THE ITO 3(2)(1), MUMBAI V. M/S. IDEA CELLULAR LTD, MUMBAI

ITA 3493/MUM/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78868 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2014
• Appeal Filed By: Department
• Bench Allotted: I
• Next Hearing Date: 11-03-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 19-05-2008
• Court: TRIBUNAL
• Department Lawyers: DH LS DH LS
• Keywords: Capital asset; Business expenditure; Scheme of amalgamation; Right to appeal; Revised return; Revenue expenditure; Capital expenditure
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH , MUMBAI JH FOT; IKY JKO] U;KF;D LNL; ,OA JH JKTSUNZ] YS[K K LNL; DS LE{K JH FOT; IKY JKO] U;KF;D LNL; ,OA JH JKTSUNZ] YS[KK LNL; DS LE{K JH FOT; IKY JKO] U;KF;D LNL; ,OA JH JKTSUNZ] YS[KK LNL; DS LE{K JH FOT; IKY JKO] U;KF;D LNL; ,OA JH JKTSUNZ] YS[KK LNL; DS LE{K BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER VK;DJ VIHY LA[;K / ITA NO.3260/MUM/2008 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR:- 2001-02 M/S IDEA CELLULAR LTD. WINDSOR, 5 TH FLOOR, OFF. CST ROAD, NEAR VIDYA NAGARI, KALINA, SANTA CRUZ (EAST) MUMBAI 400 098. VS. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 3(2) MUMBAI. PAN:- AAACB21OOP APPELLANT RESPONDENT VK;DJ VIHY LA[;K /ITA NO.3493/MUM/2008 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR:- 2001-02 INCOME TAX OFFICER (3)(2)(1) ROOM NO. 673, 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI 400 020. VS. M/S IDEA CELLULAR LTD. WINDSOR, 5 TH FLOOR, OFF. CST ROAD, NEAR VIDYA NAGARI, KALINA, SANTA CRUZ (EAST) MUMBAI 400 098. PAN:- AAAFJ1402D APPELLANT RESPONDENT ASSESSEE BY / FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS SHRI J.D. MISTRY REVENUE BY/ JKTLO JKTLO JKTLO JKTLO DH VKSJ LS DH VKSJ LS DH VKSJ LS DH VKSJ LS SHRI P.K. SHUKLA & SHRI O.P, SINGH ORDER PER VIJAY PAL RAO, JM THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 14.03.2008 OF CIT(A) FOR THE ASSESSMENT YEAR 2001-02. THE ASSESSE E HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL. DATE OF HEARING 29.04.2014 DATE OF PRONOUNCEMENT 13.05.2014 M/S IDEA CELLULAR LTD. 2 GROUND NO.1: DISALLOWANCE OF EXPENSES OF RS. 3,94, 75,619/- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ADDITIO NAL COMMISSIONER OF INCOME TAX, RANGE 3(2), MUMBAI ( THE AO) IN DISALLOWING AMOUNT OF RS. 3,94,75,619/- BEING AMOUNT WRITTEN OFF BY THE APPEL LANT IN RESPECT OF EXPENSES ON ABONDONED PROJECTS ON THE GROUND THT THE ENTIRE EXPENDITURE HAS BEEN INCURRED FOR THE PURPOSE OF BRINGING INTO EXISTENCE A NEW SOURCE OF INCOME AND HENCE SUCH EXPENDITURE IS CAPITAL IN NATURE. GROUND NO. 2.: DISALLOWANCE OF ADDITIONAL CLAIM U /S 35ABB OF THE ACT. 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO OF DISALLOW ING RS. 11,24,92,260/- BEING THE AMOUNT OF LICENSE FEES PAID BY TATA CELLULAR LT D TO DEPARTMENT OF TELECOMMUNICATION UPTO DECEMBER 31, 2000, ON THE GR OUND THAT THE CLAIM WAS MADE BY A LETTER WITHOUT FILING A REVISED RETURN OF INCOME. GROUND NO. 3: AMOUNT PAID TOWARDS REVENUE SHARE EX PENSES BE ALLOWED AS REVENUE EXPENDITURE U/S 37 OF THE ACT. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT ENTERTAINING THE ADDITIONAL GRO UND IN ALLOWING DEDUCTION U/S 37 OR U/S 35ABB FO THE ACT ON REVENUE SHARE EXPENSE S ON THE GROUND THAT THE CLAIM WAS NOT EMANATING FROM THE RETURN OF INCOME A ND EVEN WAS NOT TAKEN BEFORE THE AO IN THE ASSESSMENT PROCEEDINGS. 2. GROUND NO. 1 IS REGARDING DISALLOWANCE OF EXPEND ITURE ON ABONDONED PROJECT. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO NOTED THAT THE ASSESSEE HAS INCURRED EXPENSES ON ABONDONED PROJECT TO THE TUNE OF RS. 3,94,75,619/-. ON QUERY FROM THE AO, THE ASSESSEE S UBMITTED THAT THE ASSESSEE WAS REQUIRED TO PUT UP CELLSITES FOR ENABL ING ITS BUSINESS. IN CERTAIN CASES THE ASSESSEE HAD INCURRED EXPENSES FOR PUTTIN G UP CELLSITES BUT THIS COULD NOT BE COMPLETED AND WERE ABONDONED. THE ASSE SSEE CLAIMED THAT THE EXPENSES WERE INCURRED FOR THE PURPOSE OF ITS BUSIN ESS AND, THEREFORE, IS ALLOWABLE AS BUSINESS EXPENDITURE. THE AO DISALLOWE D THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE EXPENDITURE HAS BEE N SPENT BY THE ASSESSEE ON SITES TO BRING INTO EXISTENCE THE NEW ASSET AND NEW SOURCE OF INCOME. M/S IDEA CELLULAR LTD. 3 ACCORDINGLY THE AO HELD THAT THE LOSS INCURRED DUE TO ABONDONMENT OF PROJECT, IS CAPITAL IN NATURE AND ACCORDINGLY DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE. 2.2 ON APPEAL, THE CIT(A) HAS CONCURRED WITH THE V IEW OF THE AO AND HELD THAT THE EXPENSES INCURRED ON CELL SITES WERE DEFI NITELY CAPITAL EXPENSES, WHEN SUCH A PROJECT IS ABONDONED, THE ENTIRE EXPENDITURE INCURRED IS A CAPITAL LOSS.. 2.3 BEFORE US, SHRI J.D. MISTRI, LD. SENIOR COUNSE L FOR ASSESSEE SUBMITTED THAT THE EXPENDITURE IN QUESTION HAS BEEN INCURRED FOR SETTING UP/CONSTRUCTION OF CELL TOWERS WHICH WERE ABONDONED DUE TO UNAVOIDABLE CIRCUMSTANCES/REASONS AS IT WAS NOT FOUND IF AND SUITABLE IN THE AREA OF OPERATION, THEREFORE, THE EXPENDITRUE WAS INCURRED FOR THE PURPOSE OF EXISTIN G BUSINESS OF THE ASSESSEE AND NOT INTENDED FOR ANY NEW BUSINESS. SINCE THE TO WERS COULD NOT BE BROUGHT INTO EXISTENCE, THEREFORE, THE EXPENDITURE ON THE A BONDONED PROJECT IS ALLOWABLE BUSINESS EXPENDITURE. IN SUPPORT OF HIS CONTENTION, THE LD. SENIOR COUNSEL HAS REFERRED THE VARIOUS DECISIONS, HOWEVER RELIANCE IS PLACED ON THE DEICISION OF HONBLE JHARKHAND HIGH COURT IN THE CASE OF CIT VS . TATA ROBINS FRASER LTD. ( (211 TAXMAN 257). THE LD. SENIOR COUNSEL HAS SUBMIT TED THAT THE HONBLE HIGH COURT HAS HELD THAT THE PRE-OPERATIONAL EXPENS ES ON AN ABONDONED PROJECT CAN BE TREATED AS REVENUE EXPENDITURE AND NOT CAPITAL EXPENDITURE. HE HAS STRESSED THE POINT THAT IN THE CASE OF THE ASSE SSEE THE PROJECT OF CONSTRUCTION OF TOWER WERE ABONDONED DUE TO THE REA SONS THAT THE SITES WERE NOT FOUND SUITABLE, THEREFORE, THE DECISION IN THE CASE OF TATA ROBINS FRASER LTD. IS SQUARELY APPLICABLE IN THE FACTS OF THE ASS ESSEES CASE. 2.4 ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE EXPENDITURE HAS BEEN INCURRED NOT ONLY ON SUVEY OF THE SITES BUT AL SO FOR THE DEVELOPMENT OF THE SITES AS WELL AS FEASIBILITY REPORT, THEREFORE, THE EXPENDITURE OF SUCH NATURE IS IN THE CAPITAL FIELD AND LOSS DUE TO THE ABONDONMENT O F THE PROJECT WOULD CERTAINLY M/S IDEA CELLULAR LTD. 4 BE A CAPITAL LOSS AND NOT REVENUE LOSS. HE HAS RELI ED UON THE ORDERS OF AUTHORITIES BELOW AND REITERATED THAT THE ENTIRE EX PENDITURE HAS BEEN INCURRED FOR THE PURPOSE OF BRINING INTO EXISTENCE NEW ASSE T AND NEW SOURCE OF INCOME. THEREFORE, THE EXPENDITURE OF SUCH NATURE IS NOT AL LOWABLE AS REVENUE EXPENDITURE. 2.5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON REOCORD. THERE IS NO DISPUTE THAT THE EXPENDITURE I N QUESTION WAS INCURRED BY THE ASSESSEE FOR THE PURPOSE OF CONSTRUCTION/ERECTI ON OF CELLULAR TOWRERS WHICH WERE ABONDONED DUE TO THE REASON THAT THE SAME WERE NOT FOUND SUITABLE. THE AUTHORITIES BELOW HAVE DISALLOWED THE CLAIM OF THE ASSESSEE ON TWO REASONS VIZ. (I) THE EXPENDITURE HAS BEEN INCURRED FOR BRIN GING UP A CAPITAL ASSET INTO EXISTENCE.(II) THE CAPITAL ASSET BEING CELLULAR SIT ES/TOWERS WOULD BE THE NEW SOURCE OF INCOME. AS FAR AS THE CELLULAR TOWERS BEI NG NEW SOURCE OF INCOME IS CONCERNED, WE FIND, THAT THE TOWERS WERE BEING EREC TED FOR THE PURPOSE OF ASSESSEES OWN BUSINESS OF PROVIDING CELLULAR SERVI CES TO ITS CUSTOMERS. THEREFORE, THE TOWER IS ONLY A MEAN THROUGH WHICH T HE ASSESSEE IS ABLE TO PROVIDE CELLULAR SERVICES AND IT IS NOT AN INDEPEND ENT SOURCE OF INCOME IT IS ONLY TO FACILITATE THE ASSESSEE TO MANAGE AND RUN T HE BUSINESS OF PROVIDING CELLULAR SERVICES IN A MORE EFFICIENT, CONVENIENT A ND PROFITABLE MANNER. THEREFORE, WHEN THE TOWERS ARE NOT EXCLUSIVELY MEAN T FOR LEASING OUT TO THIRD PARTIES FOR EARNING THE REVENUE BUT USED FOR TRANSM ISSION OF TELEPHONE SIGNALS OF ASSESSEES OWN CELLULAR SERVICES THEN IT CANNOT BE SAID THAT THE TOWERS WHICH ARE USED FOR THE ASSESSEES OWN BUSINESS ARE NEW SO URCE OF INCOME. A CELLULAR TOWER CAN BE A NEW INDEPENDENT SOURCE OF INCOME IF IT IS ERECTED EXCLUSIVELY FOR LEASING OUT TO THE OTHER OPERATORS. SINCE THIS PROJ ECT OF ERECTING TOWERS IS UNDISPUTEDLY ABONDONED BY THE ASSESSEE, THEREFORE, THERE IS NO QUESTION OF ANY NEW ASSET CAME INTO EXISTENCE. THE EXPENDITURE NO D OUBT HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ASSESSEE S BUSINESS. THEREFORE, TO EXAMINE THE ALLOWABILITY OF SUCH EXPENDITURE U/S 37 (1), THE ONLY REQUIREMENT M/S IDEA CELLULAR LTD. 5 WHICH HAS TO BE SEEN IS THAT THE EXPENDITURE IS OF REVENUE NATURE AND NOT CAPITAL NATURE. THERE ARE SERIES OF DECISIONS WHERE IN THE HONBLE HIGH COURTS AND HONBLE SUPREME COURT HAS LAID DOWN THE PRINCIP LE THAT IF AN EXPENDITURE IS INCURRED FOR DOING THE BUSINESS IN A MORE CONVENIEN T AND PROFITABLE MANNER AND HAS NOT RESULTED IN BRINING ANY NEW ASSET INTO EXIS TENCE THEN SUCH EXPENDITURE IS ALLOWABLE BUSINESS EXPENDITURE. IT IS ALSO PERTI NENT TO NOTE THAT IN THE CASE IN HAND THE EXPENDITURE HAS BEEN INCURRED ONLY IN RESP ECT OF THE EXISTING BUSINESS AND NOT FOR SETTING UP OF A NEW BUSINESS OR LINE OF BUSINESS. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE HONBLE HIGH COURT OF JH ARKHAND IN THE CASE OF CIT VS.TATA ROBINS FRASER LTD VS. (SUPRA), AND HELD IN PARA 12 TO 16 AS UNDER:- 12. SO FAR AS ISSUE RELATING TO THE LEASE OF THE ARTIC LES ARE CONCERNED, THAT HAS BEEN ANSWERED IN TAX APPEAL NOS. 3 OF 2000, 4 OF 20 00, 5 OF 2000, 6 OF 2000 AND 8 OF 2000. IN TAX APPEAL NO. 7 OF 2000, ONE MOR E ISSUE IS INVOLVED AND THAT IS RELATING TO THE CLAIM OF THE ASSESSEE OF SP ENDING AN EXPENDITURE TO THE TUNE OF RS. 3,16,490. IT HAS BEEN ON THE GROUND THA T THE ASSESSEE THOUGH HAD ONE PROJECT IN CONTEMPLATION, BUT THAT WAS NOT COMP LETED AND THE PROJECT WAS ABANDONED, THEREFORE, IT IS AN ABORTIVE EXPENDITURE . THE EXPENDITURE INCURRED BY THE ASSESSEE IS AS UNDER :- 1. ARCHITECTURAL FEE IN RESPECT OF ABANDONED PROJECT RS. 2,57,335/- 2. OLD CAPITAL WORK IN PROGRESS ABANDONED RS. 46,379/- 3. COST OF DAMAGED CABINETS RS. 12,776/- 13. THE COMPANY'S CONTENTION WAS THAT THE COMPANY HAD ENTRUSTED THE STUDY AND DESIGN, DETAIL WORKING AND DRAWINGS OF A MULTI- STORIED (12 STORIED) BUILDING TO A PARTY NAMES ACME COMPARTMENTS PVT. LTD., CALCU TTA. AFTER THE PRELIMINARY WORK WAS UNDERTAKEN, THE PROJECT WAS TO BE ABANDONE D DUE TO ADVERSE SOIL AND OTHER ADVERSE CONDITIONS AT THE PROPOSED SITE. THE ASSESSEE COMPANY HAD TO INCUR SOME EXPENDITURE ON PRELIMINARY WORK. IT WAS SAID THAT ALL DESIGNS, DRAWINGS ETC. BECAME USELESS AND THAT WAS WHY THE E XPENDITURE WAS WRITTEN OFF. AFTER NARRATING THE DETAIL FACTS IN RESPECT OF THE ABOVE EXPENDITURE, IT HAS BEEN CLAIMED THAT IT MAY BE TREATED TO BE ABORTIVE EXPENDITURE. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE AS MISCO NCEIVED ON THE GROUND THAT IT IS A CASE OF CAPITAL EXPENDITURE. THE C.I.T.(APPEAL S) ALSO UPHELD THE SAID FINDING BUT THE TRIBUNAL HAS REVERSED THE FINDING. 14. IN THE CASE OF INDO RAMA SYNTHETICS (I) LTD. V. CIT [2009] 185 TAXMAN 277 (DELHI) IT HAS BEEN HELD THAT IF EXPENDITURE HAS BEEN INCURRED FOR SETTING UP A NEW UNIT WHICH WAS S UBSEQUENTLY ABANDONED, THEN THE AFORESAID EXPENDITURE WILL BE TREATED AS R EVENUE IN NATURE AS NO NEW INDUSTRIAL ASSET CAME IN EXISTENCE. M/S IDEA CELLULAR LTD. 6 15. THE TRIBUNAL HAS RELIED UPON THE JUDGEMENT OF THE CALCUTTA HIGH COURT DELIVERED IN THE CASE OF CIT V . GRAPHITE INDIA LTD . [1996] 221 ITR 420 AND DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F JONAS WOODHEAD & SONS (INDIA) LTD. V. CIT [1997] 224 ITR 342 / 91 TAXMAN 1 AND ALLEMBIC CHEMICAL WORKS CO. LTD. V. CIT [1989] 177 ITR 377 / 43 TAXMAN 312 (SC) AND HELD THAT IN VIEW OF THE RATIO OF ABOVE JUDGEMENTS, IF THE EX PENDITURE IS INCURRED FOR ACQUISITION OF AN ASSET WHICH GIVES OR RENDERS ENDU RING BENEFIT TO THE ASSESSEE, NATURALLY IT IS TO BE CONSIDERED AS CAPITAL EXPENDI TURE OTHERWISE REVENUE EXPENDITURE. 