF THE REVENUE THAT CERTAIN FRESH FADS CAME TO LIGHT OR THAT RELEV ANT MATERIAL EVIDENCE WAS IGNORED AT THAT TIME IN THE PROCEEDINGS FOR THE AY 1996-97. IN THESE CIRCUMSTAN CES WE FIND MERIT IN THE UNDISPUTED CONTENTIONS OF THE ID. AR THAT PRINCIPLES OF CONSISTENCY SHOULD HAVE BEEN ADHERED TO. IN THIS CONNECTION HON'BLE JURISDICTIONAL HIGH COURT IN THEIR DECISION IN THE CASE OF TARABEN RAMANBHAI PATEL & ANOTHER (SUPRA) IN THE CONTEXT OF LEVY OF PENALTY U/S 271(1 )(A) OBSERVED AS UNDER: ' IT IS NO DOUBT TRUE THAT THE STRICT RULE OF THE DOC TRINE OF RES JUDICATA DOES NOT APPLY TO PROCEEDINGS UNDER THE IN COME-TAX ACT. AT THE SAME TIME IT IS EQUALLY TRUE THAT UNLES S THERE IS A CHANGE OF CIRCUMSTANCES THE AUTHORITIES WILL NOT D EPART FROM PREVIOUS DECISIONS AT THEIR SWEET WILL IN THE ABSEN CE OF MATERIAL CIRCUMSTANCES OR REASONS FOR SUCH DEPARTUR E : JOINT FAMILY OF UDAYA CHINUBHAI V. CIT [1967] 63 ITR 416 (SC) AIR 1967 SC 762 ; RADHASOAMI SATSANG V. CIT [1992] 1 93 ITH 321 (SC) ; AIR 1992 SC 377; H. A. SHAH AND CO. V. CIT/EPT [1956] 30 ITR 618 (BOM). IN THE LAST MENTIONED CASE IT WAS OBSERVED THAT IF THE QUESTION WAS NOT CONSIDERED IN DETAIL IN EARLIER PR OCEEDINGS IT IS OPEN TO THE AUTHORITIES TO CONSIDER THOSE DOC UMENTS AND TO COME TO A DIFFERENT CONCLUSION. BUT IF THE QUEST ION IS ALREADY DECIDED ON THE BASIS OF THE FACTS AND THERE IS NO CHANGE IN THAT FACTUAL POSITION IT CANNOT BE REOPE NED. IN THE INSTANT CASE AS OBSERVED BY US HEREINABOVE THE FA CT WAS BROUGHT TO THE NOTICE OF THE RESPONDENT AUTHORITY B Y THE PETITIONERS THAT LITIGATION WAS GOING ON BETWEEN TH E PARTIES AND THE RECEIVER WAS APPOINTED BY THE HIGH COURT OF BOMBAY. THAT FACT WAS ALSO ACCEPTED BY THE DEPARTMENT FOR T HE ASSESSMENT YEAR 1978-79 AND EVEN FOR THE YEAR 1982- 83 IN RESPECT OF A NUMBER OF APPEALS FILED BY OTHER CO-OW NERS AS ALSO BY SOME OF THE PETITIONERS. IN OUR OPINION TH ERE WAS NO GOOD AND JUSTIFIABLE CAUSE TO TAKE A DIFFERENT VIEW WHEN SOME APPEALS CAME BEFORE A DIFFERENT OFFICER WITHOUT THERE BEING ANY CHANGE IN THE FACTUAL POSITION AND WHEN T HE EARLIER DECISION WAS NOT CHALLENGED BY THE DEPARTMENT.' I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 13 6.3 THE AFORESAID DECISION HAS BEEN FOLLOWED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THEIR SUBSEQUENT DECIS ION IN LALLUDAS CHILDREN TRUST VS CIT 251 ITR 50{GUJ) .SIM ILAR VIEW HAS BEEN TAKEN IN THE SEVERAL CASES INCLUDING IN DIT VS. LOVELY BAL SHIKHA PARISHAD 266 ITR 349(DEL.) DIT VS. GURU NANAK VIDHYA BHANDAR TRUST 272 ITR 379(DEL.) CIT VS. LEADER VALVES LTD. 295 ITR 273(P&H) AND CIT VS. D S PROMOTERS & DEVELOPERS PVT. LTD. 25 DTR (DEL) 8 AR IHANT BUILDERS DEVELOPERS & INVESTORS (P.) LTD V. ITAT [2 005] 277 ITR 239 (MP) ASSTT. CIT V. GENDALAL HAZARILAL & CO . [2003] 263 ITR 679 (MP) CIT V. NEO POLY PACK (P.) LTD [20 00] 245 ITR 492 (DELHI) . DHANSIRAM