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2016 (5) TMI 813 - AT - Income TaxSubsidy received from DOT for rural telephony - eligibility for deduction u/s 80-IA - Held that:- As in terms of the non-obstante clause used in section 80IA(2A), deduction for telecommunication services is available in respect of 'profits of eligible business' and is not restricted to 'profits derived from eligible business' as mentioned in section 80IA. Giving due recognition for the peculiarities of the telecommunication services where heavy investment costs in the initial years are a necessity they have been allowed to be recovered by way of profits to the extent of hundred percent from that activity in the first five years and thereafter the allowable deduction is substantially reduced to thirty percent in the next five years presuming that by then the heavy infrastructural costs would have been recovered and/or the objectives of the governmental policy would have been attained. Keeping in mind the services and functions performed by such an assessee towards the aims of the government policy wherein gestation period necessarily looking at the nature of the undertaking is very long. Thus, for the purposes of the time frame the legislature has given the timeline of fifteen years from which ten consecutive years could be opted. The fact remains that the legislature aware of the differences in the use of terms used consciously ensures that "profits and gains derived from" used in sub-section (1) is not used in sub-section (2A). Instead in sub-section (2A) the term used is "profits and gains of eligible business" juxta posed with the glaring fact that the sub-section (2A) starts with a non-obstante clause namely "Notwithstanding" qualified further by the use of the words "anything contained in". In the face of the clear and unambiguous statutory provisions we find ourselves unable to agree with the arguments advanced by the Ld. CIT DR however valiantly as what the law is has very clearly been enunciated and set out in the relevant provision giving cause to no debate whatsoever. - Decided in favour of assessee Disallowance of depreciation claimed for the current year - Held that:- The Government of India has transferred the assets to the petitioner company at their book value i.e., the value at which thesaid assets are reflected in the books of DTS and DTO and the book value of the Government of India's holding in the petitioner company as shareholder and a creditor aggregates the book value of the assets transferred. The configuration of the capital structure of the petitioner has no impact on the value of the Government's holding in the petitioner company as reserves of a company are subsumed in the book value of its capital. We find no basis, at all, for the Assessing Officer to surmise that reserves represent a subsidy, grant or reimbursement from which the cost of assets of the petitioner company are met and the whole consideration received by the Government of India for transfer of business is limited to the value of loans and the face value of the shares issued to the Government of India. A reserve represents the shareholders' fund and may be utilized in various ways including to declare dividends or for issuing bonus shares. There is no plausible reason to assume that the value of shareholders' holding in a company is limited to the face value of the issued and paid up share-capital and the reserves represent a subsidy or a grant or a reimbursement by the shareholders from which directly or indirectly the cost of the assets in the hands of a company are met.- Decided in favour of assessee Disallowance @15% of Licence and Spectrum fees - Held that:- 'License fees' being a charge received by the government for parting with rights, is neither a tax, nor a duty, nor a fees, nor a cess within the meaning of S.43B of the Act. Hence this Sec.43B cannot be applied. - Decided in favour of assessee Disallowance on account of write off of losses - Held that:- Once through writing back in the computation of Income of the Provisions made for asset write-offs, and then again if the same were to be disallowed separately by the A.O. The accounting entries passed in this regard are consistently being followed from year to year. It appears that the full accounting implication of this item of 'Write off of Assets' in light of the corresponding 'Provision accounts' for 'Decommissioned Assets has not been fully understood. The A.O's step of disallowing these expense does result in a double disallowance of the same expenditure, which is being Credited to the Provision Account, and the Provision Account itself being written back. I therefore direct the deletion of this addition erroneously made by the learned A.O upon a mis-reading of the facts and accounting involved.- Decided in favour of assessee
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