16. SUBSTANTIALLY THIS IS ALSO A QUESTION OF FACT WHER E AN EXPENDITURE INCURRED BY THE ASSESSEE WAS OF THE REVENUE IN NATURE OR IT WAS A CAPITAL EXPENDITURE. HOWEVER, IN VIEW OF THE FACT THAT QUESTION HAS BEEN FRAMED AND WE HAVE NARRATED THE FACTS OF THE CASE INCLUDING THE BREAK- UP OF THE EXPENDITURE WHICH INCLUDES THE FEE OF RS. 2,57,335/- PAID TO THE ARCH ITECT AND SOME EXPENSES OF RS. 46,379/- INCURRED ON OLD CAPITAL WORK IN PROGRE SS WHICH WAS ABANDONED AND COST OF DAMAGED CABINETS AND THAT TOO, AMOUNTIN G TO RS. 12,776/-, TOTAL EXPENDITURE INCLUDING ALL THREE OF THE HEADS IS RS. 3,16,490/-. IT IS NOT IN DISPUTE THAT THE PROJECT COULD NOT BE ACCOMPLISHED BECAUSE OF THE REASON THAT THE PLACE WHERE IT WAS TO BE UNDERTAKEN HAD A POOR QUALITY OF SOIL AND ALL THE CONSTRUCTION ALREADY DAMAGED. THE OTHER ARTICLES BOUGHT BY THE A SSESSEE ALSO GOT DAMAGED AND, THEREFORE, IN THAT FACT SITUATION, THE TRIBUNA L WAS FULLY JUSTIFIED IN HOLDING THAT SUCH EXPENDITURE WHICH MAY BE PRE-OPERATIONAL EXPENDITURE FOR A PROJECT CAN BE TREATED TO BE A REVENUE EXPENDITURE ACTUALLY AND NOT A CAPITAL EXPENDITURE. 2.6 SINCE THE EXPENDITURE HAS BEEN INCURRED FOR THE PROJECT WHICH COULD NOT BE ACCOMPLISHED AND IT WAS INTENDED TO FACILITATE T HE ASSESSEES BUSINESS ACTIVITY TO BE CARRIED OUT MORE CONVENIENTLY AND PR OFITABLY, THEREFORE, THE SAID EXPENDITURE IS AN ALLOWABLE REVENUE EXPENDITURE. HE NCE BY FOLLOWING THE DECISION OF HONBLE HIGH COURT OF JHARKAHDN IN THE CASE OF CIT VS. TATA ROBINS FRASER LTD. (SUPRA), WE SET ASIDE THE ORDER OF AUTH ORITIES BELOW QUA THIS ISSUE AND ALLOW THE CLAIM OF THE ASSESSEE. 3. GROUND NO. 2 IS REGARDING DISALLOWANCE OF CLAIM U/S 35ABB OF THE INCOME TAX ACT. 3.1 ON 01 ST JANUARY 2001, THE ASSESSEE COMPANY TAKEN OVER TATA CELLULAR LTD AND ACCORDINGLY THE TATA CELLULAR LTD. MERGED W ITH THE ASSESSEE. AT THAT POINT OF TIME THE LICENSE FEE WAS PAID BY THE OPERA TORS AS FIXED LICENSE FEE M/S IDEA CELLULAR LTD. 7 UNDER THE LICENSE AGREEMENT. THE TATA CELLULAR LTD HAD PAID THE LICENSE FEE UPTO 31 ST DECEMBER 2000 AND ALSO CLAIMED THE EXPENDITURE U/S 35ABB. FROM 01 ST JANUARY 2001 ON WARDS. THE ASSESSEE PAID THE LICEN SE FEE FOR THE AREA OF OPERATION WHICH WERE EARLIER WITH THE TATA CELLULAR LTD. MERGED WITH THE ASSESSEE. IN THE RETURN OF INCOME THE ASSESSEE DID NOT MAKE CLAIM U/S 35ABB WITH RESPECT TO THE LICENSEFEE PAID BY THE TATA CEL LULAR LTD UPTO 31 ST DECEMBER 2000. HOWEVER DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE CLAIMED THAT IN TERMS OF SECTION 35ABB, CONSEQUENT TO THE AMALGA MATION OF TATA CELLULAR LTD, WITH THE ASSESSEE THE ENTIRE LICENSE FEE PAID BY THE TATA CELLULAR LTD TILL 31 ST DECEMBER 2000 OUGHT TO HAVE BEEN ALLOWED TO THE AS SESSEE. THE AO DECLINED TO ACCEPT THE CLAIM OF THE ASSESSEE. 3.2 ON APPEAL, CIT(A) HAS CONFIRMED THE ACTION OF AO ON THE GROUND THAT THE ASSESSEE HAS MADE THIS CLAIM BY A LETTER WITHOUT CL AIMING IN THE RETURN OF INCOME OR REVISED RETURN OF INCOME. THUS THE CIT(A) WAS OF THE VIEW THAT THE CLAIM MADE BY A SIMPLE LETTER WITHOUT FILING A REVI SED RETURN IS NOT A VALID CLAIM. 3.3 BEFORE US, THE LD.SENIOR COUNSEL HAS SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 35ABB(6), IN A CASE OF AMALGA MATION THE PROVISIONS OF SUB-SECTION 2 TO 4 SHALL NOT APPLY TO THE AMALGAMAT ING COMPANY BUT THESE PROVISIONS OF THIS SECTION SHALL APPLY TO THE AMALG AMATED COMPANY AS THEY WOULD HAVE APPLIED TO THE AMALGAMATING COMPANY WHEN THE LATER HAS NOT TRANSFERRED THE BUSINESS. THUS THE LD. SENIOR COUNS EL HAS SUBMITTED THAT UNDER THE PROVISIONS OF SECTION 35ABB(6), THE LICENSE FEE PAID BY THE TATA CELLULAR LTD FOR THE ENTIRE FINANCIAL YEAR/PREVIOUS YEAR REL EVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION FOR THE PERIOD PRIOR TO THE AMA LGAMATION IS ELIGIBLE FOR DEDUCTION U/S 35ABB IN THE HANDS OF THE AMALGAMATED COMPANY I.E. ASSESSEE. HE HAS FURTHER CONTENDED THAT THE CLAIM MADE BY THE TATA CELLULAR LTD IN RESPECT OF LICENSE FEE U/S 35ABB HAS BEEN REJECTED BY THE AO AS IT WAS NOT ALLOWABLE IN THE HANDS OF AMALGAMATING COMPANY. THU S THE REVENUE IS TAKING M/S IDEA CELLULAR LTD. 8 CONTRARY STAND BY APPLYING THE PROVISIONS FOR REFUS ING THE CLAIM OF TATA CELLULAR LTD AMALGAMATED WITH THE ASSESSEE AND AT T HE SAME TIME NOT ACCEPTING THE CLAIM OF THE ASSESSEE. ON THE POINT O F ADMISSION OF CLAIM WITHOUT REVISED RETURN OF INCOME, HE HAS RELIED UPON THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CORPORA TION LTD. VS. CIT (229 ITR 383) AS WELL AS THE DECISION OF HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT VS.PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD. (34 6 ITR 336) AND SUBMITTED THAT THE POWER AND JURISDITION OF CIT(A) IS NOT RES TRICTED ONLY TO ENTERTAIN THE CLAIM MADE IN THE RETURN OF INCOME. 