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Commissioner of Income Tax-3 Versus M/s. Idea Cellular Ltd.

2016 (10) TMI 181 - BOMBAY HIGH COURT

Allowability of revenue expenditure being the amount written off by the assessee in respect of expenses incurred on projects originally set up to put up cell sites, but later abandoned - expenses were disallowed by the assessing officer as that was spent by the assessee on sites to bring into existence a new asset and new source of income and therefore, such expenditure was in the nature of capital expenditure. - Held that:- A cellular tower can be a new independent source of income, if it i .....

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nt case, no new business was set up, but towers in addition to which were already set up were proposed at site, which project was later on abandoned. - Income Tax Appeal No. 516 of 2015 - Dated:- 30-9-2016 - S. C. Dharmadhikari And B. P. Colabawalla, JJ. Mr. A. R. Malhotra i/b. Ms. Padma Divakar for the appellant Mr. J. D. Mistri - Senior Advocate with Mr. P. C. Tripathi i/b. Mr. Atul K. Jasani for the respondent ORDER P. C. 1. This appeal of the Revenue challenges the order passed by the Income .....

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(a) and (b) at pages 6 and 7 are substantial questions of law. 4. In that, it is submitted that the assessee filed a return of income for the assessment year 2001-02 on 30th October, 2001 declaring a loss of ₹ 133,91,49,737/-, which was determined by the assessing officer at a loss of ₹ 75,04,02,061/- under section 143(3)(ii) of the Income Tax Act, 1961. 5. During the assessment proceedings, the assessing officer noted that the assessee claimed as a revenue expenditure a sum of ͅ .....

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ty by the assessee. That also came to be dismissed and the Commissioner of Income Tax (Appeals) agreed with the assessing officer. Thereafter, the tribunal was approached and Mr. Malhotra would submit that in reversing the concurrent views, the tribunal committed an error of law, which is apparent on the face of the record. It is the tribunal's finding, which is perverse to say the least. It is the stand of the assessee, which was culled out from a letter addressed by the assessee itself. On .....

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te was not found suitable. Therefore, the expenditure incurred for the purpose of existing business of the assessee came to be written off. The assessee is a cell company and providing cellular services even today. When it decides to erect new towers, it incurs expenses. Until such stage, as the site is declared unsuitable for the operation, these expenses have to be incurred and have been shown as such in the accounts. Mr. Mistri would submit that, therefore, the treatment in the account could .....

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. We have carefully perused the memo of the appeal. We have also perused the order of the assessing officer and that of the first appellate authority. Mr. Malhotra has elaborately taken us through these orders to submit that the assessing officer found from the record itself and particularly from a document, namely, a letter or response from the assessee that the purpose of the expenditure cannot be said to be other than bringing up a capital asset into existence. The fact that later on the site .....

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