TMI Blog2016 (5) TMI 1592X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer with a direction that assessee will pay the tax as if section 43B(f) is on the statute book. However, till the decision of the Hon'ble Supreme Court is rendered in case of CIT v/s Exide Industries Ltd. (supra), the Department will not recover the penalty and interest which may accrue till the decision of the appeal in the case of Exide Industries Ltd. (supra). It would be open to the Department to recover the outstanding interest payment once the appeal in the case of Exide Industries Ltd. (supra) is decided in favour of the Department. Ground no.1, is allowed for statistical purposes. Disallowance of revenue sharing - HELD THAT:- As found from the record that this is recurring dispute between the assessee and the Department right from the assessment year 2000 01. However, in a series of decisions in assessee s own case, the Tribunal has decided the issue in favour of the assessee holding that the amount paid to DOT towards revenue sharing license fee as revenue expenditure. There being no material difference in facts and no contrary decision has been brought to our notice by the learned Departmental Representative, respectfully following the consistent vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. We do not find any infirmity in the aforesaid direction of the learned Commissioner (Appeals). As already held by us, revenue sharing license fee paid to DOT is otherwise allowable as revenue expenditure. Since the BTA was claiming depreciation on revenue sharing license fee after treating it as intangible asset after capitalization the assessee continued with the same accounting principle after merger of BTA insofar as revenue sharing business fee paid by BTA which was acquired as a part of block of asset. In the aforesaid facts and circumstances, assessee s claim of deduction being legally valid has to be allowed. Therefore, we uphold the order of the learned Commissioner (Appeals) on the issue by dismissing ground no.2, raised by the Department. - ITA no. 4445/Mum./2013, ITA no. 4418/Mum./2013, ITA no. 1977/Mum./2013 - - - Dated:- 27-5-2016 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER For the Assessee : Shri Yogesh Thar For the Revenue : Shri B.C.S. Naik ORDER PER SAKTIJIT DEY, J.M. These cross appeals are directed against two separate orders passed by the learned Commissioner (Appeals) 4, Mumbai, pertaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorised Representative relied upon the following decisions of the Tribunal: i) Aditya Birla Finance Ltd. v/s ACIT, ITA no.6630 and 7530/ Mum./2010 dated 23rd January 2015; ii) ACIT v/s Alok Industries Ltd., ITA no.8340 and 8920/ Mum./2010 dated 20th February 2015. iii) Birla Sunlife Asset Management Co. Ltd. v/s DCIT, ITA no.5457/Mum./2013 dated 30th June 2015. 6. Learned Departmental Representative opposing the contention of the assessee submitted, the decision in case of Exide Industries Ltd. (supra) having been stayed, the disallowance made should be upheld. He further submitted the Hon'ble Supreme Court while staying the judgment of the Hon'ble Calcutta High Court in Exide Industries Ltd. (supra) has directed the assessee to pay the tax on account of provisions made and when the actual payment has not been made by the assessee in terms of section 43B(f) of the Act. 7. We have considered the submissions of the parties and perused the material available on record. Undisputedly, the deduction claimed by the assessee is only a provisions and no payment was actually made by the assessee during the relevant previous year. Therefore, in terms of section 43B(f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra). It would be open to the Department to recover the outstanding interest payment once the appeal in the case of Exide Industries Ltd. (supra) is decided in favour of the Department. With the aforesaid observations, we restore the matter back to the file of the Assessing Officer for deciding afresh in terms with the decision of the Hon'ble Supreme Court in Exide Industries Ltd. (supra). Ground no.1, is allowed for statistical purposes. 9. In ground no.2, the assessee has challenged the disallowance of revenue sharing amounting to ₹ 142,30,76,399. 10. Brief facts are, during the assessment proceedings, the Assessing Officer while verifying the tax audit report filed by the assessee noticed that as per Annexure 3 to the tax audit report, assessee has claimed depreciation of ₹ 87,12,39,508, on license fee by treating it as intangible asset. However, subsequently, the assessee had filed a revised return of income claiming deduction of an amount of ₹ 142,30,76,399 on account of revenue sharing license fee after giving up its claim of depreciation of ₹ 87,12,39,508. The Assessing Officer, after examining the facts and material on record as well as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal, while deciding identical issue, held as under: 4.5 We have considered the rival submissions as well as relevant material on record. So far as the admissibility of the fresh claim first time before the appelate authority is concerned, we find that an identical issue was before the Hon ble Supreme Court in the case of National Thermal Power Corporation Ltd. Vs. CIT (supra). The issue in the said case emerged from the fact that the assessee offered an amount to tax in the return of income which was not taxable as income. The inclusion of the said amount was not objected by the assessee even before the CIT(A) and only after filing appeal before the Tribunal the assessee raised a ground by way of forwarding a letter. In those facts, Hon ble Supreme Court has held that when it is found that non taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the Tribunal first time so long as relevant facts are on record in respect of that item. We have already reproduced the relevant finding of the Hon ble Supreme Court in the foregoing paras while discussing the ground no. 2. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be treated as revenue expenditure. (ii) Capital expenditure will qualify for deduction as per Section 35ABB of the Act. 4.6 We further note that this Tribunal in the cae of Mahanagar Telephone Nigam Ltd. Vs. ACIT(supra) as well as in the cae of ACIT Vs. Vodafone Essar Gujarat Ltd. (supra) along with other no. of decision has taken a similar view. Following the decisions of Hon ble Delhi High Court in the case of CIT Vs. Bharati Hexacom ltd. Others as well as other decisions relied upon by the assessee, we allow the claim of the assessee. The view expressed above was again followed by the Tribunal in its order dated 29th December 2014, in ITA no.3261 and 3568/ Mum./2008, for the assessment year 2003 04 in assessee s own case. It is also observed, the co ordinate bench while coming to such conclusion has followed the decision of the Hon'ble Delhi High Court in CIT v/s Bharti Hexacom Ltd. and Ors., [2013] 221 Taxmann 223 (Del.). Learned Departmental Representative has not brought to our notice any change in facts in the impugned assessment year nor any contrary decision. Therefore, respectfully following the decision of the co ordinate bench of the Tribunal in as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without charging any interest. Taking all these facts into consideration, the Assessing Officer was of the view that advancing interest free loan to subsidiary amounts to utilisation of interest bearing borrowed funds for purpose other than business. He, therefore, was of the opinion that interest attributable to interest free advance given to subsidiary requires to be disallowed. Accordingly, he called upon the assessee to explain why proportionate disallowance should not be made. Though, the assessee objected to the proposed disallowance out of interest expenditure but the Assessing Officer rejecting the explanation of the assessee disallowed an amount of ₹ 9,87,50,000 being interest attributable to interest free advances to the subsidiary. Being aggrieved of such disallowance, assessee challenged the same in appeal preferred before the learned Commissioner (Appeals). 21. The learned Commissioner (Appeals) having found that the assessee has made the advance to its wholly owned subsidiary and special purpose vehicle through which assessee had made investment in other companies engaged in the same business was of the view that the interest free advance made was for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground no.2, raised by the Department. 23. Respectfully following the consistent view of the Tribunal, we uphold the order of the learned Commissioner (Appeals) by dismissing the grounds no.2 and 3 raised by the Department. 24. In ground no.4, Department has challenged allowance of assessee s claim of deduction towards club fee. 25. During the assessment proceedings, the Assessing Officer noticed that the assessee had claimed expenditure of ₹ 33,21,734, on account of club entrance fee proposing to disallow the same, he called for an explanation from the assessee. Though, the assessee objected to such disallowance but rejecting the explanation of the assessee, the Assessing Officer disallowed the club fee of ₹ 33,21,734. The assessee challenged the disallowance before the learned Commissioner (Appeals). 26. The learned Commissioner (Appeals), following the decision of his predecessor in office in assessee s own case for the assessment year 2003 04, allowed assessee s claim. 27. We have considered the submissions of the parties and perused the material available on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para 14, similar ground raised by the assessee is allowed. Following the reasoning given by us therein, we set aside the order of the learned Commissioner (Appeals) and allow the ground no.1 raised by the assessee. 32. In ground no.2, the assessee has challenged proportionate deduction claimed under section 35DD on legal fee. 33. Brief facts are, during the assessment proceedings for the financial year 2003 04, assessee had paid legal fee amounting to ₹ 29,37,435 to Amarchand Mangaldas and Suresh A. Shroff, Advocate and Solicitor for legal service relating to drafting of loan agreement, due diligence, etc., in respect of Escotel Mobile Communication Ltd., which was a Cellular Service provider in the telecom circles of Kerala, Haryana and Uttar Pradesh. For the purpose of expanding its business activity, the assessee was looking for new areas where it is not providing telecom services. He, therefore, was exploring the possibility of acquiring other cellular service provider having telecom license in the area other than assessee s area of operation. For achieving this object, the assessee wanted to acquire Escotel Mobile Communication Ltd., and for that purpose, it engage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. We have considered the submissions of the parties and perused the material available on record in the light of the case laws cited before us. As far as the factual aspect is concerned, it is not in dispute that the expenditure claimed is on account of feasibility report for acquisition of a new company. It is further evident that during the relevant previous year, no acquisition has actually taken place. However, it is a fact on record that the acquisition of the business of Escotel was effected from 1st April 2006. Thus, the expenditure incurred by the assessee is for acquiring a new business / project. Therefore, as such expenditure incurred is for creating an asset of enduring nature, in our view, such expenditure is capital in nature. We are supported in our view by the decision of the Tribunal, Ahmedabad Bench in CLP Power India Pvt. Ltd. (supra). As far as the decision relied upon by the learned counsel, on a perusal of the same we find them to be factually distinguishable as the expenditure incurred therein do not relate to merger. In view of the aforesaid, we uphold the order of the learned Commissioner (Appeals) on the issue. As far as the alternative claim of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... helcom Ltd. (BTA) which amalgamated with the assessee during the relevant previous year. He observed, as BTA has claimed deduction under section 35ABB on the revenue sharing license fee, assessee is not eligible to claim deduction. Accordingly, he disallowed deduction claimed of ₹ 6,65,44,254. Being aggrieved of such disallowance, the assessee challenged the same in appeal before the learned Commissioner (Appeals). 44. Before the learned Commissioner (Appeals), it was submitted by the assessee that till its merger with the assessee, BTA has never claimed deduction under section 35ABB on the revenue sharing license fee. It was submitted, BTA was consistently capitalising revenue sharing license fee and claimed depreciation @ 20% by treating it as intangible asset. It was submitted, the Assessing Officer also has allowed BTA s claim of depreciation in the earlier assessment year. Assessee submitted as BTA was claiming depreciation on the revenue sharing license fee, assessee also continued to claim depreciation after amalgamation on the assets of the BTA, even though the revenue sharing license fee is allowable as revenue expenditure. Learned Commissioner (Appeals) after con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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