TMI Blog2015 (4) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee. - Decided in favour of assessee for statistical purposes. Provident fund dues - disallowance u/s 37 deleted by CIT(A) - Held that:- CIT(A) has allowed the claim by applying the provisions of section 43B of the Act wherein deduction n respect of provident fund was allowed on payment basis. The ld. CIT(A) held that the amount has been paid during the year under consideration and therefore deduction has to be allowed during the year itself. We do not find any infirmity in the order of ld. CIT(A) deleting the addition made by the A.O. - Decided in favour of assessee. Disallowance of club entry fee - disallowance u/s 37 deleted by CIT(A) - Held that:- CIT(A) for allowing club fees by following the decision of Otis Elevators [1991 (4) TMI 53 - BOMBAY High Court] and the decision of Gujarat Estate Export Corporation Ltd. ( 1993 (9) TMI 52 - GUJARAT High Court). As the expenditure was incurred was revenue in nature as held by the Hon’ble High Court, we do not find any infirmity in the order of ld. CIT(A) deleting the disallowance - Decided in favour of assessee. Disallowance of brand service fees treated as capital expenditure - Held that:- brand servicing fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tentions have been heard and record perused. Facts in brief are that the assessee company is in the business or providing cellular services in telecom circles of Maharashtra, Gujarat, Andhra Pradesh and Delhi. The company initially started its operation in Maharashtra and Gujarat and thereafter expanded its scope of operation in 2000-01 in Andhra Pradesh by acquiring Tata Cellular Ltd. Further, in the year 2002-03, the company acquired a licence from DoT through bidding to operate in Delhi. Thus, currently the company operates in four telecom circles. The company also trades in handsets and accessories which are integral part of the nature of business in which the assessee is operating. During the course of scrutiny assessment, the A.O. observed that the assessee has shown capital work-inprogress at ₹ 398.15 million. In this context, the A.O. referred para 11(a) of Part-B, being Notes to Accounts of Schedule - 19 forming part of the accounts and observed that the auditors in this para have provided certain details of work-in-progress which reveal that the work-in-progress has been reduced by the income during pre-operative period of ₹ 3.80. million. A.O. further found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in ITA No. 3260/Mum/2008 dated 29-04- 2014 for A.Y. 2001-02 wherein both the issues regarding accepting the additional ground as well as licence fees paid under revenue sharing was examined by the Tribunal in great detail and allowed the same in favour of assessee. 6. We have considered the rival contentions and found that exactly similar issue with regard to accepting fresh claim first time before appellate authority and claim of deduction of licence fees paid under Revenue s sharing was held to be allowable as revenue expenditure. Precise observation of the Tribunal was as under:- 4.5 We have considered the rival submissions as well as relevant material on record. So far as the admissibility of the fresh claim first time before the appelate authority is concerned, we find that an identical issue was before the Hon ble Supreme Court in the case of National Thermal Power Corporation Ltd. Vs. CIT (supra). The issue in the said case emerged from the fact that the assessee offered an amount to tax in the return of income which was not taxable as income. The inclusion of the said amount was not objected by the assessee even before the CIT(A) and only after filing appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the said date should be treated as revenue -------------------------------------------------------- -------------------------------------------------------- 47. In view of the aforesaid findings, the substantial question mentioned above in item Nos.1 to 9 is answered in the following manner: (i) 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 1st August, 1999 should be treated as revenue expenditure. (ii) Capital expenditure will qualify for deduction as per Section 35ABB of the Act. 4.6 We further note that this Tribunal in the cae of Mahanagar Telephone Nigam Ltd. Vs. ACIT(supra) as well as in the cae of ACIT Vs. Vodafone Essar Gujarat Ltd. (supra) along with other no. of decision has taken a similar view. Following the decisions of Hon ble Delhi High Court in the case of CIT Vs. Bharati Hexacom ltd. Others as well as other decisions relied upon by the assessee, we allow the claim of the assessee. 7. As the facts and circumstances of the case during the year under consideration are para mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Ground No. 3 is with respect to the depreciation on licence fees amounting to ₹ 39,37,22,853/- disallowed by the A.O. This ground has become infructuous insofar as we have already allowed assessee s claim for licence fees paid while deciding ground No. 2 of assessee s appeal, hence, this ground of Revenue s appeal is dismissed as infructuous. 12. Ground No. 4 of Revenue s appeal pertains to disallowance of brand service fees treated as capital expenditure. The A.O. has disallowed brand servicing fee amounting to ₹ 86,70,OOO/- on the ground that it constitutes capital expenditure. While making the disallowance, Assessing Officer has argued that the nomenclature suggests that expenditure has been incurred for projection and development of the brand and therefore it is of capital nature. He has, accordingly, made the disallowance. By the impugned order, the ld. CIT(A) allowed the claim after having the following observation:- 7.2 I have perused the facts of the case and I find the only basis for making disallowance is nomenclature of expenditure, This is not a rational base for making this disallowance. If Assessing Officer wanted to disallow expenditure, he o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of the assessee s business. 16. We find that in all earlier years as mentioned above, the assessee paid brand service fees to AT T and debited the same to Profit Loss Account and claimed as revenue expenditure in the return of income. The claim was never disputed by the revenue in any earlier Assessment Years and the same was allowed. During the year under appeal, the assessee paid brand service fees to AT T only for the month of April 2002 and after that the assessee is using its own brand Idea . 17. From the record we find that the brand servicing fee was paid by the assessee since last several years and in the earlier assessment orders, this expenditure has been held to be revenue in nature by the A.O. himself. No distinguishing feature was brought on record by the A.O. during the year under consideration to justify the disallowance of assessee s claim. Accordingly, we do not find any infirmity in the order of ld. CIT(A) deleting the disallowance of brand servicing fee paid by the assessee insofar as findings recorded by the ld. CIT(A) had not been controverted by the ld. CIT - DR by bringing any positive materials on record. 18. The next grievance of the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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