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2018 (6) TMI 1583 - HC - Income TaxThe following two questions of law are framed for consideration:- “1. Did the Income Tax Appellate Tribunal (ITAT) fall into error in upholding the disallowance of the depreciation claimed to the extent of ₹ 5,10,79,752/- on account of asset reconstruction cost in holding that it was a contingent liability? 2. Did the ITAT fall into error in upholding the disallowance u/s 49(a)(ia) of the Income Tax Act, 1961 with respect to the discount offered by the assessee to the prepaid SIM Card distributor as commission?” Proportionate interest claimed on account of Section 36(1)(iii) - HELD THAT:- The Court is of the opinion that the assessee’s argument that the improved efficiency within the circle if it was allowed for operation of its licences, did not amount to extension of business, is unpersuasive. The facts are that the assessee is a license holder in respect of three telecom circles. At the relevant time, it sought to install cell-site towers claiming that they would merely improve its efficiency. The lower authorities discerned that materials on record clearly show that the object of such exercise was to reach the greater number of customers and thus increase subscriber base. In these circumstances, the finding of the lower authorities cannot be faulted. No substantial question of law arises. Addition of advertising, marketing and promotion (AMP) expenses - HELD THAT:- Having regard to the fact that all materials were available with it, the ITAT is directed to consider the transactions involving AMP expenditure as well as the issue of royalty. In this regard its observations with respect to the comparables used by the assessee vis-a-vis the two foreign parties shall not be treated conclusive. The ITAT shall carry out necessary inquiry if need be by resorting to a limited remand to the TPO or DRP as the case may be having regard to the overall facts and circumstances and decide whether AMP expenses required in the present case involve international transaction, if so, to what extent.
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