3.4 ON THE OTHER HAND, THE LD. DR HAS HEAVILY RELIE D UPON THE ORDERS OF AUTHORITIES BELOW. 3.5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. INITIALLY THE ASSESSEE HAS CLAIMED THE AMOR TIZATION OF LICENSE FEE RELATING TO THE TATA CELLULAR LTD ONLY FOR POST AMA LGAMATION PERIOD OF THREE MONTHS W.E.F 1.1.2000 TO 31 ST MARCH 2001, HOWEVER DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE MADE A CLAIM FO R THE ENTIRE YEAR U/S 35ABB FOR THE LICENSE FEE PAID IN RESPECT OF THE TA TA CELLULAR LTD AMALGAMATED WITH THE ASSESSEE. THE CIT(A) HAS ALLOW ED THE CLAIM OF THREE MONTHS AND DISALLOWED FOR NINE MONTHS ONLY ON THE G ROUND THAT THE ASSESSEE HAS NOT MADE THE CLAIM IN THE REVISED RETURN OF INC OME. THE RESTRICTION ON THE JURISDICTION FOR ENTERTAINING A FRESH CLAIM OTHERWI SE THAN A REVISED RETURN IS APPLICABLE ONLY OF THE AO AND NOT OF THE APPELLATE AUTHORITIES. THERE IS NO FETTER ON THE POWER AND JURISDICTION OF THE APPELLATE AUTH ORITIES TO ENTERTAIN A FRESH CLAIM IF NO NEW FACTS ARE REQUIRED TO BE INVESTIGAT ED TO ADJUDICATE SUCH FRESH CLAIM. THE HONBLE SUPREME COURT IN THE CASE OF NAT IONAL THERMAL POWER CORPORATION LTD. VS. CIT (SUPRA) HAS OBSERVED AT PA GE 386 AS UNDER:- M/S IDEA CELLULAR LTD. 9 UNDER SECTION 254 OF THE INCOME-TAX ACT, THE APPELL ATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNIT Y OF BEING HEARD, PASS SUCH ORDERS THEREON AS IT THINKS FIT. THE POWER OF THE T RIBUNAL IN DEALING WITH APPEALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TE RMS. THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIE S IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW . IF, FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PE NDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TAXED OR A PERM ISSIBLE DEDUCTION IS DENIED, WE DO NOT SEE ANY REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIM E, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THAT ITEM. WE DO NOT SE E ANY REASON TO RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DEC IDE THE GROUNDS WHICH ARISE FROM THE ORDER OF THE COMMISSIONER OF INCOME- TAX (APPEALS). BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/CROSS- OBJECTIONS BEFORE THE TRIBUNAL. WE FAIL TO SEE WHY THE TRIBUNAL SHOULD BE PREVENTED FROM CONSIDERING QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER. 3.6 THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF TH E CASE WE ARE OF THE VIEW THAT THERE IS NO BAR IN ENTERTAINING THE PRESENT CL AIM IN QUESTION BY THE CIT(A) EVEN WITHOUT FILING THE REVISED RETURN. ON MERITS IT IS APPARENT THAT THE PROVISIONS OF SECTION 35ABB(6) PERMITS SUCH CLAIM O NLY IN THE HANDS OF THE AMALGAMATED COMPANY AND NOT IN THE HANDS OF THE AMA LGAMATING COMPANY. FOR READY REFERNCE WE QUOTE SUB-SECTION (6) OF SECT ION 35ABB. (6) WHERE, IN A SCHEME OF AMALGAMATION, THE AMALG AMATING COMPANY SELLS OR OTHERWISE TRANSFERS THE LICENCE TO THE AMALGAMATED COMPANY (BEING AN INDIAN COMPANY),- (I) THE PROVISIONS OF SUB-SECTION (2),(3) AND (4) S HALL NOT APPLY TO THE AMALGAMATED COMPANY AND; (II) THE PROVISIONS OF THIS SECTION SHALL, AS FAR A S MAY BE, APPLY TO THE AMALGAMATED COMPANY AS THEY WOULD HAVE APPLIED TO T HE AMALGAMATING COMPANY IF THE LATTER AHD NOT TRANSFERRED THE LICEN SE.] 3.7 SUB-SECTION (6) MAKES IT CLEAR THAT IN A SCHEME OF AMALGAMATION IF THE AMALGAMATING COMPANY SALES OR TRANSFER THE LICENSE TO THE AMALGAMATED M/S IDEA CELLULAR LTD. 10 COMPANY THEN LICENSE FEE PAID FOR THE ENTIRE YEAR I S ELIGIBLE FOR AMORTIZATION U/S 35ABB ONLY IN THE HANDS OF AMALGAMATED COMPANY. ACC ORDINGLY IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THE CLAIM OF AMORTIZATIO N OF LICENSE FEE RELATING TO TATA CELLULAR LTD MERGED WITH ASSESSEE FOR ENTIRE Y EAR U/S 35ABB. 4. GROUND NO. 4 IS REGARDING CLAIM FOR REVENUE SHAR ING LICENSE FEE TO BE ALLOWED U/S 37(1). 4.1 IN THE RETURN OF INCOME THE ASSESSEE HAS NOT CLAIMED THE DEDUCTION IN RESPECT OF AMOUNT PAID TOWARDS REVENUE SHARING EXPE NSES TO THE GOVT. OF INDIA AS IT WAS CAPITALIZED IN THE BOOKS OF ACCOUNTS. ONL Y BEFORE THE CIT(A) THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND TOWARDS TH E AMOUNT PAID UNDER REVENUE SHARING BASIS OF LICENSE FEE. THE CIT (A) HAS REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THIS ISSUE HAS NOT EMER GED FROM THE ORDER OF ASSESSMENT. 