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2020 (2) TMI 322 - ITAT MUMBAIDisallowance of deduction u/s. 35ABB(2) - expenses on surrender of National Long Distance (NLD) license - HELD THAT:- Assessee has surrendered NLD license to DOT during the year and accordingly, wrote-off the amount of ₹ 2.50 Crores in its Books of Accounts, being license fees paid to acquire the NLD license. The allegation of Ld. AO was that NLD was an intangible asset which would be eligible for depreciation u/s 32. The perusal of financial statements for the year as placed before us also corroborate the said fact which is further fortified by the fact that the assessee has not claimed any depreciation on intangible assets in its Income Tax Return. This being the case, the assessee was clearly eligible to claim the write-off of ₹ 2.50 Crores as normal business loss as well as in terms of provisions of Sec.35ABB(2) read with CBDT Circular No. 763 dated 18/02/1998 . It is noteworthy that the assessee was engaged in the business of providing telecom services and the losses incurred on account of surrender of NLD license would be in the normal course of business and therefore, the same would be an allowable deduction to the assessee in the normal business losses also. The decision of Hon’ble Bombay High Court rendered in CIT V/s Evergrowth Telecom Ltd. [2013 (1) TMI 64 - BOMBAY HIGH COURT] also support assessee’s case and therefore, no fault could be found in the impugned order, in this regard. - Decided against revenue Interest on fixed deposits / margin money which was reduced from work-in-progress (WIP) and not credited to Profit & Loss Account - HELD THAT:- The perusal of financial statements corroborates the same. The Note no. 4 of Schedule 17 also mention that the company has started operations in 8 of its 21 circles with effect from 29/07/2010. This being the case, we direct Ld. AO to verify the stated facts and accept assessee’s claim after due verification since the learned first appellate authority agreed with assessee’s proposition that interest received during pre-operative period could not be charged to tax and the revenue is not in further appeal on this point. If the said interest of ₹ 151.89 Lacs pertains to circle which were not operationalized during the year, the impugned addition would stand deleted. Accordingly, the appeal may be treated as allowed for statistical purposes.
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