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2013 (1) TMI 64 - HC - Income TaxLicense fees paid to holding company - whether an allowable expenditure u/s. 37(1)? - the assessee company had itself amortized the said license fee for a period of ten years and further Section 35ABB was applicable to such payment as license fee - Held that:- Operating license fee paid to holding company for the year under consideration, consequently, no enduring benefit is received by the assessee so as to spread the expenditure beyond the period of one year in which the expenditure is incurred. In such a case, there can be no amortization of the expenditure over a period of 10 years. Section 35ABB would have no application in the present case but would apply in respect of the license fee paid by M/s. J.T. Mobiles Ltd. The fact that the respondent-assessee had in its books of accounts spread the expenditure of Rs.115 crores over a period of 10 years and only debited amount of Rs.47.46 crores as expenditure during the year under consideration would not change the nature of the expenditure for the purpose of determining to allow ability of the expenditure for income tax purpose. The Tribunal in the present case has merely followed its earlier order for the assessment year 1997-98 that the entire amount paid as operating license fee was allowed as an expenditure under Section 37(1) which appears to have been accepted by the department as no appeal there from has been preferred by the revenue. In view of the above, no substantial question of law arises. Prior period expenses towards PSTN charges and dealers commission - Revenue v/s Capital - - Held that:- The order of the Tribunal dated 29/3/2007 for the assessment year 1997-98 stated that the aforesaid expenses are not pre-operating expenses as the appellant had set up its business much before the commercial launch on 12/1/1998 as evident from the fact that it had started marketing its services, appointing dealers, accepting deposits from subscribers much before the commercial launch. The aforesaid expenses were incurred after setting up of business and allowable as permissible deductions u/s 37 - This order of the Tribunal for assessment year 1997-98 was accepted by the revenue as no appeal there from is filed by the revenue - no substantial question of law arises. Expenditure on foreign travel - Revenue v/s Capital - Held that:- CIT(A) and the Tribunal on examination of the facts concluded that the expenses incurred do not give rise to any enduring benefits but only enables the respondent-assessee to efficiently run its business so as to achieve higher profits hence allowable as a revenue expenditure - no substantial question of law arises
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