TMI Blog2010 (1) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... sions amended w.e.f. 1-4-2000 even when the assessee had already started providing telecommunication services in the period relevant to the AY 97-98 - assessee did not actually claim any such deduction in the period relevant to the AY 97-98 until the AY 2003-04 in view of losses -Held that:- The assessee was justified in exercising option in terms of the amended provisions, especially when the provisions of section 80-IA(4)(ii) clearly stipulate that the option is available even to those undertakings which had started providing telecommunication services on or after 1-4-1995. Therefore, when the assessee fulfilled all other stipulated conditions in terms of the relevant provisions of section 80-IA CIT(A) was not justified in holding that the benefit of substituted provisions was available only to those undertakings which were granted a license after 1-4-1995 and could not start operations until 1-4-2002. Thus such an restrictive interpretation does not emerge from the amended provisions. CIT(A) was also not justified in concluding that the assessee having exercised option in the period relevant to the assessment year 1997-98 [even though there was no such provision of exercising op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of sale promotion expenses - expenditure on account of gifts to the staff on the occasions of marriage, Diwali, gift vouchers - Held that:- ITAT allowed claim of assessee in the assessee's own case for the AYs 2003-04 and 2005-06 - Deletion of dis-allowance upheld Deletion of dis-allowance of claim for deduction u/s 80IA on the Revenue on a/c of sharing of certain common facilities - Held that:- ITAT decided in favor of assessee for AY 05-06 on ground that income generated on account of bandwidth capacity and site sharing, which has direct nexus with the business income of the Industrial Undertaking, is eligible for deduction u/s. 80IA(1) - Deletion of dis-allowance upheld Deletion of addition made on account of provision for Municipal Tax while determining book profits in terms of provisions of section 115JB - Held that:- ITAT decided in favor of assessee for the AY2005-2006 on ground that provisions made for Municipal tax liability on the basis of reasonable estimate made by the management on the basis of the relevant information, cannot be added and cannot be called unascertained liability - Deletion of dis-allowance upheld. - IT Appeal Nos. 1361 and 1878 (Ahd.) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2006-07 cannot take a view contrary to the view taken in assessment year 1996-97. 1.3 Without prejudice even it is presumed that the business is set up in assessment year 1996-97, the CIT(A) erred in not appreciating that deduction under section 80-IA(4) is available only after the assessee starts providing telecommunication service which happened in January, 1997 relevant to the assessment year 1997-98. 2. On the facts and in the circumstances of the case, the CIT(A) erred in confirming the action of the Assessing Officer in holding that the appellant's claim for deduction in assessment year 2006-07 would be governed by the provisions of section 80-IA of the Act as it stood in assessment year 1996-97 and not the relevant assessment year, i.e., assessment year 2006-07. 2.1 On the facts and in the circumstances of the case, the CIT(A) erred in holding the appellant has exercised its option of making a claim for deduction under section 80-IA, the assessment year 1997-98 and, hence, the provisions of section 80-IA as substituted from the assessment year 2002-03 would not apply. 2.2 The CIT(A) erred in holding that the option to claim deduction for ten out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encement of business was issued to the company on 4-4-1995, the Assessing Officer asked the assessee to explain as to why initial year for claiming deduction under section 80-IA(4) of the Act may not taken as assessment year 1996-97 instead of 1997-98 claimed by it. In response, the assessee submitted vide letter dated 19-12-2008 that after obtaining a certificate of commencement of business on 4-4-1995, the assessee entered into a license agreement with telecom authority in the month of January 1996 to establish, maintain and operate cellular mobile telephone service in the State of Gujarat. Thereafter, the assessee started implementing the project and launched its commercial operations only on 24-1-1997 as is evident from the audited accounts for the year ending 31-3-1997. Since telecom business was capital intensive involving considerable gestation period, after identification, it took time in installing the equipment at various sites. Thereafter, the telecom authority undertook necessary performance tests to ascertain the quality of service before launching commercial operations. While referring to the assessment order for the assessment year 1996-97 under section 143(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istency, it was contended that the Department having accepted the position of the assessee for every assessment year since the assessment year 1996-97, cannot now adopt a contrary position to contradict its own findings, in this connection, the assessee relied upon the decisions in the case of Radhasoami Satsangv. CIT [1992] 193 ITR 321 (SC), CIT v. Lagankala Upvan [2003] 259 ITR 489 (Delhi), CIT v. N.P. Mathew [2006] 280 ITR 44 (Ker.), CBDT v. Cochin Goods Transport Association [1999] 236 ITR 993 (Ker.), DIT v. Lovely Bal Shiksha Parishad [2004] 266 ITR 349 (Delhi), CIT v. Shri Nirmal Commercial Ltd. [1995] 213 ITR 361 (Bom.) (FB), ITO v. Tejmalbhai and Co. [2006] 99 ITD 399 (Rajkot) and CIT v. Bhartesh Jain [2009] 310 ITR 82 (Delhi). While relying upon their submissions before the Assessing Officer, the assessee added that the Assessing Officer cannot change the initial year in the assessment proceedings for the year under consideration. 