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The Dy. C.I.T, Circle 10 (1) , New Delhi Versus Digital Radio [Kolkata] Broadcasting Ltd.

2017 (12) TMI 418 - ITAT DELHI

Benefit of deduction in respect of license fees - proportional allowance of claim - the total claim of deduction was withdrawn earlier - Held that:- In view of the facts and circumstances of the case, the expenditure so claimed by the assessee has rightly been allowed proportionately for 10 year period u/s 35ABB of the Act and we do not find any infirmity in the order of the ld. CIT(A). Thus the ground raised by the Revenue in this appeal is dismissed. - ITA No. 5002/DEL/2014, ITA No. 5003/DEL/2 .....

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these are being disposed of by this common order for the sake of convenience and brevity. 2. The revenue, in all the three present appeals, has raised common grounds of appeal except for the quantum of addition. 3. First we are taking up the appeal in ITA No. 5002/DEL/2014 for adjudication. Grounds raised in this appeal are as under: 1. On the facts and in the circumstances of the case the Ld CIT(A) has erred in deleting the addition of ₹ 1,26,58,244/- made by the Assessing Officer, witho .....

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o the facts on record and the settled position of law, be set aside and that of the Assessing Officer be restored. 4. Brief facts of the case are that the assessee is engaged in the business of radio broadcasting at Delhi under the channel identity 93.5 FM. The first issue to be examined during the assessment proceedings was the claim of assessee with regard to benefit of deduction in respect of license fees in accordance with CIT(A) order dated 02.12.2010 for assessment year 2006-07. In the ori .....

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f the claim is admissible. The assessee filed appeal against this order however CIT(A) decided the issue against the assessee. The assessee is in further appeal against this particular issue and is contesting that he is entitled for deduction in lump sum in the AY 2006-07 itself. Thus the assessee is maintaining its claim for total deduction in the assessment year 2006-07 but at the same time he is making a double claim in the AY 2010-11. The plea of the assessee is apparently is not admissible. .....

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cision of the ld. CIT(A) for assessment year 2006-07. The relevant findings of the ld. CIT(A) are reproduced hereinbelow: 2.1 I have carefully considered the facts of the case and the submissions made by the Counsel of the appellant. The facts denoted in the assessment order reveal that the Assessing Officer had disallowed the claim of 1/10th deduction of ₹ 1,26,58,244/-made by the appellant as held by the CIT(Appeal) for the A.Y. 2006-07. The CIT(Appeal)-XVIII, New Delhi while adjudicatin .....

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ing license fee expenditure of ₹ 12,65,82,440/- as paid during the A.Ys. 2004-05 and 2005-06 under Phase- I license regime. The appellant has claimed the above amount for deduction in full as revenue expenditure u/s 35ABB of the Act basing on the cutoff date of 01.04.2005 for migration to Phased! license regime. The AO has disallowed the same by treating it as a capital loss. On careful examination, I find that the migration of license from Phase-1 license regime to Phase-II license regime .....

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case laws as cited by the Id. AR vide its submissions dated 18.11.2010 are distinguishable on facts as such cases deal with definition of 'transfer' of a capital asset u/s 2(47) of the Act which includes exchange or relinquishment of the asset or/extinguishment of any rights therein. What we are concerned here in this case is not 'transfer7 within the meaning of section 2(47) of the Act, but under section 35ABB of the Act which is entirely different in context and application as it r .....

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id all their license fee dues under Phase-1 license regime as were applicable till the cutoff date of 01.04.2005. In this connection, relevant portion under the heading Migration to Phase 2 from such Policy document dated 1 3.07.2005 are reproduced as under: Automatic migration shall be considered for only those license holders of Phase-1 who have admittedly operationalised their channels, provided they have paid all their dues from the due date (after allowing for certain condonation of delay i .....

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at option to migrate to Phase II Policy Regime would be considered valid only after all amount due up to cut off date are received in the Government account. On exercising your option to automatic migration to Phase II, and payment of OTEF within prescribed period, you shall be required to sign a fresh Grant of Permission Agreement with Government on the same Terms and Conditions as for the successful Bidders of Phase II In other words, payment of license fee dues under Phase- I license regime w .....

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unts due and payable by the appellant under Phase-1, license fee regime and vide para 5 states as under: obtaining Phase-ll license. As OTEF (migration fee) of ₹ 22,22,52,219/- has been accepted by the AO to be allowed over the 10 year term of Phase-ll license under sub-section (1) of section 35ABB, on the same basis, I am of the view that the remaining expenditure of Rs.l2,65,82,440/-as incurred by the appellant under Phase -I license also needs to be allowed over the new 10 year term und .....

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pertaining to this charge, the assessee was granted a license during FY 1995-96 by the Department of Telecommunications, Govt, of India for a period of 10 years for operating telecommunications services. For acquiring the above license, the appellant had paid a fixed license fee during financial years 1995-96 to 1999-2000. The business actually commenced in the month of February 1997. The assessee claimed deduction on account of the above license fee in its return of income from AY 1997-98 to 19 .....

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recalculated the amortization of license fee over 20 years and in the return of income from AY 2001-02, the assessee claimed the amortization by taking into account the unexpired period of the license fee of 16 years (out of total 20 years) and claimed the deduction u/s 35ABB accordingly. The said deduction u/s 35ABB as claimed by the appellant in its return of income as per the new calculation from AY 2001-02 onwards has been allowed by the Department in all the years. 5.10 Accordingly, the app .....

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the well reasoned order reproduced hereinabove. Moreover, this issue is also covered by the decision of ITAT B Bench in assessee s own case vide order dated 24.11.2015 for assessment year 2006-07. The relevant finding of the ITAT is reproduced hereinbelow for ready reference: We have also carefully perused the reason given by CIT (A) for allowing the deduction of fees paid by assessee under PHASE -I over the remaining life of the license granted under PHASE-II of the regime. We do not find any i .....

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he matter travelled before the Hon'ble Delhi High Court where the Hon'ble High Court in ITA Nos. 432 to 434/2016 vide order dated 24.5.2017 upheld the finding of the Tribunal. For the sake of convenience, the relevant operative para No. 11 of the order is reproduced hereinbelow: 11. Having heard learned counsel for the parties, the Court is of the view that no substantial question of law arises on any of the above issues. As far as the questions 2.1 to 2.3 are concerned, the purport of t .....

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