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ITA 210/BANG/2013

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0660 (ITAT-BANGALORE)
• Duration Of Justice: 6 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-03-2019
• Assessment Year: 2001-2002
• Appeal Filed On: 15-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K R NAYAYANA JCIT HEAR
• Keywords: Capital asset; Depreciation
• Section: 80IA

Judgement Text

ITA.210 TO 216/BANG/2013 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'B', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NOS.210 TO 216/BANG/2013 (ASSESSMENT YEARS : 2001-02 TO 2007-08) WEBEX COMMUNICATIONS INDIA P. LTD, DIVYASHREE CHAMBERS, B-WING, NO.11, O SHAUGHNESSEY ROAD, OFF LANGFORD ROAD, BENGALURU 560025 .. APPELLANT PAN : AABCC0256A V. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 12(5), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. RAJAN VORA, CA REVENUE BY : SMT. NEERA MALHOTRA, CIT & SHRI. K. R. NAYAYANA, JCIT HEARD ON : 19.03.2019 PRONOUNCED ON : 27.03.2019 O R D E R PER BENCH : THESE ARE SEVEN APPEALS ARISING OUT OF SEPARATE OR DERS OF THE CIT (A), DT.27.11.2012, FOR AYS.2001-02, 2003-04, 2 005-06, AND ORDERS DT.30.11.2012, FOR AYS.2002-03, 2004-05, 200 6-07 AND 2007-08, RESPECTIVELY. ITA.210 TO 216/BANG/2013 PAGE - 2 02. THE COMMON GROUNDS OF APPEAL RAISED BY THE ASSE SSEE, ARE AS UNDER : THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS AS UNDER : 02. THE LD. AR HAD SUBMITTED BEFORE US THAT THIS IS THE SECOND ROUND OF LITIGATION AND HAS SUBMITTED THAT THE HONO URABLE HIGH COURT VIDE ITS ORDER IN I.T.A. NO.2775/2005, DATED 12.04.2010, IN PARA 9 TO 11, REPRODUCED HEREINBELOW, HAD REMANDED THE MATTER ITA.210 TO 216/BANG/2013 PAGE - 3 BACK TO THE AO FOR DECIDING THIS ISSUE IN TERMS OF THE OBSERVATION MADE BY THE HONOURABLE HIGH COURT : 9. FURTHER THE QUESTION AS TO WHETHER THE SERVICES RENDERED BY THE ASSESSEE COMES WITHIN THE DEFINITION OF TELECOMMUN ICATION SERVICE' HAS ALSO NOT BEEN TAKEN INTO CONSIDERATION IN ITS PROPER PERSPECTIVE AND IT HAS BEEN ANSWERED THAT THE ASSESSEE'S SERVIC E DOES NOT COME WITHIN THE SCOPE OF TELECOMMUNICATION SERV ICE. THOUGH THE INCOME TAX ACT DOES NOT DEFINE AS TO WHAT TELEC OMMUNICATION SERVICE, NEVERTHELESS, IT WOULD BE APPROPRIATE TO R E F ER TO THE DEFINITION OF TELECO MMUNICATION SERVICE AS CONTAINED IN SECTION 2(K) OF THE TELECOM REGULATORY AUTHORIT Y OF INDIA ACT, 1997. AS THE SAID ACT DIRECTLY DEALS WITH TELECOMMUNICATION AND OTHER SUCH ALLIED MATTERS, TH E SAID DEFINITION CAN BE REFERRED TO FOR THE PURPOSE OF INTERPRETING TELECOMMUNICATION SERVICE WITHIN THE MEANING OF SECTION 80-IA(4)(IL) OF THE ACT. THE DEF INITION OF TELECOMMUNICATION SERVICES UNDER THE SAID ACT, READ S AS FOLLOWS: 'SECTION 2(K) 'TELECOMMUNICATION SERVICE' MEANS SERVICE OF ANY DESCRIPTION (INCLUDING ELECTRONIC MA IL, VOICE MAIL, DATA SERVICES, AUDIT TEXT SERVICES, VIDEO TEX T SERVICES, RADIO PAGING AND CELLULAR MOBILE TELEPHON E SERVICES) WHICH IS MADE AVAILABLE TO USERS BY MEANS OF ANY TRANSMISSION OR RECEPTION OF SIGNS, SIGNALS, WRITING, IMAGES AND SOUNDS OR INTELLIGENCE OF ANY NATURE, BY WIRE, RADIO, VISUAL OR OTHER ELECTRO - MAGNETIC MEANS BUT SHALL NOT INCLUDE BROADCASTING SERVICES. PROVIDED THAT THE CENTRAL GOVERNMENT MAY NOTIFY OTHER SERVICE TO BE TELECOMMUNICATION SERVICE INCLU DING BROAD CASTING SERVICES.' 10. IT IS NECESSARY TO NOTE THAT WHILE THE DEFINITION OF TELECOMMUNICATION SERVICE UNDER SEC.2(K) OF TELECOM REGULATORY AUTHORITY OF INDIA ACT, 1997 IS AN EXHAUSTIVE DEFINITION, IT EXP RESSLY INCLUDES ELECTRONIC VOICE MAIL, DATA SERVICE, AUDIT TEXT SERVICES VIDEO TEXT SERVICES ALSO. UNDER SEC.80-IA(4)(JI) OF THE INCOME TAX ACT, THE DEFINITION IS AN INCLUSIVE DEFINITION WITH OUT SPECIFYING THE AFORESAID SERVICES. THEREFORE ON A CONSPECTUS READI NG OF BOTH THE DEFINITION UNDER TELECOM REGULATORY AUTHORITY OF IN DIA ACT AS WELL AS SEC.80-IA(4)(II) OF THE INCOME TAX ACT, THE QUES TION AS TO WHETHER THE SERVICE RENDERED BY THE APPELLANT COMES WITHIN THE ITA.210 TO 216/BANG/2013 PAGE - 4 MEANING OF TELECOMMUNICATION SERVICE HAS TO BE DETE RMINED BY TAKING INTO CONSIDERATION THE NATURE OF THE SERVICE RENDERED BY THE ASSESSEE. 11. THEREFORE, WE DEEM IT PROPER TO REMAND THE MATT ER TO THE ASSESSING OFFICER TO CONSIDER THE ENTIRE ISSUE IN T HE LIGHT OF THE AFORESAID OBSERVATION AND GIVE A FINDING AS TO WHET HER THE APPELLANT-ASSESSEE IS AN UNDERTAKING WITHIN THE MEA NING OF SECTION 80-IA(4)(II) OF THE ACT AND ALSO TO DECIDE AS TO WH ETHER THE NATURE OF SERVICE RENDERED BY THE ASSESSEE COMES WITHIN TH E MEANING OF TELECOMMUNICATION SERVICE. IT WAS THE CONTENTION OF THE LD. AR THAT DESPITE TH E SPECIFIC DIRECTION ISSUED BY THE HONOURABLE HIGH COURT NEITH ER THE AO NOR THE CIT (A) HAVE DECIDED THE SPECIFIC ISSUE WHICH W AS REMANDED BY HIGH COURT TO THE AO. THE LD. AR HAS DRAWN OUR SPECIFIC ATTENTION TO PARA 9, 9.1, 9.2, 10,11, 12, 13, 19, 2 0 & 22 OF ORDER PASSED BY THE AO ON 27.11.2012 .WE ARE REPRODUCING HERE IN BELOW PARA 22 WHICH IS FINAL FINDING OF THE AO : 22. THE TELECOMMUNICATION SERVICES DEFINED UNDER TRAI ACT IS NO DOUBT EXHAUSTIVE, BUT, THERE WAS A LOT OF DIFFERENCE BETWEEN EXHAUSTIVE / SOFISCATED TECHNOLO GY SERVICE AND BASIC INFRASTRUCTURE SERVICE UNDER THE PROVISIO N OF INCOME TAX. THEREFORE, THE NATURE OF SERVICES REQUIRED TO BE RENDERED UNDER THE TWO ACTS CANNOT REGARDED AS ONE FOR THE S AME PURPOSE. IF THE INTENTION OF THE LEGISLATURE WAS T O PROVIDE INCENTIVE TO THE UNDERTAKING FOR ALL TYPES OF TELEP HONIC SERVICES WHICH INCLUDES SOFISCATED TECHNOLOGY SERVICE, IT WO ULD HAVE VIDEN THE MEANING GOVERNED BY UNDER THE I. T. ACT. THEREFORE, THE SERVICES TO GET INCENTIVES WAS TO PROVIDE SERVI CES AS PER THE MEANING GIVEN UNDER THE I. T. ACT ONLY. FURTHER THE LD AR HAS DRAWN OUR ATTENTION TO PARA 5 .2 TO 5.7 OF CIT(A) TO THE FOLLOWING EFFECT : 5.2. I HAVE CAREFULLY CONSIDERED THE GROUNDS RAISED BY THE ARE COVERED BY THAT DEFINITION WHEN SECTION 801 A REQUIRES THAT THE CLAIMANT BE INVOLVED IN PROVIDING ITA.210 TO 216/BANG/2013 PAGE - 5 INFRASTRUCTURAL APPELLANT. THE ONLY ISSUE FOR DETER MINATION IS WHETHER THE AO WAS CORRECT IN NOT CONSIDERING TH E MEANING OF THE TERM 'TELECOMMUNICATION SERVICES' BY RECOGNIZIN G THE PROVISIONS OF THE TRAI ACT IN ADDITION TO SECTION 8 01A OF THE