4. After considering the aforesaid submissions, the ld. CIT(A) upheld the findings of the Assessing Officer mentioning that notes to the accounts of the assessee for the financial year 1995-96 revealed that the assessee started construction w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflected for the first time in the balance sheet as on 31-3-1997 to the extent of Rs.4,32,28,337. The list of cellular providers as on 31-3-2006 (copy placed at page 4 of the paper book), also mentions the date of start of initial services as 21-1-1997 while even the assessment order dated 29-1-1999 in the assessee's own case for the assessment year 1996-97 concluded that no business activities were carried out. While referring to the impugned assessment order, the ld. AR pointed out that while passing the order, the Assessing Officer is recording findings relevant for the assessment years 1996-97 and 1997-98. According to the ld. AR, first year when deduction was claimed by the assessee is assessment year 2005-06; however, the Assessing Officer did not allow the deduction under section 80-IA of the Act. While referring to page 94 of the paper book, the learned AR added that though the assessee earned profits in the assessment year 2004-05, it did not claim deduction under section 80-IA of the Act. While carrying us through pages 46, 54, 55 of the paper book, the learned AR, further submitted that terms and conditions in the license agreement were not relevant. The issue in this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.1 As pointed out by the ld. AR, we find that as on 31-3-1996 only capital advance of Rs.1,06,50,000 shown under the head 'Fixed Assets' was given besides payment of license fee of Rs.46,34,54,000. The company started their commercial operations in Ahmedabad/Gandhinagar only on 24-1-1997 and, accordingly, sales and service revenue was reflected for the first time in the balance sheet as on 31-3-1997 to the extent of Rs.4,32,28,337. The list of cellular providers as on 31-3-2006 (copy placed on page 4 of the paper book) also mentions the date of start of initial services as 21-1-1997. Even the assessment order dated 29-1-1999 in the assessee's own case for the assessment year 1996-97 concluded that no business activities were carried out. These evidences lead only to one conclusion that the assessee did not start providing telecommunication services in the period relevant to the assessment year 1996-97. We are further of the opinion that whether or not the assessee started providing telecommunication services in any year, has to be decided in the assessment proceedings for that year in the light of the relevant facts and circumstances obtaining in that assessment year alone. Her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 321 (SC)/AIR 1992 SC 377; H.A. Shahand Co. v. CIT/EPT [1956] 30 ITR 618 (Bom.). In the last mentioned case, it was observed that if the question was not considered in detail in earlier proceedings, it is open to the authorities to consider those documents and to come to a different conclusion. But if the question is already decided on the basis of the facts and there is no change in that factual position, it cannot be reopened. In the instant case, as observed by us hereinabove, the fact was brought to the notice of the respondent authority by the petitioners that litigation was going on between the parties and the receiver was appointed by the High Court of Bombay. That fact was also accepted by the Department for the assessment year 1978-79 and even for the year 1982-83 in respect of a number of appeals filed by other co-owners as also by some of the petitioners. In our opinion, there was no good and justifiable cause to take a different view when some appeals came before a different officer without there being any change in the factual position and when the earlier decision was not challenged by the Department." 6.3 The aforesaid decision has been followed by the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up to the assessment year 2005-06. In response to a show-cause notice, proposing to apply the provisions of section 80-IA of the Act as these stood before the amendment brought about by Finance Act, 1999 with effect from 1-4-2000, the assessee explained vide letter dated 17-11-2008 that they had started providing telecommunication services in the period relevant to the assessment year 1997-98. Since the amended provisions alone would be applicable in the year under consideration, they were entitled to deduction at the rate of 100 per cent of the profits and gains of the undertaking. According to the Assessing Officer, the assessee had no option to choose initial assessment year in terms of provisions of section 80-IA of the Act as existed in the assessment year 1996-97. Since there was no option for the assessee, it had to claim deduction in the assessment year 1996-97 itself and for subsequent nine years and not from any other year. However, the assessee pleaded before the Assessing Officer that in April, 2002, section 80-IA was amended and the period for which deduction was available, become 10 consecutive years out of 15, beginning from the year in which undertaking started prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not entitled to any deduction in the year under consideration. 7.2 Without prejudice to his aforesaid findings, the Assessing Officer also observed that even if initial year is taken as assessment year 1997-98, the assessee would be entitled to deduction at the rate of 30 per cent of the eligible profits and not at the rate of 100 per cent and that too after set-off of the losses of earlier years. 8. On appeal, the assessee contended since the assessee-company started providing telecommunication services in the period relevant to the assessment year 1997-98, it was entitled to deduction in terms of provisions of section 80-IA of the Act. In accordance with the provisions of section 80-IA(2) of the Act, the assessee can claim deduction at the rate of 100 per cent of the eligible profits for the first five years and 30 per cent for the next 5 years so long as option to claim deduction under section 80-IA is exercised at any time during the 15 years, beginning from the year in which the undertaking starts providing telecommunication services. While explaining the provisions of section 80-IA of the Act amended by the Finance Act, 1999 with effect from 1-4-2000, the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of provisions of the Act as on 1-4-2006 and, accordingly, the assessee opted for claiming deduction from the assessment year 2005-06 for a period of 10 years. Relying upon the decision of Chennai Bench of the ITAT in the case of Mohan Breweries and Distilleries Ltd. v. Asstt. CIT [2009] 116 ITD 241 and Bank of Baroda v. H.C. Shrivastava [2002] 122 Taxman 330 (Bom.), Asstt. CIT v. Aurangabad Holiday Resorts (P.) Ltd. [2009] 118 ITD 1 (Pune), Siemens India Ltd. v. K. Subramanian, ITO [1983] 143 ITR 120 (Bom.), Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 188 (SC), CIT v. South Arcot District Co-operative Marketing Society Ltd. [1989] 176 ITR 117 (SC), CIT v. U.P. Cooperative Federation Ltd. [1989] 176 ITR 435 (SC) and Broach Distt. Cooperative Cotton Sales, Ginning and Pressing Society Ltd. v. CIT [1989] 177 ITR 418 (SC), the assessee contended that the assessee is entitled to deduction at the rate of 100 per cent of the profits and gains of the industrial undertaking. The assessee further pointed out while referring to the provisions of section 80-IA(2) of the Act, the word 'claimed' used in the said section means actually claimed. If the assessee has not claimed the deduction, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year, as the provisions existed before the amendment in section 80-IA. As no option was provided in the old provisions of section 80-IA, the appellant did not have any option but to claim the deduction under section 80-IA for 10 years starting from assessment year 1996-97. The provisions were amended to extend and provide incentive benefit to the assessees who were granted license from 1-4-1995 but could not start the commercial operations till 1-4-2002 by extending the scheme to 15 years. Therefore, the period of 10 years for claiming deduction expires in assessment year 2005-06 and, therefore, the Assessing Officer has rightly concluded that the appellant is not entitled for any deduction under section 80-IA for this year. The Assessing Officer has discussed the notes attached by the appellant to the computation of income for assessment years 1997-98, 1998-99 and 1999-2000, wherein it was mentioned that "deduction under section 80-IA has not been claimed in view of loss claimed by the company". Therefore, it is clear that the appellant had started exercising its option to claim deduction under section 80-IA from assessment year 1997-98 and as there was no positive profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the questions arose for decision in that case. It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete "law" declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, the Courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasoning." The A.R. has referred to Circular No. 717 of 1995 and clause 34.5 thereof saying the assessee have option to choose initial assessment year, out of 12 years, but 12 years period was provided for co-operative societies and option was given to choose any 10 years out of 12 years and for companies the period was 10 years and there was no opti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (2A) has to be given full import. He added that the issue is no longer res integra in view of the decision dated 17-6-2008 of ITAT in Mastak Ltd. in IT Appeal Nos. 1688 and 4352/Ahd./2003 wherein it was held that once the conditions stipulated in section 10A of the Act were fulfilled in terms of amended provisions, providing deduction for 10 consecutive assessment years instead of five earlier, the assessee cannot be denied the claim for deduction. 10.2 The ld. AR on behalf of the assessee further relied upon the decision of the Chennai Bench of the ITAT in the case of Mohan Breweries and Distilleries Ltd. (supra). Referring to Circular No. 717 of 1985 issued by the CBDT, the ld. AR pleaded that the assessee argued that they are entitled to deduction at the rate of 100 per cent of the profits, first year being the assessment year 2005-06. In the period relevant to the assessment year 1997-98, there was no such provisions of exercising option and, therefore, findings of the ld. CIT(A) that the assessee exercised the option in the assessment year 1997-98 is not correct. While referring to the provisions of sections 10A(8) and 115-I of the Act, the ld. AR contended that whereve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and development or providing telecommunication services whether basic or cellular (such business being hereinafter referred to as the eligible business), to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to the percentage specified in sub-section (5) and for such number of assessment years as is specified in sub-section (6). ** ** ** (4C) This section applies to any undertaking which starts providing telecommunication services whether basic or cellular at any time on or after the 1st day of April, 1995 but before the 31st day of March, 2000. (5) The amount referred to in sub-section (1) shall be:- (ic) in the case of an undertaking referred in sub-section (4C), hundred per cent of the profits and gains derived from such business for the initial five assessment years and thereafter, twenty-five per cent of the profits and gains derived from such business:- Provided that, where the assessee is a company, the provisions of this clause shall have effect as if for the words "twenty-five per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... started or starts providing telecommunication services whether basic or cellular, including radio paging, domestic satellite service or network of trunking and electronic data interchange services at any time on or after the 1 st day of April, 1995 but before the 31st day of March, 2000." 12.2 Following clause (2A) was inserted in section 80-IA with effect from 1-4-2001:- "(2A) Notwithstanding anything contained in sub-section (1) or sub-section (2), the deduction in computing the total income of an undertaking providing telecommunication services, specified in clause (ii) of sub-section (4), shall be hundred per cent of the profits and gains of the eligible business for the first five assessment years commencing at any time during the periods as specified in sub-section (2) and thereafter, thirty per cent of such profits and gains for further five assessment years." 12.3 The relevant provisions as existing in the year under consideration and the preceding assessment year 2005-06 read as under:- "80-IA. Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc:- (1) Where the gross total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of provisions of section 80-IA reveals that the said section was originally inserted by Finance (No. 2) Act, 1991 with effect from 1-4-1991. The said section was later divided into sections 80-IA and 80-IB by Finance Act, 1999 with effect from 1-4-2000. The section, as it existed in the period relevant to the assessment year 1997-98 stipulated that deduction is admissible, including the initial assessment year at the rate of 100 per cent of the profits and gains of the undertaking for the initial five assessment years and 30 per cent for the balance five assessment years, beginning with the assessment year relevant to the previous year in which the undertaking starts providing telecommunication services, whether basic or cellular at any time on or after 1-4-1995 but before 31-3-2000. Section 80-IA, as it stands today after the amendment provides for an option to the assessee to claim deduction for any ten consecutive assessment years out of fifteen years beginning with the year in which the undertaking starts providing telecommunication services. It is not disputed before us that the assessee started providing telecommunication services in the State of Gujarat in the period rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be denied benefit of the amended provisions, once it fulfilled the conditions stipulated in the relevant provisions. While construing beneficial provisions, it becomes necessary to resort to a construction which is reasonable and purposive to make the provision meaningful. In CIT v. Straw Board Mfg. Co. Ltd. [1989] 177 ITR 431 (SC), it was held that the few providing for concession for tax purposes to encourage industrial activity should be liberally construed. If the interpretation adopted by the revenue authorities is accepted the words used in section 80-IA(4)(ii) 'has started' become redundant. Such cannot be the intention of the Legislature. Hon'ble Apex Court in Bajaj Tempo Ltd. 's case (supra) referred to by the ld. AR observed that ordinarily a provisions in a taxing statute granting incentives for promoting growth and development should be construed liberally; and since a provision intended for promoting economic growth has to be interpreted liberally, the restriction on it, too, has to be construed so as to advance the objective of the section and not to frustrate it. Hon'ble Apex Court in another decision in the case of CIT v. Cellulose Products of India Ltd. [199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1991-92 to 1995-96. Thereafter, for the assessment years 1996-97 to 1998-99, the assessee claimed deduction under section 80HHE of the Act. The said claim for deduction under section 80HHE is stated to have been rejected in the assessment year 1996-97 on the ground that the details of export realizations were not available and receipts included amounts on account of recruitment and training charges and interest income and foreign exchange fluctuation. Thereafter, section 10A of the Act was amended with effect from 1-4-1999, where from the deduction under section 10A of the Act was made available for a period of ten consecutive assessment years instead of five consecutive assessment years out of eight years. Since the assessee in that case had already availed deduction under section 10A for a period of five consecutive assessment years out of eight years and in between claimed deduction under section 80HHE of the Act for the three assessment years, the Assessing Officer disallowed the claim for deduction under section 10A of the Act for the assessment years 1999-2000 and 2000-01. On appeal, the ld. CIT(A) upheld the findings of the Assessing Officer. On further appeal, the ITAT held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the lower authorities on this issue and the Assessing Officer is directed to allow the claim for exemption under section 10A of the Act in respect of profits and gains derived by the taxpayer in its industrial undertaking, te., unit 106, in accordance with law..........." 12.6 Our attention was also drawn to a decision in the case of Mohan Breweries and Distilleries Ltd. (supra), wherein while adjudicating a claim for deduction under section 80-IA of the Act, Chennai Bench of the ITAT held as under:- "Section 80-IA as enacted by Finance Act, 1999 with effect from 1-4-2000 as stated earlier gives an option to the assessee with effect from 1-4-2000 to claim relief under this section for any 10 consecutive assessment years out of 15 years beginning from the year ending in which the undertaking or enterprise develops or begins to operate any infrastructure facility, etc. It is left to the assessee at its will to claim this relief from the first assessment year, or from the second or from the third or so as it might think fit. Once the assessee has opted the first year of relief then it continues for further 9 consecutive years. To claim this relief the undertaking is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese have to be construed in such a manner so as to advance the objects of the provisions and not to frustrate it. If the intention of the Legislature was that the first year of start of telecommunication services is the initial assessment year to claim deduction under section 80-IA of the Act, then the provision of option to the undertakings which had already started providing telecommunication services, would be meaningless. 12.7 Even otherwise while ascertaining the admissibility of any deduction law as on 1st April of the relevant year is to be applied. It is a cardinal principle of the tax law that the law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication: CIT v. Isthmian Steamship Lines [1951] 20 ITR 572 (SC) and Karimtharuvi Tea Estate Ltd.'s case (supra), followed in Reliance Jute and Industries Ltd.'s case (supra). In Goslino Mario case (supra), it was also held that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. 12.8 In view of the foregoing, we are of the opinion that the assessee was justified in exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer without considering the said decision in the case of Mohan Breweries and Distilleries Ltd. (supra). However, the learned ld. Commissioner of Income-tax (Appeals) rejected the contentions of the assessee relying, inter alia, on the decision of ITAT in assessee's own case in ITA No. 1369 and 2000/Ahd./2009 for the assessment year 2005-06. 15. The revenue is now in the appeal before us against the aforesaid findings of the ld. CIT (Appeals). Both the parties agreed before us that the issue is squarely covered by the decision dated 9-1-2009 by the ITAT in the assessee's own case for the assessment year 2005-06. 16. We have heard both the parties and gone through the facts of the case. We find that while adjudicating a similar issue in ITA Nos. 1369 and 2000/Ahd./2008, a co-ordinate Bench of the ITAT in the assessee's own case for the assessment year 2005-06 vide their order dated 9-1-2009 while rejecting the contentions on behalf of the assessee that there being change in shareholding of the assessee-company during the previous year relevant to assessment year 2001-02, the accumulated losses for the assessment years 1997-98 to 2001-02 lapsed by virtue of the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allimal Naval Kishore v. CIT [1997] 224 ITR 414 the Assessing Officer restricted the claim under section 35ABB of the Act and disallowed the remaining amount to 61.89 crores, treating the same as capital expenditure. 