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2019 (8) TMI 15 - HC - Income TaxDisallowance of claim of deduction u/s 80 IA (4)(ii) - profit generated from the operation of private telephone exchange in the computation of taxable total income - HELD THAT - The substantial question of law arising in these appeals was considered in the case of Sabdhagiri Telecom Vs. Income Tax Officer, Ward-1(1) Coimbatore 2018 (12) TMI 644 - MADRAS HIGH COURT wherein it was held that the assessee, an authorised franchise of BSNL, operating telephone exchange and providing basic telecommunication services to its customers in pursuance of agreement entered into with BSNL was entitled to deduction under 80-IA(4)(ii). In the said decision, the decision of CIT Vs. Himanshu V. Shah 2014 (12) TMI 1331 - GUJARAT HIGH COURT was quoted with approval held that the assessee is a franchisee of BSNL, engaged in installing, maintaining and operating EPEX system to support functioning of BSNL could be treated to have provided 'basic telephonic services' and thus, was eligible for deduction under Section 80- IA(4)(ii). - Decided in favour of assessee.
Issues Involved:
- Appeal against disallowance of deduction u/s 80 IA (4)(ii) of the Income Tax Act for profit from private telephone exchange operation. Analysis: The Tax Case Appeals were filed by the assessee challenging the order of the Income Tax Appellate Tribunal concerning the disallowance of the deduction under section 80 IA (4)(ii) of the Income Tax Act for the profit generated from operating a private telephone exchange. The main issue raised was whether the Tribunal was correct in sustaining the disallowance of this deduction in the computation of taxable total income. The court heard arguments from both sides, with the appellant represented by Mr. A.S. Sriraman and the respondent by Mr. M. Swaminathan. The court considered a similar case, Sabdhagiri Telecom Vs. Income Tax Officer, where it was held that an assessee operating as an authorized franchise of BSNL and providing basic telecommunication services was entitled to deduction under section 80 IA (4)(ii). This decision referenced a case from the Gujarat High Court, CIT Vs. Himanshu V. Shah, which supported the allowance of such deductions. The appeal filed by the Revenue against the decision in the case of Himanshu V. Shah was dismissed by the Gujarat High Court. Subsequently, in another case involving the same assessee, the Tribunal referred the matter to a larger bench, which ruled in favor of the assessee, establishing eligibility for the deduction under Section 80 IA (4)(ii). Based on the precedent set by the decisions mentioned above, the court ruled in favor of the assessee in the present appeals. It was concluded that the assessee, being a franchisee of BSNL engaged in providing basic telephonic services, was eligible for the deduction under Section 80 IA (4)(ii). Therefore, the appeals filed by the assessee were allowed, and the substantial question of law was answered in favor of the assessee, with no costs imposed.
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