4.2 BEFORE US, THE LD. SENIOR COUNSEL HAS SUBMITTED THAT SO FAR AS THE ISSUE OF ADMISSION OF ADDITIONAL GROUND IS CONCERNED, THE SAME IS COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF N ATIONAL THERMAL POWER CORPORATION LTD. VS. CIT (SUPRA) AS WELL AS THE DEC ISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS.PRU THVI BROKERS & SHAREHOLDERS PVT. LTD (SUPRA). ON MERITS THE LD. SENIOR COUNSEL HAS SUBMITTED THAT THIS ISSUE IS COVERED BY THE VARIOUS DECISIONS OF HONBL E HIGH COURTS AS WELL AS THIS TRIBUNAL. HE HAS REFERRED THE FOLLOWING DECISIONS:- (I) CIT VS. BHARTI HEXACOM LTD. (221 TAXMAN 323) (D ELHI) (II) IDEA MOBILE COMMUNICATIONS LTD. VS. DCIT ( IT A NO. 310/DEL/2006) (MUM) (III) DCIT VS. IDEA MOBILE COMMUNICATIONS LTD. (201 2) (ITA NO. 5635/MUM/2011(MUM) M/S IDEA CELLULAR LTD. 11 (IV) DCIT VS. IDEA MOBILE COMMUNICATIONS LTD. (2013 ) (ITA NO.3665/MUM/2011)(MUM) (V) VIDESH SANCHAR NIGAM LTD V. JCIT (81 ITD 456) (MUM) (VI) MAHANAGAR TELEPHONE NIGAM LIMITED VS. ACIT (8 SOT 376)(DEL) (VII) BHARATI CELLULAR LIMITED VS. DCIT (ITA NO. 53 35/DEL/03) (VIII) BHARATI AIRTEL LTD. VS. ACIT (2010) (41 SOT 175) (MUM) (IX) COSMAT MAX LIMITED VS. DCIT (29 SOT 436/ITA NO . 728/DEL/05)(DEL) (X) ACIT VS. VODAFONE GUJARAT LTD. (38 SOT 51)(AHD. ) 4.3 LD. COUNSEL HAS SUBMITTED THAT IN ALL THE ABOVE CITED DECISIONS IT HAS BEEN HELD THAT LICENSE FEE PAID ON REVENUE SHARING BASIS IS ALLOWABLE AS REVENUE EXPENDITURE. 4.4 ON THE OTHER HAND THE LD. DR HAS SUBMITTED THA T NO CLAIM WAS MADE BY THE ASSESSEE EITHER IN THE RETURN OF INCOME OR DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THEREFORE, THERE IS NO GRIEVANCE OF TH E ASSESSEE AGAINST THE ASSESSMENT ORDER UNDER CONSIDERATION. HE HAS REFERR ED THE PROVISIONS OF SECTION 253 AND SUBMITTED THAT THE APPEAL BEFORE, T HE CIT(A) CAN BE FILED ONLY IN THE CASE WHEN THE ASSESSEE IS AGGRIEVED BY THE O RDER OF ASSESSING OFFICER. SINCE THE ASSESSEE HAS NOT MADE ANY CLAIM BEFORE TH E AO AND THEREFORE, THERE WAS NO QUESTION OF GRIEVANCE OF THE ASSESSEE AGAINS T THE ASSESSMENT ORDER AND CONSEQUENTLY NO APPEAL IS MAINTAINABLE ON AN IS SUE NOT EMERGING FROM THE ASSESSMENT ORDER. 4.5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. SO FAR AS THE ADMISSIBILITY OF THE FRESH CL AIM FIRST TIME BEFORE THE APPELATE AUTHORITY IS CONCERNED, WE FIND THAT AN ID ENTICAL ISSUE WAS BEFORE THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERM AL POWER CORPORATION LTD. VS. CIT (SUPRA). THE ISSUE IN THE SAID CASE EMERGED FROM THE FACT THAT THE ASSESSEE OFFERED AN AMOUNT TO TAX IN THE RETURN OF INCOME WHICH WAS NOT TAXABLE AS INCOME. THE INCLUSION OF THE SAID AMOUNT WAS NOT OBJECTED BY THE M/S IDEA CELLULAR LTD. 12 ASSESSEE EVEN BEFORE THE CIT(A) AND ONLY AFTER FILI NG APPEAL BEFORE THE TRIBUNAL THE ASSESSEE RAISED A GROUND BY WAY OF FOR WARDING A LETTER. IN THOSE FACTS, HONBLE SUPREME COURT HAS HELD THAT WHEN IT IS FOUND THAT NON TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUCTION IS DENIED, WE DO NOT SEE ANY REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING T HAT QUESTION BEFORE THE TRIBUNAL FIRST TIME SO LONG AS RELEVANT FACTS ARE O N RECORD IN RESPECT OF THAT ITEM. WE HAVE ALREADY REPRODUCED THE RELEVANT FINDING OF THE HONBLE SUPREME COURT IN THE FOREGOING PARAS WHILE DISCUSSING THE GROUND NO. 2. IT IS CLEAR FROM THE DECISION OF HONBLE SUPREME COURT THAT WHEN A CLAIM WHICH IS OTHERWISE ALLOWABLE /PERMISSIBLE BUT WAS NOT ALLOWED AS THE ASSESSEE DID NOT CLAIM THE SAME IN THE RETURN OF INCOME, THERE IS NOTHING UNDE R LAW TO PREVENT THE ASSESSEE TO RAISE SUCH CLAIM BEFORE THE APPELLATE A UTHORITIES IF THE FACTS RELATING TO SUCH NEW CLAIM ARE ALREADY ON RECORD AND DO NOT REQUIRE ANY INVESTIGATION. ACCORDINGLY IN THE FACTS AND CIRCUMSTANCES OF THE C ASE WHEN THE DENIAL OF CLAIM BY CIT(A) IS NOT ON THE GROUND THAT IT IS NOT ALLOW ABLE BUT FOR WANT OF SUCH CLAIM BEFORE THE AO AND FURTHER ON MERITS THIS ISSUE IS C