19. On appeal, the assessee contended that they entered into license agreement with Government of India on 11-1-1996 for operating and providing telecommunication services in the State of Gujarat. The license fee under the said agreement being for acquiring the telecom license, the amount was capitalized in the books and appropriate deduction was claimed in the return in accordance with the provisions of section 35ABB of the Act. Subsequently, in pursuance to a new telecommunication policy applicable with effect from 1-8-1999, the Government allowed option to migrate from fixed license fee to revenue sharing fee. In terms of migration package vide letter dated 22-7-1999, the license fees were bifurcated into 2 components, viz.:- (a) One time entry fee which would be the license fee payable by the existing licensees up to 31-7-1999, and (b) with effect from 1-8-1999, payable as percentage of the gross revenue on an annual recurring basis. Accordingly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 29-5-2009 in the case of Bharti Cellular Ltd. v. Dy. CIT [IT Appeal No. 5335 (Delhi) of 2003] for the assessment year 2000-01 wherein also claim for deduction of the license fee was allowed by the ITAT. 21. We have heard both the parties and gone through the facts of the case as also the decisions relied upon. We have before us a company, entrusted with the object of providing telecommunication services by the Government of India. The very purpose of incorporation of the company is that. Obviously, the object of incorporating the company is to establish and run it as a commercial venture. In order to provide services to the general public, the company has been permitted to use the telecom network for payment of a price. We find on perusal of a copy of the license agreement executed on 11-1-1996 pages 7 to 43 of the paper book that license has been defined in clause (m) to mean a license granted or deemed to have been granted under section 4 of the Indian Telegraph Act, 1885 and Indian Wireless Telegraphy Act, 1993. A perusal of the relevant provisions of the Telegraph Act, 1885 and the aforesaid agreement reveals that the license has been granted to establish, maintain and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the Government charges to the licensees for parting with its privileges and granting them to the licensee and as the State can carry on a trade or business, such a charge is the normal incident of a trading or business transaction. The amount charged to the licensees is in the nature of the price of the privilege which the purchaser has to pay in any trading or business transaction. Similar view was taken in Pannalal Ors. v. State of Rajasthan (AIR 1975 SC 2000), State of Haryana v. Jage Rain AIR 1980 SC 2018, Government of Andhra Pradesh v. Anabeshahi Wine Distilleries (P.) Ltd AIR 1988 SC 771. All these judgments were considered by the Hon ble Calcutta High Court in CIT v. Varas International (P.) Ltd. [1997] 225 ITR 831 in the context of section 43B of the Act. After referring to the aforesaid four judgments of the Supreme Court, the Hon ble Calcutta High Court held that the license fee which an assessee was required to pay to the West Bengal Government under the Bengal Excise Act, for getting the license for the manufacture of country liquor is not a tax or cess or fee and therefore, cannot be disallowed on the ground of non-payment, under section 43B of the Act. These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely related to the actual carrying on or the conduct of the business. The payment does not secure for the assessee any asset or right of a permanent character. The license, in our opinion, does not confer any such enduring advantage because under condition no. 15 of the schedule B, the license granted under section 4 can be revoked on the breach of any of the conditions subject to which it was issued or any default of payment of any consideration payable for the license. Further, the license is a non-exclusive license and it is open to the Government of India to grant similar licenses to other persons as well by virtue of powers conferred upon it under section 4 of the Telegraph Act. Thus, there is no monopoly right conferred upon the assessee. 21.2 The aforesaid view which we have taken is supported by the decision of a co-ordinate Bench in the case of Comsat Max Ltd. vs. DCIT,29 SOT36(Delhi). Following this decision as also the decision in the case of Mahanagar Telephone Nigam Ltd.,100 TTJ 1, The ITAT Delhi Bench in their order dated 29.5.2009 allowed a similar claim in the case of Bharti Cellular Ltd. vs. DCIT in ITA no.5335/Del./2003 in the AY 2000-01 21.3. In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the assessee on the ground that the aforesaid receipts on account of Misc. income and scrap sales were not derived from the business of the industrial undertaking, relying on the decision in the case of Pandian Chemicals and Sterling Foods(supra). 24. The assessee is now in appeal before us against the aforesaid findings of the ld. CIT(A). The learned AR on behalf of the assessee contended that assessee is not pressing the ground for deduction under Section 80IA on the income on account interest on refund while recovery from call center would go to reduce cost of the assessee. As regards scrap sales, the ld. AR relied on the decision in the case of Harjivandas Juthabhai Zaveri and Another,258 ITR 785(Guj). Since the ld. CIT(A) has not passed a speaking order nor considered the issue in proper perspective, the ld. AR argued that the matter may be restored to the file of the ld. CIT(A) for readjudication, On the other hand learned DR relied upon the decision in the case of Cambay Electrical Supply Co. Ltd. vs. CIT, 113 ITR 84 (SC) and contended that scrap having not been generated out of production process, the assessee was not entitled to deduction under section 80IA of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 115JB of the Act. Since the income computed under normal provisions of the Act exceeded the book profits determined u/s 115JB of the Act,there is discussion on this issue in the assessment order. On appeal, the ld. Commissioner of Income Tax(Appeals) while relying upon the decision of Hon'ble Madras High Court in the case of Gitaramakrishna Mills Private Limited, 288 ITR 489 and decision of ITAT, Ahmedabad Bench in the case of Additional CIT vs. Ashima Syntex Ltd., 310 ITR (AT)1, upheld the levy of interest u/s 234B and 234C of the Act while determining book profits u/s 115JB of the Act. 27. The assessee is now in appeal before us against the aforesaid findings of the ld. CIT(Appeals). Both the parties agreed that issue is squarely covered by the decision of ITAT Special Bench in the case of Ashima Syntex Limited.(supra) as also decision of the 3rd Member in the case of M/s. Kanel Oil and Export Industries Limited vs. JCIT, 28. We have heard both the parties and gone through the facts of the case as also the decisions relied upon.We find the Hon'ble TM in the case of Kanel Oil and Export Industries Limited(supra) while relying upon the decision in the case of Ashi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1, the Assessing officer noted that the assessee had claimed a sum of Rs.46.39 million towards sales promotion which included entertainment expenses incurred while dealing with dealers and distributors, vendors, etc., expenses on sponsorship of events, festivals, musical nights, etc., expenses on corporate gifs, expenses on promotional schemes for distributors, dealers, salary and incentives given to temporary sales staff, commission to direct sales representatives, gifts given to staff, marriage gifts, gift vouchers and expenses for uniforms to staff, dresses for customer care staff and expenses directly related to franchise and retail shops. According to him, gifts given to staff as marriage gifts, gift vouchers and expenses for uniforms for staff are not for any business expediency of the assessee. These are in the nature of perquisites. Neither the assessee nor the employees had paid any tax. The assessee, even, had not furnished any details of the above expenses. He, therefore, disallowed an amount equal to 1/10th of the total expenses treating the same as not incurred wholly and exclusively for the purposes of business of the assessee." Accordingly, the Tribunal confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the ITAT in the assessee's own case for the AYs 2003-04 and 2005-06, we have no alternative but to uphold the findings of ld. CIT(Appeals), deleting the disallowance. Therefore, ground no.1 in the appeal of the Revenue is dismissed. 35. Ground No. 2 in the appeal of the Revenue relates to deletion of disallowance of claim for deduction u/s 80IA of the Act on the Revenue of Rs.2,75,30,602/- on a/c of sharing of certain common facilities. The AO noticed that during the year under consideration, the assessee received Rs.2,75,30,602/- on account of share in passive infrastructure such as cell phone towers, air conditioners and D.G. Sets etc. with the other operators. Since the assessee was not in the business of leasing out of its assets, relying upon the decisions in the case of CIT vs. Paras Oil Extraction Ltd.,230 ITR 266,Pandian Chemicals Limited, 262 ITR 278 (SC), CIT vs. Sterling Foods and his own findings for the Assessment Year 2005-2006 as also on the order of the ld. CIT(A) for the AY 2005-06, the AO concluded that the said income was not derived from the business of the industrial undertaking and accordingly, disallowed claim for deduction under section 80IA of the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g is to be considered for computing deduction under section 80-IA. Thus, if an act is required to be undertaken essentially for carrying on of the business of industrial undertaking and if any income is generated out of such act, the same is to be considered for computing deduction under section 80IA. In the present case the income from sale of excess bandwidth capacity and revenue from site sharing are directly and inextricably linked to the business income of the industrial undertaking and thus deduction is allowable u/s. 80IA of the Act. Accordingly, these issues of the assessee's appeal are allowed. 39. In the light of the aforesaid decision of the ITAT in the assessee's own case for the preceding assessment year, we have no alternative but to upheld the findings of the ld. CIT(A).Therefore, ground No.2 in the appeal of the Revenue is dismissed. 40. Next ground No.3 relates to deletion of addition of Rs.9,52,20,000/- on account of provision for Municipal Tax while determining book profits in terms of provisions of section 115JB of the Act. The AO noticed that the assessee made a provision of Rs.9.52 crores for municipal taxes and claim deduction while computing book pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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