AGARWALLA V. CIT [1996] 217 ITR 4 (GAUHATI) CIT V. SHIV SAGAR ESTATE [2002] 257 IT R 59 (SC) AND UNION OF INDIA V. SATISH PANNALAL SHAH [2001] 2 49 ITR 221 (SC). IN OUR OPINION THERE WAS NO GOOD AND JUS TIFIABLE CAUSE TO TAKE A DIFFERENT VIEW AND CONCLUDE IN THE ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERA TION THAT THE AY 1996-97 WAS THE FIRST YEAR WHEN THE ASS ESSEE STARTED PROVIDING TELECOMMUNICATION SERVICES WITHO UT THERE BEING ANY CHANGE IN THE FACTUAL POSITION AND WHEN T HE EARLIER DECISION WAS NOT CHALLENGED BY THE DEPARTME NT. AS POINTED OUT IN THE DIRECTOR'S REPORT FOR THE AY 199 7-98 AND THE RELEVANT ACCOUNTS FOR THAT YEAR THE ASSESSEE S TARTED PROVIDING TELECOMMUNICATION SERVICES ONLY IN THE PE RIOD RELEVANT TO THE AY 1997-98. THE EVIDENCE BROUGHT TO OUR NOTICE BY THE ID. AR ON BEHALF OF THE ASSESSEE AND UNCONTROVERTED BY THE REVENUE UNMISTAKEABLLY POINTS OUT THAT THE ASSESSEE STARTED PROVIDING TELECOMMUNICATI ON SERVICES IN THE PERIOD RELEVANT TO THE AY 1997-98 A ND THIS HAS ALREADY BEEN CONCLUDED IN THE ASSESSMENT PROCEE DINGS FOR THE RELEVANT AY 1997-98. IN VIEW THEREOF WE HA VE NO HESITATION IN VACATING THE FINDINGS OF THE LOWER AU THORITIES ON THIS ISSUE AND. THEREFORE ALLOW GROUND NOS. 1 T O 1.3 IN THE APPEAL OF THE ASSESSEE. 5.3 NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLE DGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR SO FOLL OWING THE SAME REASONING WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS DIRECTED THE ASSESSING OFFICER TO CONSIDER THE I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 14 YEAR IN WHICH ASSESSEE HAS STARTED PROVIDING TELECOMMUNICATION SERVICES AS A.Y. 97-98 IN STEAD O F 96-97 AS HELD BY ITAT AHMEDABAD BENCH A IN ASSESSEES OWN CASE FOR A.Y. 2006-07. SAME IS UPHELD. 6. NEXT ISSUE IS WITH REGARDS TO AMENDED PROVISIONS AND ALLOWABILITY OF DEDUCTION U/S. 80IA OF THE ACT. AS SESSING OFFICER OBSERVED THAT IN ASSESSMENT ORDER FOR A.Y. 06-07 THE THEN ASSESSING OFFICER HAD HELD THAT COMPANY HAD ST ARTED PROVIDING TELECOMMUNICATION SERVICES WITH EFFECT FR OM A.Y.1996-97 AND NOT FROM A.Y. 97-98 AS HAS BEEN CLA IMED BY ASSESSEE. ACCORDINGLY ASSESSING OFFICER FOLLOWED ASSESSING OFFICERS ORDER PASSED IN A.Y. 05-06 AND DISALLOWED CLAIM OF ASSESSEE TO CLAIM DEDUCTION U/S. 80IA AS PRESCRIBED PERIOD TO CLAIM DEDUCTION U/S.80IA HAS EXPIRED IN A.Y. 05-06 ITSELF. 6.1 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHO RITY WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME CIT(A) OBSERVED THAT ITAT IN ASSESSEES OWN CASE FOR A.Y. 06-07 HELD THAT AMENDE D PROVISIONS OF SECTION 80IA (APPLICABLE FROM A.Y. 20 00-01) OF THE ACT ARE APPLICABLE TO THE ASSESSEES CASE AND ACCOR DINGLY ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S. 80IA OF TH E ACT. FOLLOWING THE SAID ORDER OF ITAT CIT(A) DIRECTED T HE ASSESSING OFFICER