INCOME TAX ACT, AS PER THE SPECIFIC DIRECTIONS OF THE LD. HIGH COURT. I NOTE THAT AT PARA-23 OF THE ASSES SMENT ORDER, THE AO CONCLUDES THAT THE NATURE OF TELECOMMUNICATION SERVICES RENDERED BY THE ASSESSEE AS PER THE DEFINITION OF TRAI ACT CANNOT BE REGARDED A S TELECOMMUNICATION SERVICES UNDER THE PROVISIONS OF THE INCOME TAX ACT. THE AO HAS COME TO THIS CONCLUSION AFTER DISCUSSING AT LENGTH THE NATURE OF THE SERVIC ES RENDERED AND TECHNOLOGY USED BY THE APPELLANT, AND THE FOUNDATION OF HIS ARGUMENT HAS BEEN THAT THE NA TURE OF THE SERVICES RENDERED BY THE APPELLANT CANNOT BE RE GARDED AS A BASIC TELECOM SERVICE. HENCE, THE AO'S CONCLUS ION IS THAT AFTER CONSIDERING THE DEFINITION UNDER THE TRA I. ACT, IT CANNOT BE HELD THAT THE SERVICES OF THE APPELLAN T SERVICES. AS SUCH, I AM NOT IN AGREEMENT WITH THE APPELLANT'S CONTENTION THAT THE AO HAD NOT FOLLOWED THE DIRECTIONS OF THE LD HIGH COURT SINCE THE 'CONSPECT US READING' OF THE TRPJ ACT AND INCOME TAX ACT AS REQUIRED HAD BEEN DULY UNDERTAKEN BY THE AO BEFORE HE CAME TO HIS FINAL CONCLUSION, AND THIS FACT IS APPA RENT FROM PARAS 9.1 TO 23 OF THE ASSESSMENT ORDER. 5.3. BEFORE ME, THE APPELLANT HAS ARGUED THAT IT BE ING ENGAGED IN SERVICES SUCH AS VOICE MAIL, AND AUDIO-T O-TEXT SERVICE, AND TELECONFERENCING SERVICES TO CORPORATE CLIENTS THROUGH THE USE OF HIGH-END NET WORKING EQUIPMENT A ND COMPUTER SOFTWARE, IT IS FULLY COVERED BY THE DEFIN ITION U/S 2(K) OF THE TRAI ACT. ACCORDINGLY, IT IS ARGUED THA T SINCE IT QUALIFIES TO BE PROVIDING 'TELECOMMUNICATION SERVIC ES' UNDER THE TRAI ACT, IT IS ELIGIBLE FOR DEDUCTION FO R SUCH SERVICES U/S 801A OF THE INCOME TAX ACT. 5.4. I HAVE CONSIDERED THE ARGUMENT OF THE APPELLAN T. THE FIRST POINT TO BE NOTED IS THAT THE LD. HIGH CO URT HAS NOT SPECIFIED THAT THE DEFINITION OF TELECOMMUNICA TION SERVICES' UNDER THE TRAI ACT BE INTERPOSED IN TOTO INTO SECTION 80IA(2A). RATHER, THE COURT HAS FOUND THAT U/S 80IA(4)(II) OF THE INCOME TAX ACT, THE DEFINITION I S AN INCLUSIVE DEFINITION WITHOUT SPECIFYING THE EXACT S ERVICES. ITA.210 TO 216/BANG/2013 PAGE - 6 THEREFORE, THE DIRECTION OF THE COURT TO THE AO WAS TO EXAMINE THE SERVICE RENDERED BY THE APPELLANT AND DETERMINE ITS FITMENT TO THE MEANING OF 'TELECOMMUN ICATION SERVICE BOTH UNDER THE TRAI ACT AND THE INCOME TAX ACT CONSIDERED ON A 'CONSPECTUS READING'. THUS THE C&E ISSUE TO BE CONSIDERED IS AS TO THE NATURE OF THE SERVICE S RENDERED BY THE APPELLANT COMPANY. 5.5. THE APPELLANT COMPANY STATES THAT IT IS ENGAGE D IN VOICE MAIL, AUDIO-TO-TEXT AND TELECONFERENCE SER VICES TO CORPORATE CLIENTS. FOR THIS PURPOSE, IT USES SOPHIS TICATED NET WORKING EQUIPMENTS AND COMPUTER SOFTWARE. IN FACT, I NOTE THAT THE MARKET IMAGE OF THE APPELLANT COMPANY IS T HAT OF A PROVIDER OF WEB CONFERENCING SERVICES AND PLATFORMS FOR ONLINE MEETINGS. FOR THIS PURPOSE, THE DEPARTMENT O F TELECOM [DOT] HAS GRANTED IT A LICENCE TO MAKE USE OF CERTAIN BANDWIDTH WITHIN THE TELECOM INFRASTRUCTURE OPERATED BY THE DOT. THE APPELLANT COMPANY ITSELF D OES NOT OWN ANY OF THE BASIC TELEPHONE INFRASTRUCTURE, BUT IT HAS LEASED SOME GATEWAYS AND BANDWIDTH FROM THE DOT WITHIN WHICH IT RUNS