2016 (4) TMI 1410 - HC - Income Tax

Deduction u/s 35ABB - license fee paid by the Assessee on the basis of the amount fixed at the time of acquiring the licence - telecommunication service providers were required to pay a fixed percentage of revenues earned as the licence fee - HELD THAT - Tribunal found that the controversy of identical nature on facts and in law was before the Bench of the Tribunal at New Delhi and in the case of telecommunication service providers themselves. Tribunal has also noted in the Assessee's own case for the Assessment Year 2001-02 the identical issue was raised and which was decided in favour of the Assessee - Tribunal reproduced the finding of fact and held that since the matter was decided in favour of the service providers and against the Revenue in the case of very Assessee before it for the previous Assessment Year, there is no reason to deviate or differ from those views. It found that the controversy is entirely identical to the one dealt with earlier. The Tribunal did not interfere with the order of the First Appellate Authority and dismissed the Revenue's Appeal on 20th November, 2012. We are not in agreement with Mr.Malhotra that the question framed at page 6 is a substantial question of law. It being identical and covered by the Tribunal's own order in the case of identical service provider, we do not think that a different view was possible. The Tribunal's view cannot be said to be perverse or vitiated by any error of law apparent on the face of the record. We find and as pointed out in Bharti Hexacom Ltd . and Commissioner of Income Tax Vs. Bharti Cellular Ltd 2013 (12) TMI 1115 - DELHI HIGH COURT has dismissed the Revenue's appeal.

Summary

Issues:
Challenge to the order passed by the Income Tax Appellate Tribunal regarding license fees paid by the Assessee-Company for telecommunication services during the Assessment Year 2003-04.

Analysis:
The appeal by the Revenue challenges the Income Tax Appellate Tribunal's order concerning the disallowance of a portion of the license fees paid by the Assessee-Company to the Department of Telecommunication, Government of India. The Assessee had added back a sum of ?18.07 crores as license fees paid, against which a deduction of ?40.24 crores was claimed under Section 35ABB of the Income Tax Act, 1961. The Assessing Officer made a disallowance of ?27,82,30,588 based on the fixed amount at the time of acquiring the license, despite a new policy introduced by the Department of Telecommunication requiring a percentage of revenues as license fees. The Commissioner directed the Assessing Officer to calculate the disallowance accurately. The Tribunal, considering previous decisions in similar cases, found the controversy to be identical and dismissed the Revenue's appeal on the grounds that the issue was already decided in favor of the service providers in a previous case.

The High Court, in its analysis, disagreed with the Revenue's contention that the question framed was a substantial question of law. The Court noted that the Tribunal's decision was consistent with previous rulings and not erroneous. Referring to a judgment by the High Court of Delhi, the Court highlighted that the controversy was settled in favor of the Assessee. Despite the possibility of the matter reaching the Supreme Court from the Delhi High Court's judgment, the Bombay High Court declined to admit the appeal, as the issue was conclusively settled in favor of the Assessee based on existing facts and legal precedents. Therefore, the appeal by the Revenue was dismissed, and no costs were awarded.