TO APPLY THE AMENDED PROVISIONS APPLICABLE FROM A.Y. 2000-01 AND ALLOW DEDUCTION U/S. 80IA OF THE ACT. IN FACT I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 15 ITAT AHMADABAD IN ASSESSEES OWN CASE VIDE ITS ORD ER DATED 29.01.2010 FOR A.Y. 06-07 HAS HELD AS UNDER: 12.8 IN VIEW OF THE FOREGOING WE ARE OF THE OPI NION THAT THE ASSESSEE WAS JUSTIFIED IN EXERCISING OPTIO N IN TERMS OF THE AMENDED PROVISIONS ESPECIALLY WHEN THE PROV ISIONS OF SEC. 80IA(4)(II) CLEARLY STIPULATE THAT THE OPTION IS AVAILABLE EVEN TO THOSE UNDERTAKINGS WHICH HAD STARTED PROVID ING TELECOMMUNICATION SERVICES ON OR AFTER 1.4.1995. TH EREFORE WHEN THE ASSESSEE FULFILLED ALL OTHER STIPULATED CO NDITIONS IN TERMS OF THE RELEVANT PROVISIONS OF SEC. 80IA OF TH E ACT THE ID. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE BE NEFIT OF SUBSTITUTED PROVISIONS WAS AVAILABLE ONLY TO THOSE UNDERTAKINGS WHICH WERE GRANTED A LICENSE AFTER 1.4 .1995 AND COULD NOT START OPERATIONS UNTIL 1.4.2002. WE A RE OF THE OPINION THAT SUCH AN RESTRICTIVE INTERPRETATION DOE S NOT EMERGE FROM THE AMENDED PROVISIONS. THE ID. CIT(A) WAS ALSO NOT JUSTIFIED IN CONCLUDING THAT THE ASSESSEE HAVING EXERCISED OPTION IN THE PERIOD RELEVANT TO THE AY 1 997- 98[EVEN THOUGH THERE WAS NO SUCH PROVISION OF EXERC ISING OPTION AND THE ASSESSEE COULD NOT CLAIM ANY SUCH DE DUCTION IN VIEW OF LOSS] PROVISIONS OF SEC. 80IA OF THE AC T SUBSTITUTED FROM THE AY 2002-03 WOULD NOT APPLY. 12.9 IN VIEW OF THE FORGOING GROUND NOS.2 2.1 & 2.2 IN THE APPEAL OF THE ASSESSEE ARE ALLOWED. 6.2 NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLE DGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR SO FOLL OWING THE SAME REASONING WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS RIGHTLY DIRECTED THE ASSESSING OF FICER TO APPLY THE AMENDED PROVISIONS TO BE APPLICABLE FROM A.Y. 2 000-01 AND ACCORDINGLY ALLOWING DEDUCTION U/S. 80IA OF TH E ACT. SAME IS UPHELD. 7. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF RS . 5 07 20 198/- MADE BY ASSESSING OFFICER ON ACCOUNT OF I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 16 REVENUE FROM SHARING OF CELL SITE FOR CLAIM OF DEDU CTION U/S. 80IA OF THE ACT. ASSESSING OFFICER OBSERVED THAT R EVENUE FROM SHARING OF CELL SITE IS NOT DERIVED BY UNDERTAKING FROM TELECOMMUNICATION SERVICE. ASSESSING OFFICER STATE D THAT REVENUE FROM CELL SITE SHARING IS ACCEPTED BY ASSES SEE BY LEASING OUT OF ITS ASSETS. FURTHER LEASING OF ASSE TS IS NOT ELIGIBLE BUSINESS U/S. 80IA(4) OF THE ACT. ACCORDI NGLY PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT I N CASE OF CIT VS. PARAS OIL EXTRACTION LTD. 230 ITR 266 ASSE SSING OFFICER OBSERVED THAT DEDUCTION U/S. 80IA IS NOT AV AILABLE ON THE REVENUES EARNED FROM SUCH LEASING OF ASSETS. 7.