ITS SPECIALIZED SOFTWARE FOR W EB CONFERENCING / MEETINGS AMONG CLIENTS WHO ARE SUBSC RIBERS TO ITS SERVICES. THE APPELLANT COMPANY PROVIDES SUC H SERVICES TO EDUCATIONAL COMPANIES, FINANCIAL SERVIC ES COMPANIES, NON-PROFIT ORGANIZATIONS AND PROFESSIONA L SERVICES AND ALSO OFFERS THE FACILITIES FOR RECORDI NG OF EVENTS AND MEETINGS FOR ON-DEMAND VIEWING AT A LATER TIME. THE PLATFORM IS PROVIDED OVER THE INTERNET AND ONLINE E VENTS ARE CAPABLE OF BEING ORGANIZED WITH A LARGE NUMBER OF ATTENDEES PARTICIPATING AT A TIME. 5.6. FROM THE ABOVE SERVICES RENDERED BY THE APPELLANT, IT IS APPARENT TO ME THAT THE APPELLANT IS NOT ENGAGED IN PROVIDING INFRASTRUCTURAL TELECOMMUNICAT ION SERVICES, 'WHETHER BASIC OR CELLULAR', AS REQUIRED UNDER SECTION 8OIA. THOUGH THE APPELLANT HAS ARGUED THAT SOME OF ITS ACTIVITIES SUCH AS VOICE MAIL AND AUDITO-TEX SERVICES ENTITLE IT TO BE CONSIDERED AS RENDERING TELECOMMUN ICATION SERVICES U/S 2(K) OF THE TRAI ACT, IT IS CLEAR FROM THE NATURE OF THE APPELLANT'S BUSINESS MODEL THAT ACTUA LLY THE SERVICES P. IT ARE ALSO OF THE NATURE OF DATA ' BROADCAST SERVICES', SUCH SERVICES BEING SPECIFICALLY EXCLUD ED FROM THE DEFINITION OF TELECOMMUNICATION SERVICES UNDER SECT ION 2(K) OF ITA.210 TO 216/BANG/2013 PAGE - 7 THE TRAI ACT. THE APPELLANT IS ONLY PROVIDING A BRO ADCASTED SERVICE FOR TELECONFERENCING WITHIN BANDWIDTH PURCH ASED FROM THE DOT INFRASTRUCTURE BY MEANS OF A LICENSE TO PROVIDE SUCH VALUE ADDED SERVICES. THIS IS THE BASIC AND PRIMARY SERVI CE RENDERED BY THE APPELLANT, DATED 20-10-1997 ARE INCLUSIVE OF TELEMARKETING, TELE-COMPLAINT, TELE-BOOKING, TELECONFERENCING, FAX ON DEMAND. THEREFORE IN MY VI EW, THE SERVICES PROVIDED DO NOT FALL EITHER MEANING THE A MBIT OF TELECOMMUNICATION SERVICES AS PER THE TRAI DEFINITI ON OR SERVE TO MAKE THEM ELIGIBLE AS A PROVIDER OF TELECOMMUNICATI ON INFRASTRUCTURAL SERVICES [WHETHER BASIC OR CELLULAR ] AS PER THE DEFINITION OF SECTION 801A(4)(II). THE LD. COURT HA S NOTED THAT THE DEFINITION IN THE INCOME TAX ACT IS AN INCLUSIV E THE. HOWEVER, THE INCLUSIONS AS SPECIFIED IN THE LAW VIZ RADIO-PA GING, DOMESTIC SATELLITE SERVICE, NET WORK OF TRUNKING BR OAD - BAND NET WORK AND INTERNET SERVICES DO NOT COVER THE SER VICES OF TELECONFERENCING AND PROVIDING PLATFORMS FOR ONLINE MEETINGS AS RENDERED BY THE APPELLANT COMPANY. I AL SO NOTE THAT THE AO'S RELIANCE ON THE CASE LAW OF VSNL ALRE ADY REFERRED TO IN THIS ORDER IS RELEVANT SINCE THE LD. MUMBAI ITAT HAS ELABORATED THE SCOPE OF THE WORD 'BASIC' TELECOMMUNICATION SERVICES AS FOLLOWS: IN ORDER TO ENCOURAGE THE INVESTMENT BY THE PRIVATE SECTOR, THE LEGISLATURE AMENDED THE PROVISIONS OF S ECTION 80- 1A. KNOWING WELL THAT THE EXPRESSION 'TELECOMMUNICA TION SERVICES' IS OF WIDE AMPLITUDE, THE LEGISLATURE, WH ILE AMEND ING THE PROVISIONS OF SECTION 80 -IA , QUALIFIED THIS EXPRESSION BY THE WORDS 'WHETHER BASIC OR CELLULAR'. THIS CLEARLY SHOWS THAT THE LEGISLATURE HAS RESTRICTED THE SCOPE OF THE EXP RESSION 'TELECOMMUNICATION SERVICES'. THE WORD 'CELLULAR' UNDISPUTEDLY REFERS TO VOICE COMMUNICATION THROUGH MOBILE PHONE BASED ON THE NEW TECHNOLOGY. THE WORD 'BASIC' IS A GENERAL