9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (6) TMI 382 - AT - Income TaxClaim u/s.80IA denied in respect of eligible undertakings viz., Earth Stations, Internet and Inmarsat M&B services - whether appellants method of calculating the deduction u/s.80IA totally unacceptable? - Held that - Neither the AO nor the FAA had deliberated upon the allowabililty of section 80IA with regard to internet services. Assessee fairly conceded that issue of allowing deduction with relating to internet services was never decided by any of the lower authorities considering the amended provisions. In these circumstances in the interest of justice matter should be restored back to the file of the FAA for passing fresh order keeping in mind the amended provisions of the section 80IA. In favour of assessee for statistical purposes. Prior periods expenditure disallowed - travelling, professional fees, audit fees, printing and advertisement expenses, medical and HRA arrears, municipal tax etc., as well as repairs and maintenance - Held that - From the records available it is found that out of prior period expenditure 2.18 crores bill amounting to Rs. 69.20 lakhs (49.206 lakhs 19.94 lakhs) were received before the due date of approval of accounts. As the liability crystallisation took place during the year under consideration, same should be allowed. Partly in favour of assessee. Depreciation on undersea FLAG cable system - Held that - As it is well settled position of the law that the eligibility to claim depreciation u/s.32 is governed by the factum of beneficial ownership of the depreciable assets notwithstanding the absence of legal title thereto, accordingly the appellant is entitled to claim depreciation on the value of the indefeasible rights and such claim of the appellant has been wrongly denied by the AO. As the revenue has been allowing depreciation in the subsequent year and principles of consistency should be followed as per the ratio of the judgment of CIT Vs. Dalmia Promoters P. Ltd. (2006 (1) TMI 57 - DELHI High Court). As DR was not able to factually contradict that the claim of the assessee that it is a Member of International Consortium that owned the cables and that it is a part owner, with the right to transfer its share to other and also a right to share the sale proceed on decommissioning of the system, in proportion to the rights held by it depreciation is to be allowed. In favour of assessee.
Issues Involved:
1. Disallowance of claim under Section 35D of the Income Tax Act. 2. Denial of claim under Section 80IA for eligible undertakings. 3. Disallowance of prior period expenses. 4. Allowance of depreciation on undersea 'FLAG' cable system. 5. Allowance of prior period expenses amounting to Rs.3.37 lacs. Detailed Analysis: 1. Disallowance of Claim under Section 35D: The assessee claimed a deduction of Rs.17,95,493/- under Section 35D for expenses related to GDR issues. The AO disallowed this claim, citing that the deduction should be allowed only in the year when the entire extension activities for which the issue was made were completed. The CIT(A) upheld this disallowance, following a precedent set in the AY 1998-99. The ITAT confirmed the order, referencing the ITAT's earlier decision for AY 1998-99, where the claim was dismissed. 2. Denial of Claim under Section 80IA: The assessee claimed Rs.4,12,37,88,812/- under Section 80IA for Earth Stations, Internet, and Inmarsat M&B services. The AO disallowed the claim, stating that the assessee did not start providing the said services within the stipulated period. The CIT(A) upheld this decision, following orders from previous assessment years. The ITAT noted that neither the AO nor the CIT(A) considered the amended provisions of Section 80IA regarding internet services. Thus, the matter was remanded to the CIT(A) for reconsideration in light of the amended provisions, partly favoring the assessee. 3. Disallowance of Prior Period Expenses: The AO disallowed Rs.2.18 Crores as prior period expenses, stating that these were only estimates and not actual expenditures. The CIT(A) allowed Rs.3.37 lacs of these expenses, as they were incurred in the current year, but upheld the disallowance of the remaining Rs.2.18 Crores. The ITAT allowed Rs.69.20 lacs out of the disallowed Rs.2.18 Crores, as the bills were received before the balance-sheet date, and the liability crystallized during the year under consideration. This decision was based on the principle that prior period expenses can be allowed if they crystallize in the current year, following precedents from AY 1997-98. 4. Allowance of Depreciation on Undersea 'FLAG' Cable System: The AO denied depreciation on the undersea 'FLAG' cable system, following the decision from AY 1998-99. The CIT(A) reversed this, following an appellate decision for AY 1998-99, which allowed the depreciation. The ITAT upheld the CIT(A)'s decision, referencing the ITAT's detailed discussion and favorable ruling for the assessee in AY 1997-98 and 1998-99, confirming the principle that beneficial ownership entitles the assessee to depreciation. 5. Allowance of Prior Period Expenses Amounting to Rs.3.37 Lacs: The AO disallowed Rs.3.37 lacs as prior period expenses. The CIT(A) allowed these expenses, noting that the liability crystallized during the current year. The ITAT upheld this decision, stating that although the expenses pertained to an earlier period, the crystallization occurred in the current year, thus making them allowable for the AY 1999-2000. Conclusion: - The appeal of the assessee was partly allowed, with the ITAT granting relief on some issues while upholding disallowances on others. - The appeal of the AO was dismissed, with the ITAT confirming the CIT(A)'s decisions favoring the assessee on depreciation and prior period expenses.
|
