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2016 (11) TMI 1739 - AT - Income TaxApplicability of Section 35ABB to license fee and spectrum charges - HELD THAT:- Issue is covered by the decision of the ITAT Delhi Bench in assessee’s own case in respect of A.Y. 2008-09 [2016 (5) TMI 34 - ITAT DELH] wherein held that the expenditure incurred towards licence fee is partly revenue and partly capital. Licence fee payable upto 31st July, 1999 should be treated as capital expenditure and licence fee on revenue sharing basis after 15th August, 1999 should be treated as revenue expenditure. Thus capital expenditure is qualified for deduction as per Section 35ABB of the Act in the said case as per the finding of the Hon’ble High Court. Thus the said issue is decided in favour of the assessee. Lease rent paid to IBM - HELD THAT:- This issues covered in favour of the assessee by the decision of the ITAT Delhi Bench in assessee’s own case for A.Y. 2008-09 [2016 (5) TMI 34 - ITAT DELH] wherein the Tribunal held that the service cum lease agreement between the assessee and IBM as well as Nortel clearly lays liability on IBM and substance of the transaction suggests that the beneficial ownership remained with IBM and not with assessee and therefore the assessee had rightly claimed the entire lease rent paid by it to IBM. TDS u/s 194H - discount allowed to distributors on the sale of prepaid cards which carry “Right to Use of Airtime” - HELD THAT:- Addition under Section 40(a)(ia) has to be deleted as the assessee was not in default u/s 201 of the Act in respect of applicability of Section 194H - The Assessee company was carrying out telecom business in the Rajasthan Circle and NESA. The Jaipur Bench of ITAT held that the assessee is not in default in Assessment Year 2004-05 to 2008-09 and Assessment Year 2009-10. Similarly in the case of assessee itself has held that assessee to be not in default u/s 194H of the Act. Thus no tax was determined as deductible under Chapter XVIIB. Computational provisions of Section 40(a)(ia) cannot operate if machinery provisions of Chapter XVII-B – Section 201 read with Section 194H of the Act are not applicable. TDS u/s 194J - Payment made by the assessee company for roaming charges to other telecom service providers - HELD THAT:- Jaipur Bench of ITAT recorded a finding in [2015 (7) TMI 175 - ITAT JAIPUR] held that these charges are not fees for rendering any technical services as envisaged in Section 194J - Once the order u/s 201(1) of the Act is set aside then the issue related to Section 40(a) (ia) does not sustain. Thus the disallowance under Section 40(a)(ia) of the Act in respect of free airtime to distributors and roaming charges by the Assessing Officer does not sustain - Decided in favour of assessee.
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