WORD, IT IS WELL-SETTLED LEGAL POSITION THAT WHEN G ENERAL WORD IS USED ALONG WITH A SPECIFIC WORD, THEN THE GENERAL W ORD IS TO BE UNDERSTOOD IN THE SENSE IN WHICH SPECIFIC WORD IS U SED. WORD 'BASIC' WOULD, THEREFORE, MEAN VOICE COMMUNICATION THROUGH THE EXISTING SYSTEM PRIOR TO THE INTRODUCTION OF TH E CELLULAR TECHNOLOGY. THUS, THE WORD 'BASIC' USED IN SECTION 80-/A WOULD ONLY MEAN VOICE COMMUNICATION THROUGH CONVENTIONAL SYSTEM, I.E., THROUGH CABLE TECHNOLOGY, WHICH IS POPULARLY KNOWN AS COMMUNICATION THROUGH LANDLINE PHONES. THUS, THE WO RDS 'BASIC OR CELLULAR' WOULD MEAN VOICE COMMUNICATION EITHER ITA.210 TO 216/BANG/2013 PAGE - 8 THROUGH LAND/ME SYSTEM OR THROUGH CELLULAR SYSTEM. THE OTHER SYSTEMS, EVEN FOR VOICE COMMUNICATION WERE, THEREFORE, NOT INTENDED BY THE LEGISLATURE WHILE AM ENDING THE PROVISIONS OF SECTION 80-I BY THE FINANCE ACT, 1995 . [PARA 91]. THEREFORE, VOICE COMMUNICATION THROUGH SATELLITE, BASED ON LATEST TECHNOLOGY, WAS OUTSIDE THE SCOPE O F THE EXPRESSION TELECOMMUNICATION WHETHER BASIC OR CELL ULAR USED IN SECTION 80-IA. THE EARTH STATION IS PART O F THE SYSTEM OF VOICE COMMUNICATION THROUGH SATELLITE. EARTH ST ATION AND SATELLITE ARE SUPPLEMENTARY TO EACH OTHER. THIS SYSTEM IS ENTIRELY DISTINCT AND DIFFERENT FROM THE CABLE OR C ELLULAR SYSTEM. THIS VIEW IS ALSO FORTIFIED BY THE SUBSEQUE NT AMENDMENT, IN SECTION 80-IA BY THE FINANCE (NO. 2) ACT, 1996 EFFECTIVE FROM THE ASSESSMENT YEAR 1997-98. HA D THE LEGISLATURE INTENDED TO GIVE THE WIDER MEANING TO T HE EXPRESSION 'TELECOMMUNICATION SERVICES', IT WOULD N OT HAVE RESTRICTED THE MEANING OF SUCH EXPRESSION BY U SING THE WORDS 'WHETHER BASIC OR CELLULAR' AND SUBSEQUEN TLY ENLARGED THE SCOPE BY INCLUDING OTHER MODES OF COMMUNICATION. SERVICE THROUGH SATELLITE WAS INCLUD ED ONLY WITH EFFECT FROM THE ASSESSMENT YEAR 1997-98, WHICH ALSO MEANS THAT THE LEGISLATURE DID NOT INTEND TO GIVE T HE BENEFIT OF SECTION 80-IA TO TELECOMMUNICATION SERVICES THROUGH SATELLITE OR EARTH STATION FOR THE ASSESSMENT YEAR 1996-97. T HE LEGISLATURE WAS COMPETENT TO ATTEND THE PROVISIONS RETROSPECTIVELY, I.E., FROM THE ASSESSMENT YEAR 199 6-97, BUT INTENTIONALLY MADE THE AMENDMENT EFFECTIVE FROM THE ASSESSMENT YEAR 1997-98 ONLY. THEREFORE, THE TELECOMMUNICATION SERVICES THROUGH EARTH STATION SE T UP BY THE ASSESSEE COULD NOT BE CHARACTERIZED EITHER BASI C OR CELLULAR AND, THEREFORE, THE ASSESSEE WOULD NOT BE ENTITLED TO DEDUCTION UNDER SECTION 80-IA FOR THE YEAR UNDER CO NSIDERATION. [PARA 92] .. THE MEANING OF BASIC TELECOMMUNICATION SERVICES HAS TO BE UNDERSTOOD IN ITS NORMAL COMMERCIAL SENSE AS UNDERS TOOD BY AN ORDINARY USER OF TELECOMMUNICATION SERVICES. THE MEANING OF THE EXPRESSION 'BASIC TELECOM SERVICES' IS ALSO TO BE UNDERSTOOD IN ITS CONTEXTUAL MEANING,' IT/S R ELATIVE. IN THE CONTEXT OF AN ORDINARY USER, BASIC TELECOMMUNIC ATION SERVICES MEANS THE SERVICES PROVIDED DIRECTLY TO AN END ITA.210 TO 216/BANG/2013 PAGE - 9 CUSTOMER. TRADITIONALLY SPEAKING SUCH SERVICES COUL D BE PROVIDED THROUGH THE CONNECTIVITY OF A LANDLINE. NOW WITH TH E ADVENT OF NEW TECHNOLOGY, THE CONNECTIVITY COULD BE EVEN WIRE LESS. BUT ANYHOW, IT SHOULD CONNECT TO AN ULTIMATE CUSTOMER. IT SHOULD SATISFY THE BASIC NEEDS OF AN ULTIMATE CUSTOMER IN TELECOMMUNICATIONS. 