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY WHEREIN CIT(A) OBSERVED THAT ITAT IN ASSESSEES OWN CASE FOR A.Y. 05-06 & 06-07 HAS HELD THAT REVENUE RECEIVED F ROM SHARING OF CELL SITE IS DIRECTLY AND INEXTRICABLE L INKED TO THE BUSINESS INCOME OF INDUSTRIAL UNDERTAKING AND IS EL IGIBLE FOR DEDUCTION U/S. 80IA OF THE ACT. ACCORDINGLY HE DI RECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S. 80IA OF T HE ACT ON INCOME EARNED FROM CELL SITE SHARING TO THE ASSESSE E. WE FIND THAT ITAT AHMADABAD IN ITS ORDER DATED 09.01.2009 FOR A.Y. 2005-06 VIDE PARA 35 HAS HELD AS UNDER: 35. WE FIND FROM THE ABOVE FACT THAT THE INCOME GENERATED ON ACCOUNT OF BANDWIDTH CAPACITY AND SITE SHARING WHICH HAS DIRECT NEXUS WITH THE BUSINESS I NCOME OF THE INDUSTRIAL UNDERTAKING IT MEANS THAT THE IN COME DERIVED FROM BUSINESS OF INDUSTRIAL UNDERTAKING IS ELIGIBLE FOR DEDUCTION U/S.80IA(1) OF THE ACT. IN SECTION 80 IA THE EXPRESSION USED IS ' PROFITS AND GAINS DERIVED FROM ANY I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 17 BUSINESS OF INDUSTRIAL UNDERTAKING' CLEARLY SHOWS THE INTENTION OF THE LEGISLATURE WHILE INSERTING THE WO RDS 'ANY BUSINESS OF WAS TO GIVE BENEFIT OF DEDUCTION NOT ONLY PROFITS & GAINS DERIVED FROM INDUSTRIAL UNDERTAKING BUT ALS O TO GIVE BENEFIT OF DEDUCTIONS IN RESPECT OF INCOME HAVING A CLAUSE AND DIRECT NEXUS WITH THE PROFITS & GAINS OF THE INDUSTRIAL UNDERTAKING. THE WORD 'BUSINESS' IS A WORD OF WIDE AMPLITUDE SO AS TO COVER ANY TRADE INDUSTRY OR ANY ACT OF ADVENTURE IN THE NATURE OF TRADE WHEREAS THE WORD 'INDUSTRY' IS A WORD OF VERY LIMITED MEANING. WHENEVER THE LEGISLATURE HAD INTENDED TO GIVE BENEFIT OF DEDUCTI ONS TO .THE WIDER EXTENT OF INCOME AND NOT ONLY TO THE INCOME D ERIVED FROM INDUSTRIAL UNDERTAKING IT USED THE EXPRESSION LIKE 'PROFIT ATTRIBUTED TO'. THUS TO GIVE MORE EXTENDED BENEFIT THE STATUE HAS USED HE EXPRESSION 'INCOME DERIVED FROM BUSINESS OF INDUSTRIAL UNDERTAKING'. THUS THE LEGISLATURE CERTAINLY WANTED TO GIVE BENEFIT OF DEDUCTION NOT O NLY TO THE INCOME DERIVED FROM INDUSTRIAL UNDERTAKING BUT TO I NCOME WHICH IS DERIVED FROM BUSINESS OF INDUSTRIAL UNDERT AKING MEANING THEREBY THAT ALL SORT OF INCOME WHICH IS INEXTRICABLY RELATED TO THE CARRYING ON TO THE BUSI NESS OF INDUSTRIAL UNDERTAKING IS TO BE CONSIDERED FOR COMP UTING DEDUCTION UNDER SECTION 80-IA. THUS IF AN ACT IS R EQUIRED TO BE UNDERTAKEN ESSENTIALLY FOR CARRYING ON OF THE BU SINESS OF INDUSTRIAL UNDERTAKING AND IF ANY INCOME IS GENERAT ED OUT OF SUCH ACT THE SAME IS TO BE CONSIDERED FOR COMPUTIN G DEDUCTION UNDER SECTION 80-IA. IN THE PRESENT CASE THE INCOME FROM SALE OF EXCESS BANDWIDTH CAPACITY AND R EVENUE FROM SITE SHARING ARE DIRECTLY AND INEXTRICABLY LIN KED TO THE BUSINESS INCOME OF THE INDUSTRIAL UNDERTAKING AND T HUS DEDUCTION IS ALLOWABLE U/S. 80IA OF THE ACT. ACCORD INGLY THESE ISSUES OF THE ASSESSEE'S APPEAL ARE ALLOWED. SIMILAR VIEW HAS BEEN TAKEN BY ITAT FOR A.Y. 