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Dy. C.I.T. 3 (2) , Mubmai Versus M/s Idea Cellular Ltd.

2015 (12) TMI 381 - ITAT MUMBAI

Addition on account of interest of delayed payment of license fee - CIT(A) deleted the addition - Held that:- There is a difference in the telecom policy which was upto July 1999 and new policy came into picture with effect from01/08/1999. The present licence fee is for financial year 2003-04, which is post July, 1999, therefore, the basic licence fee is allowable. It is also noted that for earlier year, even the Assessing Officer allowed the same as revenue expenditure. The allotment was under .....

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on on printers, UPS and other accessories - CIT(A) deleted the addition - Held that:- Peripherals such as printers, scanners, NT server etc, are integral part of computer, therefore, eligible for depreciation at higher rate. See DCIT vs Datacraft India Ltd. (2010 (7) TMI 642 - ITAT, MUMBAI), DCIT vs BTA Cellcom Ltd. (2011 (9) TMI 127 - ITAT, New Delhi), M/s Weizmann Ltd. vs DCIT (2013 (12) TMI 779 - ITAT MUMBAI)& Expeditors International (India) Pvt. Ltd. vs Addl. CIT (2008 (8) TMI 399 - ITAT DE .....

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account of interest of delayed payment of license fee. 2. During hearing, the crux of arguments, advanced by Shri Om Prakash Meena, ld. DR, is in support to the addition by contending that relief was granted to the assessee without appreciating the fact that the expenditure incurred is of capital in nature, therefore, is inadmissible u/s 37(1) of the Income Tax Act, 1961. Reliance was also placed upon the decision in 221 taxman 323 (Del.) On the other hand, the ld. counsel for the assessee, Shri .....

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ts of the case and submissions of the assessee, Undisputedly, it is a payment of interest on delayed payment of license fee which is in dispute. The license fee itself is not in dispute, whereas, assessee has claimed ha license fee has already been allowed as revenue expenditure to the assessee in the original assessment order and even in reopened assessment, it remained allowed, Therefore, assessee has claimed that in no case interest can be held a capital in nature. But assessee has further cl .....

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depriving the use of funds by the Government of India. Notwithstanding the fact that the licence fee to operate' telecommunication service is a capital expenditure as laid down in section 35ABB, the interest payable un overdue payment of the licence fee cannot be said to be capital expenditure, as it does not partake the character' of capital expenditure merely because it is incurred in relation to a capital asset. The law is well-settled that interest on borrowings whether for acquiring .....

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uot; In view of the above decision of Hon'ble ITAT it is clear that interest payment relates to the business of the assessee and it is not capital expenditure, but allowable as revenue expenditure, even if license fee is treated as capital expenditure, whereas, in the case of the assessee licence fee has been allowed as revenue expenditure. Respectfully following the decision of Hon ble ITAT in the above mentioned case of Fascel Ltd. the addition of Rs,69,79,000/- on account of interest on d .....

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m was allowed as revenue expenditure even in original assessment order. We find that the Tribunal in the case of ACIT vs Fascel Ltd. (supra) has deliberated upon the issue, held that interest payable on overdue payments of licence fee, cannot be said to be capital in nature as it does not partake the character of capital expenditure merely because it is incurred in relation to a capital asset and thus allowable as revenue expenditure. Following the aforesaid decision and also the ratio laid down .....

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m page 10, schedule 13 (of the paper book). ₹ 4,43,611/- was allowed as revenue deduction and book entry was amortized as revenue fees. Even otherwise, the ratio laid down in CIT vs Bharti Hexacom Ltd. (2014) 221 taxman 323 (Del.) order dated 19/12/2013 supports the cse of the assessee, thus, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals), more specifically when, no contrary decision was brought to our notice. This ground of the Revenue is, the .....

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the impugned order. 3.1. We have considered the rival submissions and perused the material available on record. Without going into much deliberation, we are reproducing hereunder the relevant portion from the conclusion drawn by the ld. Commissioner of Income Tax (Appeals) for ready reference:- I have considered the facts of the case and submissions of the assessee. The Assessing Officer has held that the UPS is only a device to provide power back and it is neither performing any of the function .....

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us decisions of Hon'ble High Courts and Hon'ble ITAT as relied by the assessee and as reproduced above. Hon'ble Delhi High Court has held that UPS to be eligible for depreciation @ 60% in the case of Orient Ceramic and Industries Ltd. (supra). Hon ble ITAT has found printers, scanners and servers as integral part of computer system and entitled for deduction @ 60% in the case of Omni Globe Information Technologies India Pvt. Ltd. (supra). Similar is the decision of Hon'ble ITA T .....

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