5.7. THOUGH THE ITAT ORDER WAS WITH REFERENCE TO TELECOMMUNICATION SERVICES THROUGH SATELLITE OR EAR TH STATION, THE RATIO OF THE JUDGEMENT IS EQUALLY APPLICABLE TO THE FACTS OF THIS APPEAL. I ALSO NOTE THAT THE CHENNAI ITAT IN T HE CASE OF ITO VS. SMT. A JAYALAKSHMI HAS FOUND THAT 'WHERE AN ASSESSEE WAS CARRYING ON A PURELY COMMERCIAL FUNCTION WHICH HAD NOTHING TO DO WITH DEVELOPMENT OF TELECOM INFRASTRUCTURE', SUCH ACTIVITIES CANNOT QUALIFY FOR THE DEDUCTION U/S 801 A. THE LD. AR SUBMITTED THAT DESPITE THE SPECIFIC DIRE CTION BY THE HONOURABLE HIGH COURT TO CONSIDER THE DEFINITION PR OVIDED WITH RESPECT TO TELECOMMUNICATION SERVICES UNDER TRAI AC T, THESE ASPECTS HAD NOT BEEN CONSIDERED BY THE LOWER AUTHOR ITY, AND THE CLAIM OF THE ASSESSEE WAS DENIED MERELY BASED ON TH E DEFINITION MENTIONED IN SECTION 80IA(4) OF THE ACT. 03. PER CONTRA THE LD. DR HAS SUBMITTED THAT SERVIC ES RENDERED BY THE ASSESSEE ARE REQUIRED TO BE INFRASTRUCTURE, TELECOMMUNICATION SERVICES ETC., AND THE ASSESSEE F AILED TO ESTABLISH WITH COGENT EVIDENCE THAT THE ASSESSEE WA S RENDERING THE BASIC TELECOMMUNICATION SERVICES AS CONTENDED BY TH E ASSESSEE BEFORE THE TRIBUNAL AND NO EVIDENCE OR MATERIAL WAS FILED BEFORE THE LOWER AUTHORITIES TO SUBSTANTIATE THE ABOVE. 04. THE LD. DR HAD FURTHER SUBMITTED THAT THERE WAS NO VIOLATION OF THE ORDER PASSED BY THE HONBLE HIGH COURT (SUPRA) BY THE AO OR BY ITA.210 TO 216/BANG/2013 PAGE - 10 THE CIT (A) BY NOT INTERPOLATING THE DEFINITION PRO VIDED UNDER THE TRAI ACT UNDER SECTION 80IA OF THE IT ACT. HAD IT BEEN SO EASY OR OBVIOUS THEN THE HONBLE HIGH COURT COULD HAVE DONE IT ON ITS OWN AND SHOULD NOT HAVE REMANDED BACK THE MATTER TO AO . TO BUTTRESS HIS ARGUMENTS ON THIS POINT HE HAD SUBMITTED THAT T HE ASSESSEE WAS HAVING LICENCE UNDER THE TRAI ACT FOR THE TELECOMMU NICATION SERVICES AND THEREFORE THERE WAS NO NECESSITY TO RE MAND THE MATTER BACK TO THE AO TO EXAMINE AFRESH, AS THE RELIEF COU LD HAD BEEN GRANTED AT THE HIGH COURT LEVEL ONLY. IT WAS FURTH ER SUBMITTED THAT THE REAL INTENTION AND PURPOSE OF THE DIRECTIONS OF THE HONBLE HIGH COURT WAS TO EXAMINE BOTH THE DEFINITIONS UNDER THE TWO ACTS AND COMPARE THEM KEEP IN MIND THE OBJECT AND PURPOSE FO R WHICH BOTH THE ACTS WERE IN EXISTENCE . IT WAS FURTHER SUBMIT TED THAT DEFINITION U/S.80IA IS AN INCLUSIVE DEFINITION AND THEREFORE T HE EXPANDABLE MEANING COULD NOT BE GIVEN TO THE TELECOMMUNICATION UNDER SECTION 80 IA OF THE ACT AS SOUGHT TO BE CANVASSED BY THE L D. AR FOR THE ASSESSEE. IF THE DEFINITION OF TELECOMMUNICATION I S TRANSPOSED / INTERPOLATED UNDER THE DEFINITION OF 80IA, THEN IT WOULD RESULT IN ABSURDITY, WHICH CANNOT BE THE INTENTION OF THE HIG H COURT. HE RELIED UPON COMMISSIONER OF CUSTOMS VS. DILIP KUMAR [(2018) 9 SCC 1, AT PARA 40 TO 45] AND ALSO THE DEC ISION OF THE HONBLE SUPREME COURT IN THE MATTER OF MACQUARIE BA NK V. SHILPI CABLE TECHNOLOGY (CA NO.15135 OF 2017, DT.15.12.201 7). IT WAS SUBMITTED THAT ANALYSIS OF 80IA ONLY SHOWS THAT THE BASIC / CELLULAR SERVICES ARE REQUIRED TO BE INCLUD ED AND AFTER SUBSEQUENT AMENDMENTS U/S.80IA, VARIOUS ATTRIBUTES OF VALUE ADDED ITA.210 TO 216/BANG/2013 PAGE - 11 SERVICES, INTERNET SERVICES, PAGER SERVICES ETC., WERE BROUGHT INTO THE FOUR CORNERS OF 80IA, THOUGH THE SAID SERVICES WERE NOT THE BASIC SERVICES . HAD THE PARLIAMENT INTENDED THAT THE SE RVICES RENDERED BY THE ASSESSEE (CALL TRANSFER, CONFERENCE, ETC.,) ARE REQUIRED TO BE INCLUDED THEN THE PARLIAMENT WOULD HAVE PROVIDED TH E SAME BY WAY OF AN AMENDMENT IN THE STATUTE. FURTHER IT WAS SUB MITTED THAT THE BASIC SERVICES ARE REQUIRED TO BE READ AS BASIC AND NOT AS VALUE ADDED SERVICES. ALL THE SERVICES PROVIDED UNDER TH E TRAI ACT WHICH COMES UNDER TELECOMMUNICATION CAN BE SAID TO BE TELECOMMUNICATION SERVICES BUT THOSE SERVICES CAN N OT BE TERMED AS BASIC TELECOMMUNICATION SERVICES WITHIN THE MEANIN G OF SECTION 80IA OF THE ACT. 05. THE LD. AR IN REBUTTAL RELIES ON THE DECISION OF THE HONOURABLE SUPREME COURT IN THE MATTER OF PR CIT VS . M/S. AARHAM SOFTRONICS (CIVIL APPEAL NUMBER 1784/ 2019). 06. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND FORCE IN THE ARGUMENT OF BOTH THE PARTIES B EFORE US AS WE FEEL THAT BOTH THE PARTIES ARE RIGHT IN T HEIR OWN SUBMISSIONS , IN PARA 9, 10 AND 11 OF HIGH COURT ORDER (SUPRA) IT IS CLEAR THAT THE DEFINITION OF TELECOMMUNICATION SERVICES UNDER THE TRAI ACT IS VAST AND ENCOMPASSES VARIOUS ACTIVITIES. HOWEVER TH E DEFINITION PROVIDED UNDER THE IT ACT UNDER SECTION 80(4) IS RE STRICTIVE AND AN INCLUSIVE DEFINITION. HOWEVER IN PARA 9 THE HONOUR ABLE HIGH COURT HAS GIVEN A FRESH INDICATION TO LOWER AUTHORITIES T O CONSIDER THE WIDER DEFINITION AS PROVIDED UNDER THE TRAI ACT FOR THE PURPOSE OF CONCLUDING WHETHER THE ACTIVITIES OF THE ASSESSEE F ALL WITHIN THE FOUR ITA.210 TO 216/BANG/2013 PAGE - 12 CORNERS OF TELECOMMUNICATION SERVICES AS MENTIONED UNDER SECTION 80IA OF THE ACT. HOWEVER THE SUBMISSIONS OF THE DR IS ALSO CORRECT THAT, THAT DIRECTION CANNOT BE INTERPRETED AS A DI RECTION TO THE AO TO REPLACE THE DEFINITION OF TELECOMMUNICATION SERVICE S UNDER SECTION 80 IA WITH THE DEFINITION OF TRAI. 07. WE FIND THAT THE AUTHORITIES BELOW THOUGH HAD R EFERRED BOTH THE PROVISIONS OF TRAI ACT AS WELL AS IT ACT, BUT I T FAILED TO GIVE THE COGENT ELABORATE REASONS FOR NOT GIVING THE BEN EFIT OF 80IA. UNDOUBTEDLY THE REVENUE AUTHORITIES HAVE FAILED TO GIVE COGENT AND DETAILED REASONS FOR DENYING THE BENEFIT OF SEC TION 80IA TO THE ASSESSEE. HOWEVER THE BUCK DOES NOT STOP HERE, IN O UR VIEW, THE ASSESSEE WHO IS IN CUSTODY OF SPECIFIC KNOWLEDGE AN D FACTS HAD ALSO FAILED TO FULFILLED ITS PRELIMINARY OBLIGATION / ONUS OF PROVING THAT THE ASSESSEE IS INTO BASIC TELECOMMUNICATION S ERVICES. THE ASSESSEE HAS NOT PROVIDED THE DETAILS OF THE EQUIPM ENT INSTALLED BY IT FOR THE PURPOSE OF TELECOMMUNICATION SERVICES FO R WHICH THE ASSESSEE IS CLAIMING DEDUCTION UNDER SECTION 80IA O F THE ACT AND HOW INSTALLATION HAD GIVEN IMPETUS TO GROWTH OF BAS IC TELECOMMUNICATION SERVICES. DURING THE COURSE OF ARGUMENT, THE LD AR HAD SUBMITTED THAT THE REVENUE HAS GRANTED DE PRECIATION ON THE CAPITAL ASSETS INSTALLED BY THE ASSESSEE. IN FA CT WE MAY NOTICE THAT THE