OVERED BY THE SERIES OF DECISIONS AS RELIED UPON BY THE ASSESSEE THEN WE AR E OF THE VIEW THAT THE CIT(A) HAS COMMITTED AN ERROR IN NOT ADMITTING THE ADDITIONAL GROUND RAISED BY THE ASSESSEE. HENCE THIS GROUND STANDS ADMITTED. ON MERITS THERE ARE VARIOUS DECISIONS WHERE THIS ISSUE HAS BEEN DECIDED BY HOLD ING THAT THE LICENSE FEE PAID UNDER REVENUE SHARING IS AN ALLOWABLE REVENUE EXPENDITURE. IN THE LATEST DECISION OF HONBLE HIGH COURT OF DELHI DATED 9 TH DECEMBER 2013 IN THE CASE OF CIT VS. BHARATI HEXACOM LTD. & OTHERS, ONE OF THE I SSUES BEFORE THE HONBLE HIGH COURT WAS REGARDING THE ALLOWABILITY OF VARIAB LE LICENSE FEE ON REVENUE SHARING BASIS PAID UNDER THE NEW TELECOM POLICY OF 1999. THE HONBLE HIGH COURT HAS DISCUSSED THE ISSUE AND HELD IN PARA 42 A ND 47 AS UNDER:- 42 THE NEXT OBVIOUS QUESTION IS, ON WHAT BASIS APP ORTIONMENT SHOULD BE DONE AND WHAT COULD BE THE PROPORTION OF APPORTIONMENT B ETWEEN CAPITAL AND REVENUE EXPENDITURE. IN THIS REGARD IT WOULD BE APP ROPRIATE AND PROPER TO DIVIDE THE LICENCE FEE INTO TWO PERIODS I.E. BEFORE AND AF TER 31-7-1999. THE LICENCE FEE PAID OR PAYABLE FOR THE PERIOD UPTO 31-7-1999 I.E. THE DATE SET OUT IN THE 1999 M/S IDEA CELLULAR LTD. 13 POLICY SHOULD BE TREATED AS CAPITAL AND THE BALANCE AMOUNT PAYABLE ON OR AFTER THE SAID DATE SHOULD BE TREATED AS REVENUE --------------------------------------------------- ----- ------------------------------------------------- ------- 47. IN VIEW OF THE AFORESAID FINDINGS, THE SUBSTANTIAL QUESTION MENTIONED ABOVE IN ITEM NOS.1 TO 9 IS ANSWERED IN THE FOLLOWING MAN NER: (I) THE EXPENDITURE INCURRED TOWARDS LICENCE FEE IS PAR TLY REVENUE AND PARTLY CAPITAL. LICENCE FEE PAYABLE UPTO 31ST JULY, 1999 S HOULD BE TREATED AS CAPITAL EXPENDITURE AND LICENCE FEE ON REVENUE SHARING BASI S AFTER 1ST AUGUST, 1999 SHOULD BE TREATED AS REVENUE EXPENDITURE. (II) CAPITAL EXPENDITURE WILL QUALIFY FOR DEDUCTION AS P ER SECTION 35ABB OF THE ACT. 4.6 WE FURTHER NOTE THAT THIS TRIBUNAL IN THE CAE O F MAHANAGAR TELEPHONE NIGAM LTD. VS. ACIT(SUPRA) AS WELL AS IN THE CAE OF ACIT VS. VODAFONE ESSAR GUJARAT LTD. (SUPRA) ALONG WITH OTHER NO. OF DECISI ON HAS TAKEN A SIMILAR VIEW. FOLLOWING THE DECISIONS OF HONBLE DELHI HIGH COUR T IN THE CASE OF CIT VS. BHARATI HEXACOM LTD. & OTHERS AS WELL AS OTHER DECI SIONS RELIED UPON BY THE ASSESSEE, WE ALLOW THE CLAIM OF THE ASSESSEE. 4.7 BEFORE PARTING WITH THE APPEAL OF THE ASSESSEE WE NOTE THAT THE ASSESSEE HAS FILED ADDITIONAL GROUNDS, HOWEVER, THE SAME ARE ONLY REPETITION OF GROUND NO. 2 AND 3 RAISED ALONG WITH FORM NO. 36, THEREFOR E, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BECOMES INFRUCTUOUS. 5. THE REVENUE HAS RAISED ONLY GROUND AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF FOREIGN EXCHA NGE LOSS OF RS. 22,38,39,000/- BY HOLDING THAT THE PRINCIPLE AMOUNT WAS NOT UTILIZED BY THE ASSESSEE FOR ACQUISITION OF CAPITAL ASSETS 5.1 THE ASSESSEE HAS BORROWED FUNDS IN FOREIGN CURR ENCY FOR PAYMENT OF LICENSE FEE. AT THE END OF THE YEAR DUE TO FLUCT UATION IN FOREIGN EXCHANGE RATE THE LOSS WAS INCURRED. THIS LOSS HAS BEEN CLUBBED IN M/S IDEA CELLULAR LTD. 14 SCHEDULE 17 OF THE BALANCE SHEET RELATING TO THE IN TEREST AND FIANCIAL CHARGES AND HAS BEEN SPECIFIED AS NET LOSS ON FOREI GN EXCHANGER FLUCTUATION. THE AO DENIED THE CLAIM OF THE ASSESSE E ON THE GROUND THAT THE LOSS UNDER CONSIDERATION HAS LED TO INCREASE IN LIABILITY TOWARDS REPAYMENT OF LOAN AND SUCH INCREASE IN THE LIABILIT Y CANNOT BE EQUATED WITH THE PAYMENT OF INTEREST. 5.2 ON APPEAL, THE ASSESSEE CONTENDED BEFORE THE CI T(A) THAT FOR THE A.Y. 1998-99 SIMILAR FLUCTUATION GAIN WAS ALLOWED T O THEM AS REVENUE EXPENDITURE. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF UPSIDC (225 ITR 703) AS WELL AS OTHER DECISIONS INCLUDING THE DECISION OF SPECIAL BENCH O F THIS TRIBUNAL IN THE CASE OF ONGC LTD. (77 TTJ 387). THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISIONS RELIED UPON BY THE ASSESSEE. 