TATA TELESERVICES (MAHARASHTRA) LTD, NAVI MUMBAI V. PR CIT -8, MUMBAI

ITA 3567/MUM/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3236 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 23-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R MANJUNATHA SWAMY
• Keywords: Depreciation
• Section: 32; 263; 12; 2; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI PAWAN SINGH, JM ITA NO S . 3567 / MUM/2016 & 4392/ MUM/ 2017 (ASSESSMENT YEAR S : 201 1 - 1 2 & 201 2 - 1 3 ) TATA TELESERVICES (MAHARASHTRA) LIMITED D - 26, TTC INDUSTRIAL AREA, MIDC, SANPADA, P.O. TURBHE, NAVI MUMBAI - 400 073 VS. PR. CIT - 8, ROOM NO. 611, 6 TH FLOOR, AAYAKAR BHAWAN, M. K. ROAD, MUMBAI - 400 020 PAN/GIR NO. AAACH 1458 C ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI NISHANT THAKKAR & MS. JASMIN AMALSADVALA RESPONDENT BY : SHRI R. MANJUNATHA SWAMY DATE OF HEARING : 12.02.2019 DATE OF PRONOUNCEMENT : 27.02 .2019 O R D E R PER BENCH: THE S E ARE APPEAL S BY THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX - 8, MUMBAI (LD.CIT FOR SHORT), PERTAIN ING TO THE ASSESSMENT YEAR S (A.Y.) 2011 - 12 & 2012 - 13 . 2. THE COMMON ISSUE RAISED IS THAT THE LD. CITS ORDER PASSED U/S. 263 OF THE ACT, IS NOT JUSTIFIED. 3. BRIEF FACTS OF THE CASE ARE THAT THE LD. CIT IN THIS CAS E HAS PASSED AN ORDER U/S. 263 OF THE ACT. THE SUBJECT MATTER OF REVISION AS NOTED IN THE ORDER FOR A.Y. 2012 - 13 WERE AS UNDER: DEPRECIATION AMOUNTING TO RS.2,44,65,94,092/ - @ 25% ON THE WDV OF THE INTANGIBLE ASSET OF RS.9,78,63,76,368/ - (RS.12,90,83,26,9 92 + RS.12,01,49,856 RS.3,24,21,00,480) 2 ITA NOS. 4392 M /17 & 3567/M / 16 WHICH WAS ARRIVED BY THE ASSESSEE AFTER CONSIDERING THE DEDUCTION CLAIMED U/S. 32 OF THE ACT IN EARLIER YEARS, WAS WRONGLY ALLOWED AS CLAIMED U/S. 32 OF THE INCOME TAX ACT, 1961. THE SAME WAS REQUIRED TO BE AMORTIZ ED OVER THE PERIOD OF LICENSE IN FORCE AS PER PROVISIONS OF SECTION 35ABB OF THE INCOME TAX ACT, 1961. 4. TH E FACT FOR THE OTHER A SSESSMENT Y EAR WAS THE SAME. AFTER ELABORATE DISCUSSION, THE LD. C IT HAS DIRECTED THE ASSESSING OFFICER (A.O. FOR SHORT) TO DISALLOW THE CLAIM OF THE ASSESSEE U/S. 32(1). THAT IN CASE THE CLAIM IS MADE FOR DEDUCTION U/S.34ABB, THE SAME MAY BE CONSIDERED AS PER THE PROVISIONS OF THE LAW. 5. AGAINST THIS ORDER, THE ASSES SEE IS IN APPEAL BEFORE US. 6. AT THE OUTSET, IN THIS REGARD, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT MUMBAI BENCH IN THE CASE OF IDEA CELLULAR LIMITED VS. PRINCIP AL COMMISSIONER OF INCOME TAX (IN ITA NO. 360/MUM/2016 FOR A.Y. 2011 - 12 VIDE ORDER DATED 06.12.2017). THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT FOR SUBSEQUENT A SSESSMENT Y EAR, THE LD. CIT(A) IN ASSESSEES OWN CASE HAS ALLOWED THE SAME ISSUE IN FAVOUR OF THE ASSESSEE BY REFERRING TO THIS DECISION OF THE ITAT OF IDEA CELLULAR LIMITED (SUPRA). 