2006-0 7 IN ASSESSEES OWN CASE AS WELL. 7.2 NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLE DGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR SO FOLL OWING THE SAME REASONING WE ARE NOT INCLINED TO INTERFERE IN THE FINDING I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 18 THAT INCOME FROM SALE OF EXCESS BANDWIDTH CAPACITY AND R EVENUE FROM SITE SHARING ARE DIRECTLY AND INEXTRICABLY LIN KED TO THE BUSINESS INCOME OF THE INDUSTRIAL UNDERTAKING AND T HUS DEDUCTION IS ALLOWABLE U/S. 80IA OF THE ACT. ACCOR DINGLY ORDER OF CIT(A) ON THIS ISSUE IS UPHELD. 8. NEXT ISSUE IS WITH REGARDS TO PROVISION FOR DOUB TFUL DEBTS WRITTEN BACK WHILE COMPUTING DEDUCTION U/S. 115JB O F THE ACT. ASSESSING OFFICER IN HIS ORDER OBSERVED AS UNDER: SECTION 115JB HAS BEEN AMENDED BY FINANCE ACT 200 8 AND FINANCE (NO.2) ACT 2009 WITH EFFECT FROM 01.0 4.2001 AND THE AMOUNT OF DEFERRED TAX AND PROVISION THEREO F AND AMOUNT OR AMOUNTS SET ASIDE AS PROVISION FOR DIMINU TION IN VALUE OF ANY ASSETS HAS TO BE ADDED BACK. ASSES SEE VIDE LETTER DATED 14.12.2009 ALSO ACCEPTED THAT WIT H THE RETROSPECTIVE AMENDMENT OF THE ACT FOLLOWING AMOUNT HAVE TO BE ADDED BACK FOR THE PURPOSE OF COMPUTATIO N OF THE BOOKS PROFIT. AS THERE IS NO DISPUTE WITH RESP ECT TO THIS ISSUE THE PROVISION FOR DEFERRED TAX AND FOR D OUBTFUL DEBT IS BEING ADDED BACK. 8.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY WHEREIN CIT(A) CONSIDERED THE SUBMISSION ON BEHALF OF ASSESSEE AND OBSERVED THAT ONCE ASSESSING OFFICER H AS ADDED PROVISION FOR DOUBTFUL DEBTS CORRESPONDINGLY THE PR OVISIONS FOR DOUBTFUL DEBTS WRITTEN BACK HAS TO BE REDUCED WHILE COMPUTING BOOKS PROFITS U/S. 115JB OF THE ACT. ACCORDINGLY HE RIGHTLY DIRECTED THE A.O. TO REDUCE THE PROVISION FOR DOUBT FUL DEBTS WRITTEN BACK WHILE COMPUTING DEDUCTION U/S.115JB OF THE ACT. SAME IS UPHELD. I.T.A. NOS. 949 & 951/AHD/2011 FOR A.Y. 05-06 & 07- 08 (ACIT VS. VODAFONE ESSAR GUJARAT LTD.) PAGE 19 9. IN THE RESULT THIS APPEAL FILED BY REVENUE IS D ISMISSED. 10. IN ITA NO. 949/AHD/2011 THE ONLY ISSUE IS WITH REGARDS TO LICENSE FEES. SIMILAR ISSUE AROSE IN A.Y. 07-08 WHICH HAS BEEN DECIDED IN FAVOUR OF ASSESSEE VIDE PARA NO. 4 OF THIS ORDER. FACTS BEING SIMILAR SO FOLLOWING THE SAME REASONIN G WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS RIGHTLY DELETED THE DISALLOWANCE OF RS.46 08 18 462/- MADE BY ASSESSING OFFICER ON ACCOUNT OF LICENSE FEES. SAME IS UPHELD. 11. AS A RESULT BOTH APPEALS FILED BY REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF NOVEMBER 2014. SD/- SD/- (N. S. SAINI) (SHAILENDR A KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMB ER TRUE COPY S.K.SINHA $ $ $ $ &' &' &' &' ('# ('# ('# ('# / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. -- . / CONCERNED CIT 4. .- / CIT (A) 5. '23 & / DR ITAT AHMEDABAD 6. 367 89 / GUARD FILE. BY ORDER / $ :/ -