2017 (12) TMI 418 - AT - Income Tax

Benefit of deduction in respect of license fees - proportional allowance of claim - the total claim of deduction was withdrawn earlier - Held that - In view of the facts and circumstances of the case, the expenditure so claimed by the assessee has rightly been allowed proportionately for 10 year period u/s 35ABB of the Act and we do not find any infirmity in the order of the ld. CIT(A). Thus the ground raised by the Revenue in this appeal is dismissed.

Summary

Issues Involved:

1. Deletion of addition of ?1,26,58,244/- made by the Assessing Officer.
2. Double claim of the same deduction.
3. Proportionate deduction of license fee under Section 35ABB of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Deletion of Addition of ?1,26,58,244/-:

The revenue challenged the deletion of an addition of ?1,26,58,244/- made by the Assessing Officer. The Assessing Officer had disallowed the claim of 1/10th deduction of ?1,26,58,244/- made by the assessee, which was in accordance with the CIT(A)'s order for the assessment year 2006-07. The CIT(A) had allowed the deduction, and this decision was upheld by the ITAT and further affirmed by the Hon'ble Delhi High Court. The High Court observed that the Phase-II license regime was a continuation of Phase-I, and thus, the expenditure was to be allowed proportionately over a 10-year period as per Section 35ABB(1) of the Income Tax Act.

2. Double Claim of the Same Deduction:

The assessee was contesting a claim for a total deduction of the license fee in the assessment year 2006-07, which was disallowed, and only 1/10th of the claim was deemed admissible. Despite this, the assessee made a double claim by also including the deduction in the assessment year 2010-11. The tribunal noted that the assessee could not make a double claim for the same deduction. The assessee had to choose either to withdraw the appeal for the assessment year 2006-07 and claim in the year under reference or persist with the original claim.

3. Proportionate Deduction of License Fee under Section 35ABB:

The CIT(A) and ITAT both held that the assessee was entitled to a deduction of 1/10th of the license fee expenditure under Section 35ABB of the Income Tax Act. This section allows for the amortization of capital expenditure incurred on acquiring the right to operate telecom services over the period of the license. The tribunal found no infirmity in the CIT(A)'s well-reasoned order, which was consistent with the decision in the assessee's own case for the assessment year 2006-07. The tribunal's decision was also upheld by the Hon'ble Delhi High Court, which found no substantial question of law arising from the revenue's appeal.

Conclusion:

The tribunal dismissed all three appeals of the revenue, confirming the CIT(A)'s decision to allow the 1/10th deduction of ?1,26,58,244/- for the assessment year 2010-11. The tribunal's decision was based on the consistent application of Section 35ABB and was supported by previous rulings in the assessee's favor. The order was pronounced in the open court on 29.08.2017.