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2023 (7) TMI 232 - AT - Income TaxAmortization of variable license fee - Deduction u/s 35AAB or u/s. 37(1) - CIT(A) allowed the same as revenue expenditure - HELD THAT:- Hon’ble jurisdictional High Court, while deciding the appeals for the assessment years 2003-04, 2004-05, 2006-07 and 2007-08, has upheld assessee’s claim of deduction as revenue expenditure. While, deciding the assessee’s appeal for the assessment year 2009-10, the Tribunal [2016 (11) TMI 1739 - ITAT DELHI] has allowed assessee’s claim of deduction following the decision of the Hon’ble High Court. No infirmity in the decision of learned first appellate authority. Ground raised is dismissed. Nature of expenditure - subscriber verification penalty paid to the Department of Telecommunication - violation of KYC norms - AO treating the payment as penal in character, hence, not allowable u/s. 37 - HELD THAT:- From the facts on record, it does not transpire that the violation of KYC norms entails any criminal liability or prosecution. As per the license agreement, for violation of any terms of the agreement including KYC norms, the assessee is to be visited with penalty of various amounts. As discussed, such penalty is imposed as a deterrent measure and not for any offense or due to prohibition of law. It is further necessary to observe, the penalty arises because of breach of certain terms and conditions of the license agreement, hence, in regular course of business. Pertinently, in case of Mangal Keshav Securities Ltd. [2015 (11) TMI 111 - ITAT MUMBAI] while dealing with more or less identical issue of penalty levied by Stock Exchange for violation of KYC norms, has held that payment made towards penalty for violation of KYC norms would not fall within the ambit of Explanation 1 to section 37(1) of the Act. Thus exceptions provided under Explanation 1 to section 37(1) of the Act will not get attracted. Thus, we do not find any infirmity in the decision of learned Commissioner (Appeals) in deleting the disallowance. Decided against revenue. TDS u/s 194H - Disallowance u/s. 40(a)(ia) - assessee has provided discounts to pre-paid card distributors - HELD THAT:- While dealing with identical issue in assessee’s own case for earlier assessment years, various Benches of the Tribunal have held that the provisions of section 194H are not attracted to the discounts given to distributors. Hence, section 40(a)(ia) would not be applicable. As in the latest order passed for the assessment year 2009-10 the Tribunal in order [2016 (11) TMI 1739 - ITAT DELHI] has deleted similar disallowance - provisions of section 194H are not applicable to the discounts given to the distributors - disallowance u/s. 40(a)(ia) deleted.- Decided in favour of assessee.
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