GRANT OF DEPRECIATION AT THE RATE OF 60% B Y THE REVENUE IS HAS NOTHING TO DO WITH GRANT OF DEDUCTION UNDER SEC TION 80IA. EVEN THE COMPUTER USED FOR OFFICE IN ENTITLED TO DE PRECIATION AT THE RATE OF 60%. HOWEVER IF THE SAME COMPUTER IS USED FOR TELECOMMUNICATION BASIC SERVICES THEN THE ASSESSEE IS ENTITLED TO ITA.210 TO 216/BANG/2013 PAGE - 13 DEDUCTION UNDER SECTION 80IA. IT IS FOR THE ASSESS EE TO PROVE WITH THE HELP OF THE INVESTMENT AND TECHNICAL SPECIFICAT IONS THAT THE INSTALLATION MADE BY THE ASSESSEE WAS AN INTEGRAL A ND INQUISITE PART OF THE BASIC TELECOMMUNICATION NETWORK WHICH WERE INSTALLED BY IT TO PROMOTE AND TO LAY DOWN THE FOOT PRINTS IN THE FIELD OF TELECOMMUNICATION SERVICES. 07. IN THESE FACTS AND CIRCUMSTANCES WE HAD SOUGHT RESPONSE FROM BOTH THE PARTIES AS TO WHETHER THE MATTER CAN BE REMANDED BACK TO THE CIT (A) FOR FRESH CONSIDERATION, TO WH ICH BOTH THE PARTIES FAIRLY AGREED. IN VIEW OF THE ABOVE, WE DE EM IT APPROPRIATE THAT THESE APPEALS ARE SENT BACK TO THE FILE OF THE CIT (A) WITH THE FOLLOWING DIRECTIONS : I) THAT THE CIT (A) SHALL ISSUE NOTICE OF HEARING T O THE ASSESSEE WITHIN 15 DAYS OF RECEIPT OF THE PRESENT ORDER, AS KING THE ASSESSEE TO FURNISH ALL THE DETAILS OF BASIC TELECOMMUNICATI ON SERVICES, II) AFTER RECEIPT OF THE NOTICE, THE ASSESSEE SHALL FILE REPLY ALONG WITH DOCUMENTS WITHIN THIRTY DAYS TO THE CIT (A), III) AFTER RECEIPT OF THE INFORMATION / REPLY ALONG WITH DOCUMENTS CIT (A) SHALL CALL UPON THE AO TO FILE THE REMAND REPORT WITHIN MAXIMUM PERIOD OF 30 DAYS THEREAFTER . IV) CIT(A) SHALL ASK THE ASSESSEE TO FILE RESPONSE TO REMAND REPORT IF ANY WITHIN A PERIOD OF 15 DAYS THEREAFTER , V) CIT(A) AFTER RECEIPT OF THE OBJECTIONS, REMAND R EPORT AND THE REBUTTAL IN THE ABOVE NOTED TIME BOUND MANNER SHAL L DECIDE THE ITA.210 TO 216/BANG/2013 PAGE - 14 MATTER IN ACCORDANCE WITH THE DIRECTIONS ISSUED BY THE HONOURABLE HIGH COURT IN ITA NO. 2275/2005, DT.12.04.2010 (SUP RA) WITHIN A MAXIMUM PERIOD OF SIX MONTHS. 08. WHILE DECIDING THE ABOVE SAID ISSUE, THE CIT(A) SHALL ALSO TAKE INTO ACCOUNT THE TERMS AND CONDITIONS AS MENTI ONED IN THE LICENCE AGREEMENT, THE PROVISIONS OF THE TRAI ACT, THE SUBMISSIONS OF LD DR (PARA3-4 SUPRA) AND ALSO THE LAW LAID DOWN BY THE HONOURABLE SUPREME COURT IN THE MATTER OF CO MMISSIONER OF CUSTOMS VS. DILIP KUMAR [(2018) 9 SCC 1, AT PARA 40 TO 45] AND ALSO THE DECISION OF THE HONOURABLE SUPREME COU RT IN THE MATTER OF PR CIT VS. M/S. AARHAM SOFTRONICS (C A NO .1784/ 2019) AND ALSO THE DECISION OF THE HONBLE SUPREME COURT IN THE MATTER OF MACQUARIE BANK V. SHILPI CABLE TECHNOLOGY (CA NO.15135 OF 2017, DT.15.12.2017). 09. THE ABOVE SAID EXERCISES SHALL BE COMPLETED BY THE CIT (A) WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF RECE IPT OF RESPONSE FROM THE ASSESSEE. 10. IN THE RESULT, ALL THE SEVEN APPEALS OF THE ASS ESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH DAY OF M ARCH, 2019. SD/- SD/- (A. K. GARODIA) ( LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER BENGALURU DATED : 27.03.2019 MCN* ITA.210 TO 216/BANG/2013 PAGE - 15 COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR, ITAT, BENGALURU