TMI Blog2018 (2) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the amount of unabsorbed depreciation ₹ 6,67,29,000/- is not eligible for deduction while that determining the book profit u/s 115JB of the Act. - Decided against revenue. No hesitation to hold that the assessee can claim the deduction either of brought forward losses or unabsorbed depreciation whichever is less as per the books of accounts. Disallowing depreciation @ 25% on computers instead of 60% claimed by it - Held that:- In the instant case, the issue relates to the rate of depreciation claimed by assessee on computer(s) and its accessories. The assessee in the immediate preceding Assessment Year i.e. 2003-04 claimed depreciation on computers @ 60% whereas the AO allowed depreciation @ 25% on the computers(s) on the ground that sufficient documentary evidence were not produced by the assessee during assessment proceedings pertaining to the AY 2003-04. The assessee has filed the documents before Ld. CIT(A) which is still sub judice. The AO on the basis of disallowance made in the immediate preceding AY also made similar disallowance on the opening WDV in the year under consideration. On perusal of impugned appellate order, we note that Ld. CIT(A) in the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oaming charges under section 40(a)(ia) - Held that:- We hold that the payment of roaming charges does not fall under the ambit of TDS provisions either u/s.194C/194I or 194J and hence we have no hesitation in directing the Learned Assessing Officer to delete the addition made u/s. 40(a)(ia) on this account. - ITA No.356 & 343/Kol/2009, ITA No.357 & 377/Kol/2009, ITA No.485 & 482/Kol/2010, ITA No.673/Kol/2011 And ITA No.673/Kol/2011 - - - Dated:- 15-12-2017 - Shri Aby.T Varkey, Judicial Member And Shri Waseem Ahmed, Accountant Member For The Assessee : Shri Deepak Chopra And Mrs. Manas Vini Bajpai, AR For The Revenue : Shri G.Hangshing, CIT-DR ORDER PER Waseem Ahmed, Accountant Member:- Out of eight appeals six are cross appeals by assessee as well as Revenue and remaining two appeals (ITA No. 673/Kol/2011 431/Kol/2012) filed by assessee are directed against the different orders of Commissioner of Income Tax (Appeals)-VIII, Kolkata of different dates i.e. 23.12.2009, 09.01.2009, 14.01.2009, 23.12.2010 27.02.2012. Assessments were framed by ACIT/DCIT-Circle-Range/7 Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07) 3,340 (20,847) 3,340 3 1996-97 (243,968) 38,844 (282,812) 38,844 4 1997-98 (211,770) 66,230 (278,000) 66,230 5 1998-99 (393,286) 60,746 (454,032) 60,746 6 1999-00 (340,411) 64,801 (405,212) 64,801 7 2000-01 (514,294) 72,822 (587,116) 72,822 8 2001-02 27,909 94,638 (66,729) 66,729 9 2002-03 372,096 283,715 88,381 0 (1,721,267) 685,136 (2,006,398) 373, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of unabsorbed depreciation and brought forward loss was to be worked out for each year as per books. There can be profit in any of the intervening year before/ after claiming the current year depreciation but the at the same time but there may be unabsorbed depreciation. In such a case, it is not justified to invoke explanation (b) to clause (iii) and ignore the unabsorbed depreciation for such year. The explanation to clause (iii) reads as under:- the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil . The assessee also submitted that the explanation (b) comes into force only to determine brought forward loss or unabsorbed depreciation on cumulative basis. For each independent year, comprising therein, the said explanation cannot be invoked. The assessee further before Ld. CIT(A) stated that without prejudice to above even if it is assumed (not accepted) that the adjustment made by the Assessing Officer on the basis of each year is correct then also in that case, it needs to be pointed out that the terms used in the explanation (b) is loss brought forward or unabsorbed depreciation , Therefore, even i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (iii) of Explanation 1 of 115JB(2) comes into force to determine quantum of set off on the basis of comparison of brought forward loss or unabsorbed depreciation on cumulative basis and not for each independent year, comprising therein. The Revenue, being aggrieved, is in appeal before us. 8. Ld DR before us vehemently supported the order of AO whereas the ld. AR reiterated the submissions as made before the ld. CIT(A) and filed a chart depicting the amount of unabsorbed depreciation and brought forward book losses of the earlier years. The ld. AR before us relied on the order of Ld. CIT(A). 9. We have heard the rival contentions of both the parties and perused the material available on record. The issue in the instant case relates to the unabsorbed depreciation for ₹ 6,67,29,000/- pertaining to the assessment year 2002-03 which was not allowed to set off while determining the book profit for the year under consideration. As per the AO there was no loss in the assessment year 2002-03 and therefore the amount of depreciation pertaining to that assessment year is not eligible for deduction in the subsequent year while determining the book profit u/s 115JB of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nil; or] A plain look at the above statutory provision makes it clear that the assessee is entitled to claim the deduction of either brought forward losses or unabsorbed appreciation whichever is less as per the books of accounts. In the case on hand we find that the amounts of brought forward losses are greater than the amount of unabsorbed depreciation. Therefore, the assessee is entitled for unabsorbed depreciation amounting to ₹37,35,12,000/- only. Indeed, there was a profit in the assessment year 2002-03 for ₹ 2,79,09,000/- before the claim of the depreciation pertaining to that AY 2002-03. However, in the year under consideration the assessee had shown brought forward business losses of ₹ 1,60,85,45,000/- and unabsorbed depreciation of ₹ 37,35,12,000/-. As the unabsorbed depreciation is lower than the amount of brought forward losses therefore in our considered view the assessee is entitled to claim the deduction of unabsorbed depreciation while determining the profit u/s 115JB of the Act. The amount of unabsorbed depreciation is inclusive of the deprecation pertaining to the assessment year 2002-03 for ₹ 6,67,29,000/-. Thus, in the given fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JB of the Act. 12. The AO during assessment proceedings observed that ( b) the assessee has already claimed set-off of unabsorbed depreciation of ₹ 8,83,81,000/- in the AY 2003-04 out of total unabsorbed de of ₹ 37,35,12,000/- available in AY 2003-04. Yet the whole amount of unabsorbed depreciation of ₹ 