DCIT 8(3)(1), MUMBAI V. TATA TELESERVICES (MAH) LTD, NAVI MUMBAI

ITA 3874/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6849 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2015-2016
• Appeal Filed On: 31-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. MANJUNATHA SWAMY
• Keywords: Depreciation; Capital expenditure; Set aside
• Section: 32; 263; 143(3); 40(a)(ia); 20

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI PAVANKUMAR GADALE ( JM) I.T.A. NO. 3874/MUM/2019 (ASSESSMENT YEAR 2015-16) DCIT-8(3)(1) ROOM NO. 615 6 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. VS. M/S. TATA TELESERVICES (MAH.) LTD. D-26, TTC INDUSTRIAL ESTATE, MIDC SANPADA NAVI MUMBAI-400703. PAN : AAACH1458C (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI HITEN CHANDE DEPARTMENT BY SHRI R. MANJUNATHA SWAMY DATE OF HEARING 0 9 .0 2 .2021 DATE OF PRONOUNCEMENT 01.04.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LEARNED CIT(A) 26.3.2019 AND PERTAINS TO A.Y. 2015-16. 2. THE GROUNDS OF APPEAL READ AS UNDER : 1. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 59,30,89,90 4/- UNDER SECTION 40(A)(IA) OF INCOME TAX ACT, 1961 AND HOLDING THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE U/S 194H IN RESPECT OF PAYMENT OF THE DISCOUNTS ALLOWED TO ITS PREPAID DISTRIBUTORS ON SAL E OF STARTER KITS AND PREPAID RECHARGE VOUCHERS.' 2. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING DEPRECIATION CLAIM OF THE ASSESSEE AMOUNTING TO RS. 99.50 CRORES U/S 32 OF THE IT ACTION RESPECT OF AMOUNT PAID TO DOT FOR PURCHASE OF 3G SPECTRUM. 3. THE LD. CIT(A)'S ORDER IS CONTRARY IN LAW AND ON FACTS AND DESERVES TO -BE SET ASIDE. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY G ROUND OR ADD A NEW GROUND THAT MAY BE NECESSARY. ' M/S. TATA TELESERVICES (MAH.) LTD. 2 5. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE A BOVE GROUND BE SET ASIDE AND THAT OF THE AO RESTORED. 3. AT THE OUTSET LEARNED COUNSEL OF THE ASSESSEE SU BMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY TH E ITAT DECISION IN ASSESSEES OWN CASE. LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT THIS SUBMISSION. 4. WE NOTE THAT THE ITAT IN ASSESSEES OWN CASE IN ITA NO. 1204/MUM/2018 FOR A.Y. 2014-15 VIDE ORDER DATED 28. 8.2019 HAS ADJUDICATED AS UNDER :- AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE STA TED THAT THIS ISSUE IS SQUARELY COVERED BY TRIBUNAL'S DECISION OF THIS CO-O RDINATE BENCH OF THIS ITAT IN THE CASE OF IDEA CELLULAR LIMITED VS. PCIT IN IT A NO. 360/MUM/2016 FOR AY 2011-12 VIDE ORDER DATED 06.12.2017, WHEREIN IT I S HELD AS UNDER: - '20. FROM THE ABOVE JUDGMENT OF HON'BLE SUPREME COUR T IN THE CASE OF SMIFS SECURITIES LTD. (SUPRA) AND THE FACTS OF THE PRE SENT CASE, IT IS CLEAR THAT THE ASSESSEE HAS RIGHTLY CLAIMED DEPRECIA TION UNDER SECTION 32 OF THE ACT ON 3G SPECTRUM. IT MEANS THAT THE EXPENDI TURE TOWARDS 3G SPECTRUM IS NOT EXPENDITURE FOR ACQUIRING ANY RIGH T TO OPERATE TELECOMMUNICATIONS 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 PRADE SH, HARYANA. ANDHRA PRADESH, KERALA, PUNJAB TELECOM CIRC LES. IN YEAR 2001-02 IT ACQUIRED RIGHTS FOR HIMACHAL PRADESH, UTTAR PRADESH EAST AND THEREAFTER IN THE YEAR 2007-08 FOR JAMMU & KASHMI R. EVEN IF 3G SPECTRUM WAS NOT APPLIED OR ALLOTTED, ASSESSEE COULD HAVE STILL CONTINUED PROVIDING TELECOMMUNICATION SERVICES UNDER E XISTING LICENSE. THE LICENSE TO OPERATE TELECOM SERVICES IS ISSUED U/S. 4 OF THE INDIAN TELEGRAPH ACT, 1885 WHICH PROVIDE RIGHTS TO ES TABLISH AND OPERATE TELECOM SERVICES. AS STATED ABOVE, WITHOUT SUC H LICENSE ONE IS NOT EVER ELIGIBLE TO BID FOR 3G SPECTRUM. 3G SPECTRUM FEES ARE MERELY FOR RIGHT TO USE A PARTICULAR FREQUENCY/SPECTRUM WHIL E PROVIDING TELECOMMUNICATION SERVICES. IN VIEW OF THE ABOVE, EVE N THE PROVISIONS OF SECTION 35ABB OF THE ACT ARE NOT APPLICABLE TO SUC H PAYMENT. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE ASSE SSEE IS ENTITLED FOR CLAIM OF DEPRECIATION ON MERITS ALSO AND AO HAS RIGHTL Y ALLOWED THE CLAIM WHILE FRAMING ASSESSMENT UNDER SECTION 143(3) OF THE ACT AND THE REVISION ORDER OF CIT UNDER SECTION 263 OF THE A CT IS BAD IN LAW. ACCORDINGLY, WE QUASH THE REVISION ORDER.' 4. WHEN THIS WAS CONFRONTED TO THE LEARNED CIT DR, HE ONLY RELIED ON THE ORDER OF THE AO AND THAT OF THE CIT(A). M/S. TATA TELESERVICES (MAH.) LTD. 3 5. WE HAVE NOTED THE FACT AND FIND THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ENQUIRED TO JUSTIFY THE REASON F OR CLAIMING THE DEPRECIATION AMOUNTING TO RS. 132.67 CRS DURING THE YEAR ON 3G SPECTRUM FEES OF RS. 1257.83 CRS PAID BY THE ASSESSEE IN AY 2011-12. THE ASSESSEE VIDE ITS SUBMISSION DATED 26.12.2016 CONTENDED THAT S AID 3G SPECTRUM FEES QUALIFIES AS AN 'INTANGIBLE ASSET' ELIGIBLE FOR DEPREC IATION AT THE RATE OF 25% AS PER PROVISION OF SECTION 32 OF THE ACT AND ADVANCED VARIOUS CONTENTIONS IN SUPPORT OF ITS CLAIM. HOWEVER, THE AO WAS OF THE OPINI ON THAT SAID CAPITAL EXPENDITURE ON ACCOUNT OF ACQUISITION OF 3GSPECTRUM FEE S IS COVERED UNDER SECTION 35AAB OF THE ACT AND IS REQUIRED TO BE AMORTIZ ED AS PER PROVISIONS OF SECTION 35ABB OF THE ACT OVER THE PERIOD OF 20 YEARS F OR WHICH 3G SPECTRUM HAS BEEN ALLOCATED AND ACCORDINGLY DISALLOWED THE DE PRECIATION CLAIM OF RS. 69,78,00,000/- ON SAID 3G SPECTRUM FEES. WE NOTED T HAT THIS ISSUE IS SQUARELY COVERED BY THE CO-ORDINATE BENCH DECISION OF IDEA CELLULAR LIMITED (SUPRA). FOLLOWING THE CO-ORDINATE BENCH DECISION, WE ALLOW THIS ISSUE OF ASSESSEE'S APPEAL. 5. RESPECTFULLY FOLLOWING THE PRECEDENTS AS ABOVE, WE UPHOLD THE ORDER OF LEARNED CIT(A). 6. IN THE RESULT, THIS APPEAL BY THE REVENUE STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 1.4.2021. SD/- SD/- (PAVANKUMAR GADALE) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI; DATED : 01/04/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI