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Commissioner of Income Tax (central) -III Versus Microwave Communications Ltd.

2015 (3) TMI 940 - DELHI HIGH COURT

Interest on payment qua the license fee - whether could not be amortised in view of Section 35ABB - whether the licence fee payable by telecom service providers to the Department of Telecommunications is to be treated as capital or revenue expenditure? - Held that:- As decided Commissioner of Income Tax V. Bharti Hexacom [2013 (12) TMI 1115 - DELHI HIGH COURT] in the licence fee payable on or before 31st July, 1999 should be treated as capital expenditure and the licence fee payable thereafter s .....

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Suruchi Aggarwal, For the Respondent : Ms. Poonam Ahuja and Mr. Rohit Kumar Gupta, Advs. Mr. Justice S. Ravindra Bhat (OPEN COURT) 1. Admit. 2. Ms. Poonam Ahuja, Advocate accepts notice. 3. With consent of the counsel the matter was finally heard. 4. The revenue urges that the interest on payment qua the license fee, could not be amortised in view of Section 35ABB of the Income Tax Act. In other words, the question is whether the licence fee payable by telecom service providers to the Department .....

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ure 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 1st August, 1999 should be treated as revenue expenditure. (ii) Capital expenditure will qualify for deduction as per Section 35ABB of the Act. 48. The appeal ITA No. 417/2013 by the Revenue in the case of Hutchison Essar Pvt. Ltd., pertains to the assessment year 1999-2000 i.e. year ending 31st Mar .....

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ITA Nos.893/2010 and 1333/2010, an additional issue arises for consideration. This additional issue relates to interest on delayed payment of license fee and whether the same was capital or revenue expenditure. By order dated 18th September, 2012, the following substantial question of law was admitted for hearing and disposal:- Whether the Tribunal fall into error in holding that the interest on the delayed payment of license fee also partook of the same nature as license fee and was deductible .....

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ee. The Assessing Officer disallowed the said payments observing that these were on capital account. The assessment order records that no details had been furnished and the expenses pertained to prior period. The payment was considered to be capital in nature because the license fee was also capital expenditure. 51. Commissioner (Appeals) in the case of Bharti Cellular Ltd. (ITA 893/2010) held that interest paid was capital expenditure because license fee itself was capital in nature. The said o .....

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