37,35,12,000/- has been again claimed in AY 2004-05. Accordingly, the AO sought clarification from the assessee for the facts as discussed above. In compliance thereto the assessee submitted that in respect of the issue mentioned in paragraph 6(b) above, it has stated that as on 31/03/2003, it had unabsorbed depreciation amounting to ₹ 37,35,12,000/- and brought forward losses excluding depreciation of ₹ 1,47,47,69,000/- aggregating to ₹ 1,84,82,81,000/-. Therefore, lower of the two being unabsorbed depreciation of ₹ 37,35,12,000/- has been claimed as deduction u/s.115JB2(iii), and that the claim made in the previous year does not affect the claim in the subsequent year as the position of unabsorbed depreciation and brought forward losses at year end has to be seen at the end of that particular year. However the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the unabsorbed depreciation remains unaltered in the books of account. For any subsequent years, what is required by section 115JB is loss brought forward or unabsorbed depreciation as per books of account. However, in view of the fact, that no adjustment is made in the books of account, while claiming the unabsorbed depreciation in earlier years, the position of unabsorbed depreciation and loss as per books of account remains the same. The Act does not provide for the adjustment, as envisaged by the AO. If it would have been so, then specific provisions would have been incorporated, as in the case of brought forward losses. Further, while interpreting the law, it is not permissible to add the words that are not in existence in, the Act. However, the Ld. CIT(A) after considering the submission of the assessee has confirmed the order of AO by disallowing the amount of unabsorbed depreciation of ₹ 8,83,81,000/- while determining the book profit u/s 115JB of the Act by observing as under : 2. As mentioned above this issue has been discussed by me in my order dated 9/1/2009 in the appeal No.501/CIT(A)-VIII/KOL//RANGE-7/07-08 for A.Y 2005-06 in appellant s own case under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted the order of lower authorities. 15. We have heard the rival contentions of both the parties and perused the material available on record and the case law relied upon by the assessee. In the instant case the assessee has shown profit of ₹ 8,83,81,000/- for the AY 2003-04 after the depreciation. The assessee claimed to have adjusted the same i.e. Profit of ₹ 8,83,81,000/- against brought forward losses. However, the AO adjusted the same against the unabsorbed depreciation while determining the book profit for the year under consideration. Consequently, the AO allowed less amount of deduction of the unabsorbed depreciation being lower than the brought forward loss by ₹ 8,83,81,000/- while determining the book profit in pursuance to clause (iii) of explanation 1 to sub section (2) of section 115JB of the Act. The view taken by the AO was subsequently confirmed by the ld. CIT(A). 15.1 Now the issue before us arises for our adjudication so as to whether the unabsorbed depreciation for ₹ 37,35,12,000/- should be reduced by the amount of profit of ₹ 8,81,29,000/- pertaining to the assessment year 2003- 04 while determining the book profit for the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/-. In holding so, we find support and guidance from the order of this Hon ble Tribunal in the case of Binani Industries Limited (supra) reported in 178 TTJ 658 which reads as under:- We have heard the rival submissions and perused the materials available on record. We are in agreement with the arguments of the Learned AR that the losses (both cash loss and depreciation loss) would continue to remain in the books of accounts till it is wiped off by earning profits by the assessee company and accordingly the same would be available for reduction from book profits u/s 115JB of the Act. We hold that the least of the cash loss or depreciation loss once adjusted / reduced from book profits in earlier assessment years, do not vanish out of the books until it is wiped out by profits in subsequent years. Till such time, the losses would only continue to remain in the books. We hold that for the purpose of computation of book profits u/s 115JB of the Act, every year the situation of least of cash loss and depreciation loss needs to be worked out and reviewed and accordingly the understanding of the Learned AO that such loss once adjusted in earlier year is no longer available fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 25% instead of 60%. The rate of depreciation was decided in AY 2003-04 on the basis of submission of insufficient details in respect of the nature of the asst under dispute. The appeal against the order of AY 2003-04 is lying before CIT(A)-VI-Kolkata ad the CIT has not yet decided this appeal. Therefore it is not possible to decide the Ground No. 3 of appellant on the basis of record of only AY 2004-05. However, the assessing officer is directed to apply the same rate of depreciation as may be decided by CIT(A)-VI-Kolkata for AY 2003-04. 3. The arithmetical calculation in respect of cost of asset n AY 2003-04 and the depreciation 2003-04 is mentioned in theism order for AY 2004-05. Cost of Asset was ₹ 65,18,756. Depreciation @ 25% instead of 600% was allowed in AY 2003-04by assessing office which amounts to R.16,29,689/ The WDV of this asset for AY 2004-05 is obviously ₹ 65,18,756 ₹ 16,29,689 = ₹ 48,80,067. Therefore the claim of appellant in Ground No 4 is correct to a certain extent that till the appeal for AY 2003-04 is decided, the depreciation on this asset can be calculate only on WDV of ₹ 48,80,067 and not on ₹ 26,07,502/-. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case has given very clear unambiguous direction for adjudication of the impugned issue of depreciation. Therefore we do not find any infirmity in the order of ld. CIT(A). Thus, the ground of assessee is allowed for statistical purpose. 21. Next issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of AO by sustaining the disallowance of ₹5,69,248/- paid to LIC on account of contribution in respect of gratuity fund. 22. The assessee, during the year, has contributed a sum of ₹5,69,248/- towards gratuity fund maintained with LIC. However, the AO during the course of assessment proceedings observed that the gratuity fund has not been approved by the IT Department. Therefore, the same was disallowed and added to the total income of assessee. 23. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that the approval of gratuity fund is pending before the Commissioner of Income-tax and once approved then it will be effective from the date of application. Therefore, the same is eligible for deduction. However, Ld. CIT(A) disregarded the contention of assessee by observing as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the purpose and intention of any particular provision of the Act. (See : Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585/23 Taxman 37 (SC). From a bare reading of Sectin 36(1)(v) of the Act, it is manifest that the real intention behind the provision is that the employer should not have any control over the funds of the irrevocable trust created exclusively for the benefit of the employees. In the instant case, it is evident from the findings recorded by the Commissioner and affirmed by the Tribunal that the assessee had absolutely no control over the fund created by the LIC for the benefit of the employees of the assessee and further all the contribution made by the assessee in the said fund ultimately came back to the Textool Employees Gratuity Fund, approved by the Commissioner with effect from the following previous year. Thus, the conditions stipulated in Section 36(1)(v) of the Act were satisfied. Having regard to the facts found by the Commissioner and affirmed by the Tribunal, no fault can be found with the opinion expressed by the High Court, warranting our interference. 9. Resultantly, the appeal is dismissed with no order as to coasts. In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of 100% CIT(Appeal) has also erred in holding that the assessee has the option to choose any continuous period of ten years out of the fifteen years. In the assessee s case the initial assessment year 1996-97 and at the point in time, there was no such option to the assessee and the period of ten years automatically started from the initial assessment year. 3. That the learned CIT(Appeal) has erred in holding that the assessee was eligible to get deduction u/s. 80IA on the following receipts a). Interest on margin money - Rs.4,74,875/- b). Provision / liabilities written back - Rs.26,73,408/- c). Bad Debt recovered - Rs.7,77,123/- d). Bounce cheque charges - Rs.4,11,440/- e). Cellsite sharing revenue - Rs.2,85,000/- even though they had no intricate or proximate nexus to the eligible business . The assessee has raised the following grounds of appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) erred in adjusting the unabsorbed depreciation of ₹ 37,35,12,000.00 while computing the book profit under section 115JB of the Act. 30. At the outset it was observed that the impugned issue has already been decided in favour of assessee by this Hon ble Tribunal in the case of Binani Industries Limited (supra) reported in 178 TTJ 658 which reads as under:- We have heard the rival submissions and perused the materials available on record. We are in agreement with the arguments of the Learned AR that the losses (both cash loss and depreciation loss) would continue to remain in the books of accounts till it is wiped off by earning profits by the assessee company and accordingly the same would be available for reduction from book profits u/s 115JB of the Act. We hold that the least of the cash loss or depreciation loss once adjusted / reduced from book profits in earlier assessment years, do not vanish out of the books until it is wiped out by profits in subsequent years. Till such time, the losses would only continue to remain in the books. We hold that for the purpose of computation of book profits u/s 115JB of the Act, every year the situation of least of cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % But the assessee claimed the deduction under section 80-IA of the Act for the AY 2005-06 for ₹ 132,70,62,114.00 @ 100%. Accordingly the AO called upon the assessee to seek clarification as to why the deduction should not be allowed @ 30% as discussed above. In compliance thereto the assessee submitted that the amended provisions of section 80IA of the Act provides that the profits of an undertaking providing telecommunication services after 1st day of April, 1995, but before the 31st day of March, 2005 shall be eligible for 100% deduction for first five years in respect of profits derived from such business out of the ten years and 30% for subsequent five years. Section 80IA was originally inserted by the Finance (No.2) Act, 1991 w.e.f. April, 1 1991 which was subsequently divided into section 80IA and 80IB by the Finance Act, 1999 w.e.f. 1, 2000. Clause (ii) of sub-section (4) of amended section 80IA which reads as under:- Any undertaking which has started or starts providing telecommunication services, whether basic or cellular, including radio paging, domes satellite service, network of trunking, broadband network and internet services on or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would be entitled to claim 100% deduction upto AY 2008-09 and subsequently it would claim 30% deduction only for AY 09-10 and 10-11. This is further supported by the language used in sub-section (2A) i.e. at any time during the periods as specified in sub-section (2). Thus, an assessee has the liberty to opt for a consecutive ten years exemption out of the period of 15 years. 32.1 It is settled law that the law to be applied is that enforce in the relevant assessment year. For this proposition reliance is placed on the following decisions: Maharajah of Pithapuram vs. CIT (13 ITR 221) (PC); Karim Tharuvi Tea Estate Ltd vs. State of Kerala (60 ITR 262) (SC) Reliance vs. CIT (120 ITR 921) (SC) Goslino Mario vs. CIT (241 ITR 314) (SC) The Hon'ble Supreme Court in Bajai Tempo s case (196 ITR 188) held that the provision granting deduction, exemption or relief should be construed liberally and in favour of the assessee. The above test has also been laid down in the following case: CIT vs. South Arcot Soc. (176 ITR 117, 119) (SC) Ct vs. UO Co-op Fed. (176 ITR 435, 441)(SC) Broach Soc. vs. CIT (177 ITR 418,422)(SC) In view of the foregoing discussion the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices after 01.04.1995 and not after 01.04.2000. For this purpose the assessee also relies upon clause (ii) of section 80IA(4) (as it stands presently) which uses the phase any undertaking which has started or starts. 16(d) At this point in time, it must be remembered that by Finance Act, 1999, w.e.f. 1st April, 2000, old Section 80IIA has been completely replaced by new section 80IA. The use of the phase any undertaking which has started or starts providing telecommunication services. In clause (ii) of Section 80IA(4), in respect of those services which started from 01.04.1995. if this was not done then the telecommunication services which started in1995 would have lost deduction totally. 16(e) It must be once again remembered that the facility of option to chose a period of ten assessment years out of fifteen assessment years has not been granted with retrospective effect. In fact the new section 80IA puts telecom services on a rather lower pedestal as compared to other infrastructure services. As per the provisions of Section 80IA as they stand w.e.f. 01.04.2000, all the infrastructure services such as roads, highway projects, railway system, irrigation projects, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Kerala 60 ITR 262 (SC) iii. Reliance vs. CIT 120 ITR 921 (SC) Thus, since the law as in the captioned assessment year provides for the deduction to be claimed in any 10 years out of the initial 15 years, the Appellant would be entitled to claim 100% deduction in the AY 2005-06 and therefore, the restriction of the deduction to 30% should be lifted. Thus, if the view taken by the AO that since the Appellant has started its operation in AY 97-98, the old section 80IA has to be applied, it would render the aforesaid Supreme Court decisions redundant. Section 80-IA was originally inserted by the Finance (No.2) Act, 1991 w.e.f. April 1, 1991, which was subsequently divided into section 80IA and 80IB by the Finance Act, 1999 w.e.f. April 1, 2000. Clause (ii) of sub-section (4) of amended section 80IA reads as under: Any undertaking which has started or starts providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services on or after the 1std day of April, 1995, but on or before the 21st day of March, 2005 Further Clause 2(A) of amended secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of ten consecutive assessment years out of 15 years from the date of commencement of operations. In the Appellant s case, it had started the telecom operations in September 1995 i.e. Asst Year 1996-97. In view of carried forward losses, the Appellant had not claimed any deduction u/s.80IA upto AY 2003-04. In view of specific provisions of section (2) to section 80IA, the Appellant would be eligible to claim deduction for any ten consecutive years out of initial fifteen years . Accordingly, the Appellant had started claiming deduction for the first time from AY 2004-05. Thus, the Appellant would be entitled to claim 100% deduction upto AY 08-09 and thereby would claim 30% deduction only for AY 09-10 and 10-11. Moreover, the assessee also relied on the decision of Mohan Breweries and Distilleris Ltd. vs. ACIT (24 SOT 170) wherein the Tribunal in the context of section amended 80IA (2) has held that section 80IA as enacted by the Finance Act, 1999 w.e.f. 1std April, 2000 gives as option to the assessee w.e.f. 1st April 2000 to claim relief under this section for any 10 consecutive assessment years out of 15 years beginning from the year ending in which the undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0IA, such undertaking would be entitled to balance unexpired period under the new provision, it would have made similar amendments. 33.3 Further, the Appellant would most humbly submit that the Supreme Court in Bajaj Tempo s case (196 ITR 188), has held that the provision granting deduction, exemption or relief should be construed liberally and in favour of the assessee. The above test has also been laid down in the following cases: * CIT v. South Arcot Soc (176 ITR 117, 119) (SC); * CIT v. UO Co-op. Fed. (176 ITR 435, 441)(SC); * Broach Soc. V. CIT (177 ITR 418, 422) (SC); In view of the foregoing, the Appellant humbly summarizes as under: * Following the ratio laid down by the Supreme Court in 120 ITR 921, the AO cannot go to the old section 80IA of the Act and accordingly, cannot rely upon the definition of the initial assessment year in erstwhile section 80IA of the Act; * Considering the language of the amended act, the legislative intent as can be gathered from the Explanatory Memorandum and settled legal position in Bajaj Tempo s case; * The definition of the term initial assessment year has no applicability since that provision was deleted much b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by legislature and a choice of 10 years out of first 15 years instead of fixed first 10 years was given to all such undertakings which had begun operation form 1.4.1995. The intention of legislature was clearly to extend the benefit of deduction u/s 80IA for full 10 years out of initial 15 years to all such industry which had begun operations on or after 1.4.1995 and due to substantial capital investment were not able to make profits in the initial few years of operation. The instant case of appellant squarely falls within the intention of legislature and therefore if in Assessment Year 2004-05 appellant has claimed the deduction u/s. 80IA for the first time then for all practical purposes it has expressed its option of choosing the period of 10 years out of 15 years for the first time in Assessment Year 2004-05. Appellant has to take a choice of the period of 10 years out the six options available to it as under:- ( i) Assessment Year 1996-97 to Assessment Year 2005-06 ( ii) Assessment Year 1997-98 to Assessment Year 2006-07 ( iii) Assessment Year 1998-99 to Assessment Year 2007-08 ( iv) Assessment Year 1999-00 to Assessment Year 2008-09 ( v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 997-98 as per the old provision of section 80-IA of the Act. The ld. DR relied on the order of AO. However in case of assessee appeal ITA 357/Kol/2009 the ld. DR submitted that the assessee has to choose the block of ten years for claiming the deduction under section 80-IA of the Act. The ld. DR vehemently supported the order of authorities below. On the other hand the ld. AR reiterated the submissions as made before the ld. CIT(A) The ld. AR relied on the order of ld. CIT(A) for allowing the deduction under section 80-IA of the Act @ 100%. 35. We have heard the rival contentions of both the parties and perused the materials available on record. In the instant case the assessee was entitled to claim deduction u/s 80-IA of the Act from the AY 1996-97 but it did not do so as there were carried forward losses. The assessee did not claim any deduction u/s 80IA of the Act up to AY 2003-04 in view of the carried forward losses. However, the assessee claimed the deduction u/s 80-IA of the Act for the first time in the AY 2004-05. As per the assessee, it was entitled to choose any year for claiming the deduction under section 80-IA of the Act out of the block of 15 years. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness by transfer to the undertaking of building, raw material or plant used in any previous business results in denial of the benefit contemplated under subsection ( 1 ) . The amended provisions of section 80IA of the Act are clear and unambiguous and the purpose of the amendment has already been explained in the memorandum as explained in the preceding paragraph. In this regard we also find that the CBDT has clarified the term Initial Assessment Year in relation to section 80IA of the Act which reads as under: The matter has been examined by the Board. It is abundantly clear from subsection (2) that an assessee who is eligible to claim deduction u/s 80-IA has the option to choose the initial/ first year from which it may desire the claim of deduction for ten consecutive years, out of a slab of fifteen ( or twenty) years, as prescribed under that sub-section. Similarly for the issue raised by the assessee we hold that the assessee has the discretion to choose the initial year out of the block of 15 years. Thereafter the assessee would claim the deduction as per the provision of section 80-IA of the Act for the remaining year but subject to the block of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues received from them. The charges were received in the course of the business and therefore eligible for deduction under section 80-IA of the Act. The assessee in support of his claim has also relied on the judgment of Madras High Court in the case of CIT Vs Madras Motors Ltd. reported in 257 ITR 60 (Mad). As regards the cell site sharing revenue , It was submitted that the activity of cell site sharing reduces the cost and the amount is received from other telecom operators in the course of business. Therefore the same is eligible for deduction u/s 80IA of the Act. In respect of other receipts It was claimed that they are inextricably linked to the business and therefore the same is eligible for deduction u/s. 80IA of the Act. However the AO observed that the term used in Section 80IA is derived and not attributed to or referable to and, therefore, only those receipts which have direct and immediate nexus with the industrial undertaking will be eligible for deduction u/s. 80IA. In fact same is the case in respect of other sections granting deduction such as, Section 80HH, Section 80HHC etc. 37.1 The AO also observed that the assessee has cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r such deduction. The AO has relied upon the decision of the Supreme Court in the case of Pandian Chemicals Ltd. V. CIT (262ITR 278) to hold that interest income is not eligible for the tax holiday. In this behalf, the Appellant most humbly submits that the decision of the Supreme Court in the case of Pandian Chemicals was rendered in the context of provisions of Sec. 80HH whereas the present case is concerned with provisions of Sec. 80-IA. The Appellant submits that under sec. 80HH(1) the tax holiday is available where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking . As against the foregoing, deduction under Sec 80-IA is available when the gross total income of an assessee includes any profits and gains. derived by an undertaking or an enterprise from any business referred to sub-section (4) . Thus, it can be observed that while deduction under Sec. 80HH requires the income to be derived from industrial undertaking, the provision of Sec. 80- IA requires the income to be derived from any business by the undertaking. Having regard to the clear shift in language of the provision, the intention of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . section 80IA and 80IB. However, that cannot make any difference since the splitted section also talks of the profits derived from the business by the undertaking, In fact the CBDT, while explaining the rationale behind the splitting of the section has categorically stated, in para 39.1 of its circular no. 779 dated September 14, 1999 that: The erstwhile provision of section 80IA in the Income tax Act has been restructured and incorporated as two new distinct sections = section 80IA and 80IB. the restructured section seek to retain the benefits hitherto provided in section 80IA.however the amended provisions extend the benefits to certain sectors The above paragraph clearly articulates the intention of the legislature that the benefits available under the pre-splitted sections would be retained. Now, if the Courts and Tribunals have held in the context of the pre-splitted section that interest and certain other receipt can be regarded as income derived from the business and hence eligible for the deduction, the same would equally hold good also for the post-splitted sections. The old benefits are not intended to be taken away but are retained. Further, had the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritten back and bad debts recovered. 4. Amount received as bounce charges: The Appellant recovers a fixed amount of bounce charges from the customers who makes default in making payment and whose cheques get bounced. The receipt is in the nature of penal charges recovered from the customer who fails to pay on time. The Appellant relies on the following cases were it is held that the interest received on delayed payment from debtors is eligible for deduction u/s. 80-IA of the Act: o Nirma Industries Ltd. v. DCIT (283 ITR 402) (Guj) o CIT v. Sidheswari paper Udyog Ltd. (94 ITD 187)(TM) (Del) : The Gujarat High Court decision in the case of Nirma Industries Ltd. v. DCIT 92006) (283 ITR 402) (supra) held that IT is an incorrect proposition to state that interest paid by the debtors for late payment of the sale proceeds would not form part of the eligible income for the purpose of computing relief under section 80-I of the Act. the reliance on the general meaning of the term interest as well as raising distinction between the source of sale proceeds and the source of interest is erroneous in law. 6. Cell Site sharing Revenue: For ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, receive an interpretation that accords with the objective behind the tax holiday. This has, indeed, been settled by the Supreme Court s decision in Bajaj Tempos case (196 ITR 188) (PB II 0-Page Nos. 167-174) Without prejudice to above If at all the income from site sharing is not to be treated a eligible for 80-IA, the Appellant prays that the expenses to that effect on account of site sharing also ought to be excluded. However the ld. CIT(A) after considering the submission of the assessee has partly allowed the relief to the assessee by observing as under:- 4. The language of section 80IA has been analyzed by various courts and it has been distinguished from the language of section 80HH where the term profits and Gains derived from Industrial undertaking has been used. Hon ble Delhi High Court has held in case of Eltel SGS P. Ltd. 300 ITR 6 (Del) that the profits and gains derived from any business of the industrial undertaking is not as broad as the expression profits and gains attributable to industrial undertaking nor is it as narrow as the expression: profits and gains derived from industrial undertaking it is somewhere in between. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire liability was written off against Siemens AG . The liability was against the purchases made from Siemens AG in respect of various Fast File Transfer, Implementation of SMS, Hardware/software, Switches, up gradation etc. The nature of such deemed income on account of writing off the liability falls under the category of profits and gains derived from business of Cellular services . Therefore assessing office is directed to include ₹ 26,73,408 of provisions/Liabilities written back and ₹ 7,77,123 of Bad debt recovery in profit and gains derived from business of Cellular services . Amount received as bounce charges: The appellant recovered a fixed amount of bounce charge from the customers and the receipt is in the nature of penal charges. The arrangement of charging on bounced cheques is an arrangement to ensure proper payment from customers for sales or services. This receipt is inextricably related to carrying on the business of cellular services. Therefore assessing officer is directed to include ₹ 4,11,440 in profits and gains derived from business of Cellular services. Cell Site sharing Revenue: The appellant has deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grievance raised by the assessee in its appeal ITA No. 357/Kol/2009 in ground no. 3 4 is that ld. CIT(A) erred in not allowing deduction under section 80-IA of the Act in respect of interest income and other receipts amounting to ₹ 66,96,909.00 and 7,65,866.00 only. 40. The ld. DR before us submitted that the income which has direct nexus with the cellular business of the assessee is eligible for deduction. Thus the income from Interest on Margin Money, Provision/liabilities written back, Bad debt recovery, Bounce cheque charges Cell site sharing revenue are not eligible for deduction under section 80-IA of the Act. the ld. DR vehemently supported the order of the AO. Similarly the ld. DR supported the order of lower authorities for not allowing the deduction in respect of interest receipts of ₹ 66,96,909.00 and other receipt of ₹ 7,65,866.00 only. On the other hand the ld. AR submitted that the assessee is eligible for deduction in respect of all its receipt/ income as discussed above. The ld. AR in support of his claim relied on the order of Hon ble Tribunal in the case of BSNL Vs. DCIT reported in 156 ITD 847 which was subsequently affirmed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e meaning and the consequent legislative intent can clearly be understood by the subsequent words used anything contained in ......... . Thus as literally as it can be read the legislative intent of Notwithstanding anything contained in sub-section (1) or sub-section (2) is plain and clear. The clear meaning of this non-obstante clause, which is reflected upto this stage is that whatever may have been contained in subsection (1) or sub-section (2) of section 80-IA is to be excluded. This position is fortified by the conscious inclusion of the word anything contained in which qualifies notwithstanding . The meaning and import of the term notwithstanding is well-settled and understood and by itself cannot be said to be leading to any ambiguity. The said term by itself would have been sufficient and complete to convey the legislative intent that whatever may have been said in sub-sections (1) and (2) but the legislature has not rested there and has taken care to qualify the word with the all encompassing, all inclusive, well understood word anything contained in sub-section (1) or (2). The meaning, use and import of the said word does not lead to any confusion or ambiguity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (2) by making a specific reference to it. Thus conscious of the fact that sub-sections (1) and (2) had completely been over-ridden for an assessee falling in section (2A), reference to sub-section (2) is made only for the purposes of increasing the timeline from which the assessee could opt for selecting ten consecutive years out of the total 15 years. 13.10 Thus the dispute of bringing sub-section (1) into play for a tax payer falling in sub-section (2A) of section 80-IA to our minds cannot arise. According to the assessee sub-section (2A) does not put the restriction contemplated in sub-section (1) of section 80-IA in the face of the nonobstante clause coupled with the specific omission to use the well understood term derived from . This argument is notwithstanding the argument that considering the assessee's nature of business the direct nexus presumed by sub-section (1) of section 80-IA is also fulfilled. On a careful reading of the above provisions, we find that the legislature has left no ambiguity in the wording of the sub-section (2A). Having started with the non-obstante clause in sub-section (2A) which over-rides the mandate of sub-sections (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated. The meaning and extent of the statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be considered to be just or expedient. To put in the words of Rowlatt J. as held in Cape Brandy Syndicate v. Commissioners of Inland Revenue [(1921) 1 KB 64, 71]. In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. 13.13 Interpretation postulates the search for the true meaning of the words used in the statutes as a medium of expression to communicate a particular thought. The task is not easy as the language used even in ordinary conversation or correspondence is capable of being mis-understood, however in such cases the person using the language can be approached for a clarification. The language used in a statute till it is amended, repealed or modified remains static as the Legislature cannot be approached for clarification. After having enacted a law or an act, the legislature becomes functus offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Legislature may take notice and promptly remedy the situation. Reliance can be placed on Standard Chartered Bank v. Directorate of Enforcement [2005] 275 ITR 81/145 Taxman 154 (SC). 13.17 The settled principles of interpretation are that the Court must proceed on the assumption that the legislature did not make a mistake and that it did what it intended to do. The Court must, as far as possible, adopt a construction which will carry out the obvious intention of the Legislature. Undoubtedly, if there is a defect or an omission in the words used by the Legislature, the Court would not go to its aid to correct or make up the deficiency. The Court could not add words to statutes or read words into it which are not there, especially when the literal reading produces intelligible results. Reference may be made to Dadi Jagannadham v. Jamulu Ramulu AIR 2001 SC 2699. Any presumption to the contrary in the absence of any ambiguity would be contrary to the settled legal position as the legislature as far as possible is presumed to know what it intends to stay. 13.18 Thus reverting again to considering the words used in sub-section (2) the proviso thereto and sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der clause (ii) of sub-section (4) and is such an enterprise providing telecommunication services. After having over-ridden the requirements of sub-sections (1) and (2) completely the legislature in its wisdom has directed that hundred per cent of the profits and gains of the eligible business and not the profits and gains derived from can be claimed as a deduction in the first five assessment years by such an enterprise commencing at any time during the periods as specified in subsection (2) and thereafter thirty per cent of such profits for further five assessment year. Thus giving due recognition for the peculiarities of the telecommunication services where heavy investment costs in the initial years are a necessity they have been allowed to be recovered by way of profits to the extent of hundred per cent from that activity in the first five years and thereafter the allowable deduction is substantially reduced to thirty per cent in the next five years presuming that by then the heavy infrastructural costs would have been recovered and/or the objectives of the governmental policy would have been attained. Keeping in mind the services and functions performed by such an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere not so argued before the tax authorities. We record our appreciation for the confident and effective representation of Ld. CIT DR, Ms. A. Mishra. We also put on record our appreciation for the well-seasoned and tempered arguments advanced by Sr. Advocate, Mr. P. Pardiwala supported by the synopsis and updated synopsis prepared and filed by his team of lawyers. However having minutely gone through the case laws and the proposition relied upon which we have brought out in the earlier part of this order, we find that in the face of the clear mandate of law addressing the case laws which are on entirely different facts and considering different set of provisions reference thereto would be out of context as it would be of no help to decide the issue which we find is clear from the very language used by the Legislature in the statutory provisions under consideration. The meaning which the Revenue would want us to read into the said provision would be in violation of the basic fundamental principles of interpretation of statutes namely that the Courts cannot write the laws as legislation is the domain of the Legislature, the Courts can only interpret the law; any Interpretation which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urtail the time line during which deduction can be claimed and also addressing the extent upto which it can be claimed has consciously carved out an exception to specified undertakings/enterprises whose needs and priorities differ has taken care to expand the time line for claiming deductions. It has consciously enabled those undertakings/enterprise who fall under sub-section (2A) to claim 100% deduction of profits and gains of eligible business for the first five years and upto 30% for the remaining five years in the ten consecutive assessment years out of the fifteen years starting from the time the enterprise started its operation. The legislature having ousted applicability of sub-section (1) and (2) in the opening sentence brought in for the purposes of time line sub-section (2) into play but made no efforts whatsoever to put the assessee under sub-section (2A) to meet the stringent requirements that the profits so contemplated were to be Page 51 derived from . The requirements of the first degree nexus of the profits from the eligible business has not been brought into play. 11. As a result, the orders of both the AO and the CIT(A) to the extent they deny the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as discussed above. Thus the ground of appeals raised by the Revenue is dismissed and the grounds of appeals raised by the assessee is allowed. Now coming to ITA No. 357/Kol/2009 appeal by the assessee 42. The First issue raised by the assessee in this appeal is that ld. CIT(A) erred in not allowing setoff of the unabsorbed depreciation of ₹ 37,35,12,000.00 while computing the book profit under section 115JB of the Act being lower of the brought forward loss. 43. We have already dealt this issue elaborately while adjudicating the ground of appeal of assessee in ITA No.356/Kol/2009 and allowed the issue in favour of assessee. 43.1 Besides the above we also observed that the impugned issue has already been decided in favour of assessee by this Hon ble Tribunal in the case of Binani Industries Limited (supra) reported in 178 TTJ 658 which reads as under:- We have heard the rival submissions and perused the materials available on record. We are in agreement with the arguments of the Learned AR that the losses (both cash loss and depreciation loss) would continue to remain in the books of accounts till it is wiped off by earning profits by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,96,909.00 only. 49. We have already dealt this issue elaborately while adjudicating the ground of appeal of Revenue in ITA No.377/Kol/2009 (supra) and since we have dismissed this ground of appeal of Revenue following the same analogy we also allow this ground of appeal of assessee. 50. The last issue raised by the assessee is that ld. CIT(A) erred in not allowing deduction for the contribution made gratuity fund maintained with LIC for ₹ 6,97,488.00 only. 51. We have already dealt this issue elaborately while adjudicating the ground of appeal of assessee in ITA No.356/Kol/2009 and since we have allowed this ground of appeal of assessee following the same analogy we also allow this ground of appeal of assessee. 52. In the result, assessee s appeal is allowed. Coming to ITA 482/Kol/2010 appeal by the Revenue and ITA 485/Kol/2010 appeal by Assessee for the AY 2006-07 53. The grounds of appeal raised by the Revenue, are reproduced as under:- That the Ld. CIT(Appeals) has erred in holding that the assessee was eligible to get deduction u/s. 80IA on the following receipts:- 1. Cellsite sharing revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (2) of section 115JB of the Act, being the lower of figures of brought forward loss and unabsorbed depreciation. All the above grounds are without prejudice to each other. The appellant craves leave to add, amend, vary, omit or substitute Assessment Year of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. First we take up Revenue appeal ITA 482/kol/2010 54. The inter-related issue raised by the Revenue in this appeal is that ld. CIT(A) erred in allowing the deduction u/s 80-IA of the Act in respect of certain receipts not eligible for deduction. 55. We have already dealt this issue elaborately while adjudicating the ground of appeal of Revenue in ITA No.377/Kol/2009 and since we have dismissed this ground of appeal of Revenue following the same analogy we also dismissed the inter-related issue of appeal of Revenue. Accordingly, AO is directed. 56. In the result, Revenue s appeal is dismissed. Now coming assessee s appeal ITA 485/Kol/2010. 57. The assessee vide letter dated 06.07.2015 has revised the ground no. 1 which reads as under:- The Appellant respectfully submits that: 1.On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice to each other. The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. 58. The first issue raised by the assessee in its revised ground of appeal is that ld. CIT(A) erred in giving finding that the assessee has to necessarily claim the deduction u/s 80-IA of the Act for 10 consecutive years. The assessee also assailed the order of ld. CIT(A) by submitting that the impugned issue for 10 consecutive years deduction is not arising from the order of AO. 59. We have already dealt this issue elaborately while adjudicating the ground of appeal in ground No. 2 of Revenue in ITA No.377/Kol/2009 and since we have dismiss this ground of appeal of Revenue following the same analogy we also allow this ground of appeal of assessee. Accordingly, AO is directed. 60. The 2nd issue raised by the assessee is that ld. CIT(A) erred in not allowing deduction under section 80-IA of the Act in respect of certain income. 61. We have already dealt this issue elaborately while adjudicating the ground of appeal No. 3 of Revenue in ITA No.377/Kol/2009 and since we have dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to necessarily claim the deduction u/s 80-IA of the Act for 10 consecutive years. The assessee also assailed the order of ld. CIT(A) by submitting that the impugned issue for 10 consecutive years deduction is not arising from the order of AO. 67. We have already dealt this issue elaborately while adjudicating the ground of appeal No. 2 of Revenue in ITA No.377/Kol/2009 and since we have dismissed this ground of appeal of Revenue following the same analogy we also allow this ground of appeal of assessee. AO is directed accordingly. 68. In the result, assessee s appeal is Coming to assessee s appeal in ITA 431/Kol/2012 for the AY 2008-09 69. The assessee vide letter dated 8th July 2015 has filed the additional ground no. 2.2 in its appeal which reads as under:- * Ground No.2.2 On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in upholding the allegation of the learned Deputy Commissioner of the Income-tax, Circle 7, Kolkata ( learned Assessing Officer') that interest income amounting to INR 66 laksh is assessable to tax as income from other sources and not as profits and gains from business and profession . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the financial year relevant to the subject assessment year, under section 40(a)(ia) of the Act. 3.2 On the facts and in the circumstances of the case and in law, the learned CIT(A) has misplaced reliance on the Supreme Court s judgment in the case of Bharti Cellular Ltd (2011) (330 ITR 239) since the same was pronounced in the context of interconnect charges and not roaming charges. 4. Ground No. 4- Interest under section234B and 234D Without prejudice and in addition, on the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in upholding the levy of interest under section234B and 234D of the Act. 5. Ground No. 5- Levy of penalty under section 271(1)(c)On the facts and circumstances of the case and in law, the learned CIT(A) has erred in not adjudicating on the ground raised by the Appellant against the intimation of penalty proceedings under section 271(1)(c) of the Act. The CIT(A) ought to have held that the proceedings under section 271(1)(c) of the Act are not justified in the instant case. All the above grounds are without prejudice to each other. The Appellant craves leave to add, amend, vary omit or substitute any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice performed is required to be seen. Moreover, the term ' work ' is defined in section 194C of the Act. The word ' work ' in section 194C referred to and comprehends only the activities of workman. It is the physical force which has comprehended in the word 'work'. We have already held that the payment of roaming charges does not require any human intervention. Hence in the absence of human intervention, the services rendered in the context of the impugned issue does not fall under the definition of ' work ' as defined in section 194C and hence the provisions of section 194C are not applicable to the impugned issue. 4.19. Let us now get into the applicability of provisions of section 1941 of the Act to the facts of the impugned issue. The term 'rent' is defined in section 194 as below: - For the purposes of this section, rent means any payment, by whatever name called, under any lease, sublease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,- (a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory building); or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es cannot be considered as goods and it is this reason which is relevant for our purpose. It was held that a subscriber to a telephone service could not reasonably be taken to have intended to purchase or obtain any right to use electromagnetic waves or radio frequencies when a telephone connection is given. Nor does the subscriber intend to use any portion of the wiring, the cable, the satellite, the telephone exchange, etc. As far as the subscriber is concerned, no right to the use of any other goods, incorporeal or corporeal, is given to him or her with the telephone connection. In view of the above, we hold that the payment of roaming charges by the assessee to other service provider cannot be considered as rent within the meaning of section 194I of the Act. 4.20. Accordingly, we hold that the payment of roaming charges of ₹ 55,41,01,320/- does not fall under the ambit of TDS provisions either u/s.194C/194I or 194J of the Act and hence we have no hesitation in directing the Learned Assessing Officer to delete the addition made u/s. 40(a)(ia) on this account. Respectfully following the above order, we reverse the order of lower authorities. Thus the ground of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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