5.3 BEFORE US, THE LD. DR HAS HEAVILY RELIED UPON T HE ORDER OF AO AND SUBMITTED THAT PART OF THE LOAN WAS USED FOR FIXED LICENSE FEE PAID BY THE ASSESSEE WHICH HAS BEEN TREATED AS CAPITAL IN NATUR E, THEREFORE, THE NOTIONAL LOSS DUE TO FOREIGN EXCHANGE FLUCTUATION I S NOT ALLOWABLE CLAIM BEING CAPITAL ITEM. HE HAS FURTHER SUBMITTED THAT T HE ASSESSEE HAS NOT FULLY UTILIZED THE FOREIGN EXCHANGE BORROWINGS FOR THE PURPOSE FOR WHICH IT WAS TAKEN WHEREAS UNDER THE RULES AND SCHEME OF ECB , THE ASSESSEE CANNOT USE THE BORROWINGS OTHER THAN THE PURPOSE, T HEREFORE, THE ENTIRE LOSS ON FOREIGN EXCHANGE FLUCTUATION SHOULD BE DISA LLOWED. 5.4 ON THE OTHER HAND, THE LD. SENIOR COUNSEL HAS S UBMITED THAT THIS ISSUE HAS BEEN CONSIDERED AND DECIDED BY THIS TRIBU NAL IN THE ASSESSEES OWN CASE FOR A.Y. 1998-99. FURTHER IN THE EARLIER A SSESSMENT YEARS M/S IDEA CELLULAR LTD. 15 WHENEVER THERE WAS GAIN DUE TO FOREIGN EXCHANGE FLU CTUATION, THE ASSESSEE HAS OFFERED TO TAX AS INCOME WHICH WAS ACC EPTED BY THE REVENUE, THEREFORE, ONCE THE FLUCTUATION GAIN HAS B EEN ACCEPTED AS INCOME AND TAXED THEN THE LOSS CANNOT BE GIVEN A DI FFERENT TREATMENT. HE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA P. LTD. (312 ITR 254) ( 179 TAXMANN 326) (SC). HE HAS ALSO RELIED UPON THE FOLLOWING DECISIO NS:- (I) CIT VS. U.P. STATE INDUSTRIAL DEVELOPMENT CORPO RATION ( 225 ITR 703)(SC) (II) BHARATH HEAVY ELECTRICALS (239 ITR 756) (DEL) (III) ONGC V. CIT (83 ITD 151) (DEL) (SB) (IV) DCIT V IDEA CELLULAR LIMITED (ITA NO. 2242/M/ 2008) (V) SAMTEX FASHIONS LTD. [2008] (24 SOT 116) (DEL) (VI) SUTLEJ COTTON MILLS LIMITED (116 ITR 1) (SC). 5.5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT FOR TH E A.Y. 1998-99, AN IDENTICAL ISSUE CAME BEFORE THIS TRIBUNAL AND THE T RIBUNAL HAS HELD THAT THE LOSS DUE TO FOREIGN EXCHANGE FLUCTUATION IS AN ALLOWABLE EXPENDITURE IN PARA 8 AS UNDER:- 8 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE HAV E CONSIDERED THE STATEMENT BY THE LEARNED COUNSEL OF THE ASSESSEE AN D ALSO TAKING NOTE OF THE FINDINGS OF THE CIT(A). WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. THE DETAILS OF THE UTILI ZATION OF THE LOANS ARE AT PAGE 27 OF THE ASSESSEES PAPER BOOK. THE DETAILS OF THE LOANS UTILIZED FOR REVENUE PURPOSES AS GIVEN IN PAGE NO. 23 OF THE ASSESSEES PAPER BOOK HAVE ALSO BEEN PERUSED BY US. THE LOAN-WISE BIFURCATION OF FO REIGN EXCHANGE LOANS AS GIVEN AT PAGE NO. 28 HAS ALSO BEEN CONSIDERED. IN T HE LIGHT OF THESE DOCUMENTS, WE ARE OF THE VIEW THAT THE CIT(A) WAS JUSTIFIED IN COMING TO THE CONCLUSION THAT THE EXCHANGE LOSS CLAIMED BY THE ASSESSEE IN P&L AC COUNT RELATES TO LOAN AVAILED FOR THE PURPOSE OF MEETING REVENUE EXPENDIT URE IN THE LIGHT OF THE DECISION OF SPECIAL BENCH IN THE CASE OF ONGC LTD. (SUPRA), WE ARE OF THE VIEW THAT THE CLAIM DESERVES TO BE ALLOWED. WE MAY ALSO POINT OUT THAT HONBLE SUPREME COURT IN THE CASE OF CIT VS. WOODWARD GOVER NOR INDIA (P) LTD., 179 M/S IDEA CELLULAR LTD. 16 TAXMAN 326 (SC) HAS ALSO APPROVED THE PRINCIPLES WH ICH HAVE BEEN LAID DOWN BY THE SPECIAL BENCH IN THE CASE OF ONGC LTD. (SUPR A) FOR ALL THE ABOVE REASONS, WE DO NOT FIND ANY GROUND TO INTERFERE IN THE ORDER OF CIT(A). CONSEQUENTLY, 2 ND GROUND OF APPEAL OF THE REVENUE IS ALSO DISMISSED. 5.6 WE FURTHER NOTE THAT THE REVENUE HAS CONSISTENT LY BEEN ALLOWING THE CLAIM OF THE ASSESSEE ON FOREIGN EXCHANGE LOSS AS R EVENUE LOSS SINCE A.Y. 1998-99 TO A.Y 2005-06 EXCEPT THE A.Y. UNDER C ONSIDERATION I.E. 2001-02. WHEN THE REVENUE IS CONSISTENTLY ALLOWING THE CLAIM OF THE ASSESSEE OR TAXING THE GAIN ARISING FROM THE FOREIG N EXCHANGE FLUCTUATION AS INCOME OF THE ASSESSEE FOR ALL THREE ASSESSMENT YEARS PRIOR TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND FOUR SUBSEQ UENT ASSESSMENT YEARS, THEREFORE, WE DO NOT FIND ANY REASON TO INTE RFERE WITH THE ORDER OF CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE BY FOL LOWING THE ORDER OF THIS TRIBUNAL. HENCE THE GROUND OF REVENUES APPEAL IS R EJECTED. 6.. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED WHEREAS THAT BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E 13 -05-2014 SD/- SD/- (RAJENDRA) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 13 -05-2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, I BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI M/S IDEA CELLULAR LTD. 17