9911796707
TMI Blog2023 (4) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... of licence fee as capital expenditure made by the Ld. Assessing Officer ("AO") which has been deleted by the Ld. CIT(A). The Ld. AO has discussed this issue in para 5 of his assessment order framed by him on 26.03.2013 under section 143(3) of the Income Tax Act, 1961 (the "Act"). The assessee is engaged in the business of information technology enabled services. It paid the impugned sum to Govt. of India, Department of Telecommunication in consideration for grant of licence to operate and provide the services. The assessee claimed that it is revenue expenditure. The Ld. AO, however held it to be capital expenditure as it gives enduring benefit to the assessee. According to him, the Act provides for such capital expenditure to be amortised as per provision of section 35ABB over unexpired portion of the licence. The unexpired portion of the licence from assessee's document is 8.5 years. Therefore, only Rs. Nil is allowable under section 35ABB. He, therefore, added the impugned amount to the income of the assessee. 3.1 On appeal, the Ld. CIT(A) discussed the issue in para 6 of his appellate order. The Ld. CIT(A) deleted the impugned addition by observing and recording his findings as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fee, the annual licence fee including USO contribution @ 15% of Adjusted Gross Revenue (AGR) shall be payable. With effect from 01.01.2006, the annual licence fee including USO contribution shall be 6% of Adjusted Gross Revenue. The assessee has explained that Rs. 2.50 crore was treated as one time licence fee and accordingly the said amount which was paid for 20 years was adjusted @ 12.50 lacs per year and the said amount is being amortized every year under section 35ABB of the Act. The case of the assessee is that it is the "Annual Fees" every year at an agreed 6% of Gross Revenue which amounted to Rs. 3,90,40,000/- for AY 2010-11 which has been claimed as revenue expenditure as against Rs. 1,85,60,000/- of the preceding year. The assessee has contended that in three preceding AY(s) and in succeeding AY 2011-12 the said payment of licence fee has been allowed as revenue expenditure in assessments completed under section 143(3) of the Act. A different view has been taken by the Ld. AO in AY 2010-11 presently under consideration. The contention of the assessee could not be controverted by the Ld. DR. In our view, a different approach without there being variation in facts or in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. AO did not offer any comments. The Ld. CIT(A) presumed the factual correctness of the details which are also based on audited annual accounts of subsequent years. 6.3 The Ld. CIT(A) recorded his observations and findings which we reproduce hereunder: "7.3 The AO had made an addition on the ground that confirmations, PAN , copies of Income Tax Return and complete address along with contra account from the books of creditors were not filed. This was the sole reason for making the addition. At the outset, an addition u/s 41(1) can be made only if a genuine trade liability has ceased to exist for the reasons mentioned in section 41(1) of the I.T. Act. If a particular liability is not genuine, the addition for the same is to be made in the year in which the corresponding expenditure was claimed and not in the year under appeal. To summarise, if the AO doubts the genuineness of opening balance of creditors and comes to a conclusion that the corresponding creditors are bogus i.e. the expenditures that led to creation of the credit balances in the books of the appellant were never incurred, the additions can be made only u/s 37(1) that too only in the year in which the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Delhi High Court in CIT vs. Hotline Electronic (2012) 18 taxmann.com 363 (Delhi); decision of Ahmedabad Bench of the Tribunal in ACIT vs. The Sandesh Limited in ITA Nos. 2920 & 2921/Ahd/2011 rendered on 20.04.2012 and decision of Jaipur Bench of the Tribunal in ITO vs. Shri Devendra Kumar Maloo in ITA No. 192/JP/2016 rendered on 25.04.2017. 8. We have carefully considered the submission of the parties and perused the records. The Ld. AO has added to the income of the assessee the entire amount standing in the name of sundry creditors as reflected in the Balance Sheet as on 31.03.2010 for want of submission by the assessee of details as per the format devised by him under section 41(1) of the Act. On appeal, the Ld. CIT(A) obtained from the assessee details of re-payment to the creditors and the amounts written back in subsequent years. The Ld. CIT(A) allowed the Ld. AO reasonable opportunity to offer rebuttal, if any which the Ld. AO chose not to avail. Since the details were culled from audited annual accounts of subsequent years, the Ld. CIT(A) presumed the factual accuracy thereof. 8.1 The Ld. CIT(A) did not agree with the Ld. AO who made the impugned addition under s ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