7 . PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT) COULD NOT DISPUTE THE PROPOSITION THAT THE ISSUE INVOLVED IS SO COVERED. HOWEVER, HE SUBMITTED THAT HE HAS SUBMITTED THE LETTERS TO PR. CIT FOR THE CLAIM OF THE ASSESSEE THAT THE ISSUE IS COVERED. HE SUBMITTED THAT NO FURTHER RESPONSE FROM PR. CIT HAS BEEN RECEIVED. 8 . UPON CAREFUL CONSIDERATION, WE NOTE THAT THE SUBMISSION OF THE LD. D R THAT NO RESPONSE FROM THE PR. CIT HAS BEEN RECEIVED ON THIS ISSUE , H AS NO RELEVANCE FOR THE ADJUDICATION BEFORE US. WE FIND THAT THE ITAT IN THE CASE OF IDEA CELLULAR LIMITED (SUPRA) 3 ITA NOS. 4392 M /17 & 3567/M / 16 ON SAME ISSUE H AS CONCLUDED THAT THE ASSESSEE WAS ENTITLED TO DEPRECIAT ION . WE MAY GAINFULLY REFER TO THE CONCLUDING PART OF THE SAID JUDGMENT WHICH READS AS UNDER: 20. FROM THE ABOVE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF SMIFS SECURITIES LTD. ( SUPRA) AND THE FACTS OF THE PRESENT CASE, IT IS CLEAR THAT THE ASSESSEE HAS RIGHTLY CLAIMED DEPRECIATION UNDER SECTION 32 OF THE ACT ON 3G SPECTRUM. IT MEANS THAT THE EXPENDITURE TOWARDS 3G SPECTRUM IS NOT EXPENDITURE FOR ACQUIRING ANY RIGHT TO OPERATE TELECOMMU NICATIONS SERVICES. OUT OF THE SERVICE AREAS IN WHICH 3G SPECTRUM WAS WON BY THE ASSESSEE, IT HAD ACQUIRED THE RIGHTS TO OPERATE TELECOMMUNICATION SERVICES IN THE YEAR 1995 - 1997 FOR MAHARASHTRA, GUJARAT, UTTAR PRADESH WEST, MADHYA PRADESH, HARYANA. ANDHRA PRADESH, KERALA, PUNJAB TELECOM CIRCLES. IN YEAR 2001 - 02 IT ACQUIRED RIGHTS FOR HIMACHAL PRADESH, UTTAR PRADESH EAST AND THEREAFTER IN THE YEAR 2007 - 08 FOR JAMMU & KASHMIR. EVEN IF 3G SPECTRUM WAS NOT APPLIED OR ALLOTTED, ASSESSEE COULD HAVE STILL CONTINU ED PROVIDING TELECOMMUNICATION SERVICES UNDER EXISTING LICENSE. THE LICENSE TO OPERATE TELECOM SERVICES IS ISSUED U/S. 4 OF THE INDIAN TELEGRAPH ACT, 1885 WHICH PROVIDE RIGHTS TO ESTABLISH AND OPERATE TELECOM SERVICES. AS STATED ABOVE, WITHOUT SUCH LICENSE ONE IS NOT EVER ELIGIBLE TO BID FOR 3G SPECTRUM. 3G SPECTRUM FEES ARE MERELY FOR RIGHT TO USE A PARTICULAR FREQUENCY/SPECTRUM WHILE PROVIDING TELECOMMUNICATION SERVICES. IN VIEW OF THE ABOVE, EVEN THE PROVISIONS OF SECTION 35ABB OF THE ACT ARE NOT APPLICA BLE TO SUCH PAYMENT. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR CLAIM OF DEPRECIATION ON MERITS ALSO AND AO HAS RIGHTLY ALLOWED THE CLAIM WHILE FRAMING ASSESSMENT UNDER SECTION 143(3) OF THE ACT AND THE REVISION ORDER OF C IT UNDER SECTION 263 OF THE ACT IS BAD IN LAW. ACCORDINGLY, WE QUASH THE REVISION ORDER. 9 . WE FURTHER NOTE THAT IN ASSESSEES OWN CASE FOR A.Y. 2013 - 14, THE LD. CIT(A) HAS ALLOWED THE ASSESSEES PLEA OF DEPRECATION BY HOLDING AS UNDER: 4.3 SO FAR AS THIRD GROUND OF APPEAL DISALLOWING DEPRECIATION CLAIM OF RS. 176.88 CRORES UNDER SECTION 32 OF THE IT ACT ON AMOUNT PAID DOT FOR PURCHASE OF 3G SPECTRUM AND RESTRICTING THE ALLOWANCE TO RS. 62.89 CRORES BEING PROPORTIONATE AMOUNT AS APPLICABLE F OR THE YEAR AS PER PROVISIONS OF SECTION 35ABB OF THE ACT IS CONCERNED, IT