ACIT, New Delhi V. M/s. Bharti Telemedia Ltd., New Delhi

ITA 6344/DEL/2012

• Counselvise Citation: 634420114 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 24-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y KAKKAR
• Keywords: Revenue expenditure; Capital expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI J.S. REDDY ITA NO. 6344/DEL/2012 ASSTT. YR: 2009-10 DCIT, CIRCLE 2(1), VS. M/S BHARTI TELEMEDIA LTD ., NEW DELHI. 1 ARAALI CRESCENT, NELSON MANDELA, ROAD, VASANT KUNJ, PHASE-II, NEW DELHI. PAN: AADCB 0147 R ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI ANIL BHALLA FCA RESPONDENT BY : MS. Y. KAKKAR SR. DR O R D E R PER R.P. TOLANI, J.M: : THIS IS REVENUES APPEAL AGAINST THE ORDER OF CIT (A)-V, NEW DELHI DATED 09-10-2012 RELATING TO A.Y. 2009-10. SOLE EFF ECTIVE GROUND RAISED IS AS UNDER: THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN D ELETING THE ADDITION OF RS. 27,20,410/- ON ACCOUNT OF AMORTIZAT ION OF LICENSE FEE AND SPECTRUM CHARGES U/S 35ABB OF THE I T ACT. 2. FACTS IN BRIEF ARE: THE ASSESSEE COMPANY, INCOR PORATED ON 30-11- 2006, IS ENGAGED IN THE BUSINESS OF PROVIDING DIREC T TO HOME (DTH) SERVICES. THIS IS THE FIRST YEAR OF OPERATION. IN ITS COMPUTA TION OF INCOME THE ASSESSEE COMPANY CLAIMED THE EXPENDITURE INCURRED ON LICENSE E FEE AND SPECTRUM CHARGES AMOUNTING TO RS. 90,04,000/-, ON REVENUE SH ARING BASIS. IN ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT IN OTHE R GROUP COMPANIES SUCH 2 CLAIM HAS BEEN CONSISTENTLY DISALLOWED IN PREVIOUS YEARS AND AMORTIZATION HAS BEEN DONE U/S 35BB OF THE ACT. OBSERVING THAT I N ASSESSEES CASE LICENSE WAS GRANTED ON 10-9-2007 FOR 10 YEARS, THE AO ALLOWED ONLY ONE AND NINTH PORTION I.E. RS. 10,00,444/- AND DISALLOWED T HE BALANCE RS. 80,03,555/-. 2.1. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), SUBMITTING THAT THE ISSUE IN QUESTION WAS COVERED BY ITAT ORDE RS IN OTHER GROUP COMPANIES CASES, HOLDING THAT LICENSE FEE UNDER LIC ENSES SHARE POLICY IS ALLOWABLE AS REVENUE EXPENDITURE U/S 37(1). IT WAS SUBMITTED THAT FACTS AND CIRCUMSTANCES OF ASSESSEES CASE BEING IDENTICAL, SAME TREATMENT SHOULD BE GIVEN. THE LD. CIT(A) ALLOWED THE ASSESSEES CLAIM BY OBSERVING AS UNDER: THE ISSUE INVOLVED AND THE VERSION OF THE APPELLAN T HAS BEEN CONSIDERED. THE APPELLANT HAS SUBMITTED COPIES OF T HE DECISIONS OF THE ITAT NOTED ABOVE IN WHICH IN SIMILAR FACTS A ND CIRCUMSTANCES THE ITAT HAS ALLOWED THE PAYMENT OF L ICENSE FEE UNDER LICENSES SHARE POLICY AS REVENUE EXPENDITURE U/S 37(1) OF THE I.T. ACT. THEREFORE, THE CLAIM OF THE APPELLANT AT RS. 80,03,555/- IS ALLOWED. 2.2. AGGRIEVED, REVENUE IS BEFORE US. 3. LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITTED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY HONBLE DELHI HIGH COURT JUDGMENT DATED 13-8-2013 IN CASES OF OTHER GROUP COMPANIES ( ITA NO. 1336/2010 CIT VS. BHARTI HEXACOM LTD. & OTHERS), HOLDING AS UNDER: (I) THE EXPENDITURE INCURRED TOWARDS LICENCE FEE I S PARTLY REVENUE AND PARTLY CAPITAL. LICENCE FEE PAYABLE UPT O 31 ST JULY, 1999 SHOULD BE TREATED AS CAPITAL EXPENDITURE AND L ICENCE FEE ON REVENUE SHARING BASIS AFTER 1 ST AUGUST, 1999 SHOULD BE TREATED AS REVENUE EXPENDITURE. 3 (II) CAPITAL EXPENDITURE WILL QUALIFY FOR DEDUCTION AS PER SECTION 35ABB OF THE ACT. 3.1. IT IS SUBMITTED THAT IN VIEW OF ABOVE, THE REV ENUES APPEAL SHOULD BE DISMISSED. 4. LD. DR IS HEARD. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. RESPECTFULLY FOLLOWING HONBLE HIGH COURTS JUDGMENT IN CASES OF OTHER GROUP COMPANIES, WE HOLD THE EXPE NDITURE INCURRED BY THE ASSESSEE ON LICENSE FEE AND SPECTRUM CHARGES AS RE VENUE EXPENDITURE. THE ORDER OF THE CIT(A) BEING IN CONFORMITY WITH HONBL E HIGH COURTS ORDER, WE SEE NO REASON TO INTERFERE. 6. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON 06-02-2014. SD/- SD/- ( J.S. REDDY ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: _06-02-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR