9911796707
TMI Blog2010 (2) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... company was changed to C.G. Fax Mail Ltd. on 15th Nov., 1996. The company was converted into a public limited company on 23rd Sept., 1997. The company was acquired by Direct Internet Ltd. in August, 2000 and the name of the company was changed to Prime Telecommunications Ltd. w.e.f. 27th Sept., 2000. It was the submission that the company was in the business of providing fax mail services. The company started two new services being internet services and internet telephony services as per the license issued from the Department of Telecommunication (DOT), dt. 5th Jan., 1999 from October, 2000. It was the further submission that the license awarded by the DOT was updated as internet services and internet telephony services provider from 2002. It was the submission that the assessee had been filing IT returns regularly and as per the provisions of s. 80-IA(4), the assessee was entitled to the deduction right from the asst. yr. 2001-02 as the first invoice was cut on 17th Oct., 2000. It was the further submission that as per the provisions of s. 80-IA(2) the assessee could claim deduction under s. 80-IA(4) for 10 years out of 15 years starting from the year in which the assessee starte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that even as per the circular issued by the CBDT in Circular No. 5 of 2005, dt. 15th July, 2005 [(2005) 197 CTR (St) 1] which was binding on the IT authorities, it was clearly mentioned that if an undertaking is formed by transfer of old plant and machinery or splitting up and reconstruction of an existing business but has started providing telecommunication services prior to 1st April, 2004, it would continue to get the tax benefit available under s. 80-IA of the IT Act and that the amendment takes effects from 1st April, 2005 and apply in relation to the asst. yr. 2005-06 and subsequent years. It was thus the submission that the first invoice having been issued on 17th Oct., 2000, the business of providing telecommunication services as provided under s. 80-IA(4) of the Act had been started prior to 1st April, 2004 and the provisions of s. 80-1A(3) of the Act providing for denial of deduction under s. 80-IA on account of reconstruction or splitting of business already existing would not apply. The learned Authorised Representative drew our attention to p. 2 of the paper book, which was the copy of the circular issued by CBDT. It was the further submission that the AO as also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng internet services by entering into an agreement with DOT on 5th Jan., 1999. It was the further submission that vide agreement dt. 19th April, 2002 the assessee had started another business under the style of internet telephony. It was the submission that the assessee thus had three lines of business being fax mail started in 1997, internet services started in 2000 and internet telephony started in 2002. It was thus a submission that the business of internet services and internet telephony were new businesses. It was formed by splitting up and reconstruction of the business of fax mail already being done by the assessee and the plant and machinery of the old business was used for the new business. It was thus a submission that even assuming without accepting that the agreement entered into by the assessee with DOT on 19th April, 2002 was a replacement of agreement dt. 5th Jan., 1999 still the business of internet services and internet telephony was a business commenced by splitting up and reconstruction of the business of fax mail services which was originally being done by the assessee, as also by using plant and machinery earlier used. It was thus a submission that the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction under s. 80-IA had been denied. It was the submission by the learned Authorised Representative that in the assessee's case this was not so. It was the submission that the business of the assessee had commenced after 1st April, 1995 and before 31st March, 2000 even assuming that the business had started in 1997. It was the submission that the 1st agreement with DOT had been entered into on 5th Jan., 1999 and this agreement was replaced by an agreement dt. 19th April, 2002. It was the further submission that as per the provisions of s. 80-IA(4)(ii) the date for starting the business was between 1st April, 1995 to 31st March, 2005. It was the submission that in any case, the business of the assessee had been started within the prescribed time. It was the further submission that the assessee had stopped its business of fax mail services right from the financial year 2003-04. It was the further submission that the assessee had incurred an expenditure of Rs. 2.65 crores in relation to its business of internet services and internet telephony. He further drew our attention to p. 28 of the paper book which was Sch. 'J' to the PandL a/c being the income from operation which showed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernet services during the year 2000 being 17th Oct., 2000 relevant to asst. yr. 2001-02. Therefore, what is to be seen is whether there has been any violation of the provisions for the claim of deduction under s. 80-IA(4)(ii) for the asst. yr. 2001-02 or at the maximum in the 1st year of claim of deduction under s. 80-IA being the asst. yr. 2004-05. This is because once it is held that the assessee is entitled to the deduction under s. 80-IA and this finding has become final, the deduction under s. 80-IA can at best be varied on account of the additions or disallowances but it cannot under any circumstances be denied as once the deduction under s. 80-IA is granted it is accepted that the business of the undertaking is not hit by any of the violations or bars as provided in s. 80-IA itself. Here, it is noticed that the assessee has been granted the deduction under s. 80-IA in the course of assessment for the asst. yr. 2004-05. Now, it is not possible for the Revenue to pick up an assessment year subsequent to the granting of the claim holding that there was violation of the provisions of s. 80-IA(3) of the Act insofar as the business was formed by splitting up and reconstruction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ail cannot be considered for deduction under s. 80-IA, it is noticed that the assessee has not made a claim nor does the assessee have any income from the business of fax mail during the relevant assessment year. We are not going into the issue as to whether fax mail itself is to be considered as telecommunication service whether basic or cellular as no income therefrom itself has been shown by the assessee and the assessee has categorically admitted that it is not doing the business of fax mail services and the same had been discontinued right from the asst. yr. 2004-05. In these circumstances, even on this ground the assessee cannot be denied deduction under s. 80-IA. Here it may be mentioned that the learned Departmental Representative has filed a letter dt. 23rd Feb., 2010 after the date of hearing of appeal stating that the Tribunal has the duty and the jurisdiction to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh, unless forbidden from doing so by the statute. 5.4 As we have categorically found ..... X X X X Extracts X X X X X X X X Extracts X X X X
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