ITO 16(3)(1), MUMBAI V. QUICK TELECOM, MUMBAI

ITA 1628/MUM/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2651 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 12-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI N.V. VASUDEVAN, J.M. AND SHRI A.L. GEHL OT, A.M. ITA NO. 1628/M/09 ASSESSMENT YEAR: 2005-06 INCOME TAX OFFICER 16(3)(1), APPELLANT MATRUMANDIR, MUMBAI 400 007. VS. M/S QUICK TELECOM, RESPONDENT ROOM NO. 2, GARDI MANSION, OPERA HOUSE, MUMBAI 400 004. APPELLANT BY : MR. AARSI PRASAD RESPONDENT BY : MR. VIJAY MEHTA ORDER PER A.L. GEHLOT, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-XVII, MUMBAI, ON 31.12.2008 FOR THE ASSESS MENT YEAR 2005- 06 WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GRO UNDS OF APPEAL:- 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE DEDUCTION U/S 80IA(4)(II) OF THE IT AC T TO THE ASSESSEE TREATING THE ASSESSEE ENGAGED IN THE BUSIN ESS OF PROVIDING BASIC TELECOM SERVICES UNDER FRANCHISEE S CHEME OF MTNL. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS ON PROVIDI NG BASIC TELECOM SERVICES UNDER D.I.D. FRANCHISEE SCHEME BY THE MTNL . THE AO AFTER EXAMINING THE CASE IN DETAIL, HELD THAT DEDUCTION U /S 80IA(4)(II) IS NOT ALLOWABLE TO THE ASSESSEE IN VIEW OF THE FACT THAT THE ASSESSEE FIRM IS NOT IN A POSITION TO PROVIDE ANY OF THE SERVICES LI STED IN CLAUSE (II) OF SUB-SECTION (4) TO SECTION 80IA OF THE ACT. THE AO FURTHER NOTICED THAT DEDUCTION U/S 80IA FOR AYS. 2003-04 AND 2004-05 HAD NOT BEEN ITA NO. 1628/M/08 M/S QUICK TELECOM 2 ALLOWED BY HIS PREDECESSORS. IT WAS ALSO NOTED BY T HE AO THAT THE ASSESSEES CLAIM U/S 80IA(4)(II) WAS BASED ON THE J UDGMENT OF ITAT IN THE CASE OF M/S KANSAN COMMUNICATION PVT. LTD. V. D CIT, IN ITA NO. 4355/M/02, AY 1998-99 VIDE ORDER DATED 12.09.2003. THE AO ALSO DISALLOWED DEDUCTION U/S 80IA IN THE YEAR CONSIDERA TION. THE CIT(A) DIRECTED THE AO TO ALLOW DEDUCTION U/S 80IA OBSERVI NG AS UNDER:- 4. THE APPELLANT HAS RELIED ON THE DECISION OF CIT( A) IN THE CASE OF SAMVAD TELECOM FOR AY 2004-05 APPEAL NO. CIT(A)XVII/ITO 16(3)/IT 171/06-07 DATED 23.11.2006 AND THE DECISION OF ITAT, MUMBAI IN THE CASE OF KANSAN COMM UNICATIONS PVT. LTD. VS. DCIT IN ITA NO. 5121/MUM/2006 DATED 2 7.11.2007 FOR AY 2003-04. BOTH THE ITAT ORDER AND MY PREDECES SORS ORDER HAVE DECIDED THAT THE SERVICES RENDERED BY THE APPE LLANT CAN BE TERMED AS BASIC TELECOM SERVICES. WITH DUE RESPECT TO THIS ORDERS OF THE ITAT & FOLLOWING THE ORDER OF MY PREDECESSOR AND THE FACTS ARE IDENTICAL TO THE CASES REFERRED TO ABOVE, THE A O IS DIRECTED TO ALLOW THE DEDUCTION UNDER SECTION 80IA(4)(II) OF TH E IT ACT. 3. AT THE OUTSET, THE LEARNED AR POINTED OUT THAT T HE AO HAS RELIED UPON HIS PREDECESSORS ORDER FOR AY 2003-04 AND 200 4-05. THE CIT(A) ALLOWED ASSESSEES CLAIM IN BOTH THE YEARS, WHICH H AVE BEEN UPHELD BY THE ITAT VIDE THEIR ORDERS IN ITA NO. 5121/MUM/200 6 FOR AY 2003-04 ORDER DATED 27 TH NOVEMBER, 2007. AND ITA NOS. 1049/M/07 & OTHERS FOR AY 2004-05 ORDER DATED 04.02.2009. 3.1 THE LEARNED AR FURTHER SUBMITTED THAT THE CIT(A ) RELIED UPON THE DECISION OF ITAT IN THE CASE OF KANSAN COMMUNIC ATIONS PVT. LTD. V. DCIT IN ITA NO. 4355/MUM/02 ORDER DATED 12.09.20 03 WHEREIN ON IDENTICAL SET OF FACTS DEDUCTION U/S 80IA HAS BE EN ALLOWED. 3.2 THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF AO. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT IN EARLIER AYS. 20 03-04 AND 2004-05, THE ITAT ON IDENTICAL SET OF FACTS HAS ALLOWED THE DEDUCTION U/S `80IA. FURTHER THE CIT(A) FOLLOWED THE ORDER OF ITAT AND I N THE LIGHT OF THAT ITA NO. 1628/M/08 M/S QUICK TELECOM 3 WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) , THEREFORE, THE ORDER OF CIT(A) IS HEREBY UPHELD. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED ON THIS 22 ND DAY OF DECEMBER, 2009. SD/- SD/- (N.V. VASUDEVAN) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED: 22 ND DECEMBER, 2009 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, D BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV S.NO. DESCRIPTION DATE INITLS 1. DRAFT DICTATED ON 18.12.09 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 21.12.09 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER