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TMI Blog2019 (1) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... owance of deduction u/s 80IA made by the A.O of the cheque bounce charges received by the assessee ignoring the AO"s finding that the same are penal in nature and not an income derived from the undertaking of telecommunication business?" The said order had declined to issue notice and frame questions of law on the issue whether the licence fee was expenditure of capital nature and not allowable under Section 37(1) of the Act in view of decision of this Court in Commissioner of Income Tax versus Bharti Hexacom Limited, (2014) 265 CTR (Del) 130. The Bench had also refused to issue notice on the question whether amended provisions of Section 80IA would be applicable to the respondent-assessee in view of the decision of the Madras High Court in Commissioner of Income Tax versus Best Corporation Limited, (2017) 395 ITR 367 (Mad.). 3. Sub-sections (1) (2) and (2A) to Section 80IA of the Act read:- (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that an undertaking providing 'telecommunication services' would be entitled to deduction of the profits and gains of the eligible business. Scope and ambit of deduction under sub-section (2A) to Section 80IA, applicable to an undertaking engaged in 'telecommunication service', is wider and comprehensive to include hundred or thirty percent of profits and gains of the eligible business in the first five and further five years, respectively. Income qualifying for deduction under sub-section (2A) is not confined to "income derived from", an expression used in Sub-Section (1) to Section 80IA. Accordingly entire profit and gain attributable to eligible business in case of an undertaking engaged in 'telecommunication service' was allowable as a deduction under Section 80IA(2A) of the Act. 4. In the said case, Bharat Sanchar Nigam Limited had claimed deduction under sub-section (2A) to Section 80IA on interest from others, liquidated damages, income from sale of directories, publications, forms, waste papers, extraordinary items and refund of universal service fund. Profits or income earned in the above accounts were held as allowable and eligible for deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services" or other business. 8. The Assessing Officer had denied benefit of sub-section (2A) to Section 80IA to profits and gains from the revenue earned from sharing of infrastructure facilities in the form of cell-sites and fibre cable with other companies or undertakings engaged in 'telecommunication services'. This he held would amount to leasing of the said assets to third parties and income from the leasing would not be income derived from 'telecommunication services'. He held that the respondent-assessee was not engaged in the business of leasing of assets. Reference was made to judgments which interpret contours and scope of the expression "derived from industrial undertaking". 9. The aforesaid findings were reversed by the Commissioner of Income Tax (Appeals), who accepted the contentions raised by the respondent-assessee, which were summarized as under:- "i) The Appellant has to develop sites for rendering services to various subscribers. At these sites, the Appellant would need to construct infrastructure facilities in the form of civil work, setting up of towers, installation of batteries, air conditioners and D.G. sets, antennas and Base Tran receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng engaged in providing telecommunication services. The respondent-assessee had not leased the telecom infrastructure to third parties as ownership/tittle in the cell towers and the cable network had not been transferred to third parties. The third parties were allowed and permitted to use the telecommunication network set up in the form of cables and cell towers on payment for use of the same. This amount received would be income generated from telecommunication services. 11. On appeal preferred by the Revenue, the said finding of the Commissioner of Income Tax (Appeals) has been affirmed by the Tribunal. 12. We do not see any good ground or reason to differ with the aforesaid findings. The expression "telecommunication services" as defined for the purpose of sub-section (2A) includes services of varied nature that can be provided to any person including those who are providing "telecommunication services" to others. Expression "telecommunication services" is in fact not defined by specific words except in case of domestic satellite service. "Telecommunication service" has been referred to as by way of basic or cellular services, including radio paging, domestic satellite servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2A) to Section 80IA as held by the Delhi High Court in the case of Bharat Sanchar Nigam Limited (supra). 16. The Commissioner of Income Tax (Appeals) had held as under:- "8.5 Decision I have carefully perused the assessment order and the written submission filed by the ld. AR of the appellant. There are two components of this ground of appeal. One is related to cheque bounce charges and the other is late payment charges received by the appellant. For the sake of convenience, both components are discussed separately hereunder: 8.6.1 Cheque bounce charges: The cheque bouncing charges are the charges which the bank levies from the appellant after the cheque, received from the customers, bounces after depositing the same in the bank account of the appellant. These charges are than recovered from the customer by the appellant. Therefore, these charges are in the nature of reimbursement or replenishment of the penal charges paid by the appellant to the bank. These charges are not linked to the business of telecommunication of the appellant: Therefore, the cheque bounce charges recovered from the customers cannot be said to be derived from the telecommunication business of the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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