IS SEEN FROM THE SUBMISSION OF THE APPELLANT THAT THE ISSUE IS COVERED IN FAVOUR OF THE APPELLANT BY THE DECISION OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF IDEA CELLULAR LIMITED (IN ITA 360/MUM/2016) WHEREIN THE HON'BLE TRIBUNAL HAS HELD THAT THE ASSESSEE HAS RIGHTLY CLAIMED DEPRECIATION ON THE FEES PAID FOR ACQUISITION OF 3G SPECTRUM. RELEVANT EXTRACT OF THE JUDGMENT IS REPRODUCED AS BELOW: '20. FROM THE ABOVE JUDGMENT OF HON'BI E SUPREME COURT IN THE CASE OF SMIFS SECURITIES LTD. (SUPRA) AND 4 THE FACTS OF THE PRESENT CASE, IT IS CLEAR THAT THE ASSESSEE HAS RIGHTLY CLAIMED DEPRECIATION UNDER SECTION 3 2 OF THE ACT ON 3G SPECTRUM. IT MEANS THAT THE EXPENDITURE TOWARDS 3G SPECTRUM I S NOT EXPENDITURE FOR ACQUIRING ANY RIGHT TO OPERATE TELECOMMUNICATIONS SERVICES. OUT OF THE SERVICE AREAS IN WHICH 3 G SPECTRUM WAS WON BY THE ASSESSEE, IT HAD ACQUIRED THE RIGHTS TO OPERATE TELECOMMUNICATION SERVICES IN THE YEAR 1995 - 1997 FOR MAHARASHTRA, GUJARAT, ULTAR PRADESH WEST, MADHYA PRADESH, HARYANA, ANDHRA PRADESH, 4 ITA NOS. 4392 M /17 & 3567/M / 16 KERALA, PUNJAB TELECOM CIRCLES. IN YEAR 2001 - 02 IT ACQUIRED RIGHTS FOR HIMACHAL PRADESH, UTTOR PRADESH EAST AND THEREAFTER IN THE YEAR 2007 - 08 FOR JAMMU & KASHMIR. E VEN IF 3G SPECTRUM W AS NOT APPLIED OR ALLOTTED, ASSESSEE COULD HAVE STILL CONTINUED PROVIDING TELECOMMUNICATION SERVICES UNDER EXISTING LICENSE. THE LICENSE TO OPERATE TELECOM SERVICES IS ISSUED U/S. 4 OF THE INDIAN TELEGRAPH ACT, 1885 WHICH PROVIDE RIGHTS TO ESTABLISH AND OP ERATE TELECOM SERVICES. AS STATED ABOVE, WITHOUT SUCH LICENSE ONE IS NOT EVER ELIGIBLE TO BID FOR 3G SPECTRUM. 3G SPECTRUM FEES ARE MERELY FOR RIGHT TO USE A PARTICULAR FREQUENCY/SPECTRUM WHILE PROVIDING TELECOMMUNICATION SERVICES. IN VIEW OF THE ABOVE, EV EN THE PROVISIONS OF SECTION 3SABB OF THE ACT ARE NOT APPLICABLE TO SUCH PAYMENT IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR CLAIM OF DEPRECIATION ON MERITS ALSO AND AO HAS RIGHTLY ALLOWED THE CLAIM WHILE FRAMING ASSESSMENT UNDER SECTION 143(3) OF THE ACT AND THE REVISION ORDER OF CIT UNDER SECTION 263 OF THE ACT IS BAD IN LAW. ACCORDINGLY, WE QUASH THE REVISION ORDER.' RESPECTFULLY FOLLOWING THE SAME, THE AO IS DIRECTED TO ALLOW THE DEPRECIATION CLAIM OF THE APPELLANT AMOU NTING TO RS. 176.88 CR IN RESPECT OF AMOUNT PAID TO DOT FOR PURCHASE OF 3G SPECTRUM. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED. 10 . SINCE THE ISSUE INVOLVED IN SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND NO CONTRARY DECISION HAS BEEN SHOWN TO US, RESPECTFULLY FOLLOWING THE PRECEDENT, WE QUASH THE ORDER PASSED U/S. 263 OF THE ACT BY THE LD. CIT. 1 1 . IN THE RESULT, THESE APPEALS BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 . 0 2 . 2 0 1 9 S D / - S D / - ( PAWAN SINGH ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 2 7 . 0 2 . 2 0 1 9 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI