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TMI Blog2013 (1) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... cation in the present case but would apply in respect of the license fee paid by M/s. J.T. Mobiles Ltd. The fact that the respondent-assessee had in its books of accounts spread the expenditure of Rs.115 crores over a period of 10 years and only debited amount of Rs.47.46 crores as expenditure during the year under consideration would not change the nature of the expenditure for the purpose of determining to allow ability of the expenditure for income tax purpose. The Tribunal in the present case has merely followed its earlier order for the assessment year 1997-98 that the entire amount paid as operating license fee was allowed as an expenditure under Section 37(1) which appears to have been accepted by the department as no appeal there fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lla, Senior Adv with Atul K. Jasani JUDGEMENT Per : M.S. Sanklecha, J : This appeal by the revenue under Section 260A of the Income Tax Act ( the Act ) challenges the order dated 9/9/2009 of the Income Tax Appellate Tribunal (Tribunal) relating to the assessment year 1998-99. 2) Being aggrieved by the order dated 9/9/2009, the revenue has formulated the following questions of law for the consideration of this Court: A) Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in holding that license fees paid by the assessee company to its holding company amounting to Rs.115,09,09,090/- is an allowable expenditure u/s. 37(1) of the Income Tax Act even though the assessee company had i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges and Rs.95.35lacs being expenses on account of commission and (iii) Rs.12.63 lacs being expenditure on foreign travel. 4) Regarding Question (A): (a) The Assessing officer by an order dated 20/2/2001 disallowed expenses of Rs.115 crores claimed as license operating fee on the ground that such expenses are not allowable in one year but has to be amortized over the life of the license in view of Section 35ABB of the Act. Further, it was held that expenses were incurred for a right to operate a telecommunication service and thus is not allowable as a revenue expenditure but the same has to be amortized to the extent of the license fee attributable for the year under consideration. For this support was drawn from the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. Therefore, the deduction of expenditure of Rs.47.46 crores as allowed by the Assessing Officer can only be allowed as revenue expenditure for the assessment year 1998-99. As against the above, Mr. Percy Pardiwala, Senior Counsel for the respondent-assessee relied upon the order of the Tribunal dated 29/3/2007and submits that for the earlier years i. e. assessment year 1997-98 the Tribunal has allowed the entire amount paid as operating license fee to M/s. J.T. Mobiles Limited under Section 37(1) of the Act. Further, the order dated 29/3/2007 of the Tribunal has been accepted by the revenue and no appeal there from has been preferred by the revenue. Further, he submits that the license fee actually paid by the respondent asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appeal there from has been preferred by the revenue. In view of the above, we find that no substantial question of law arises with regard to question (A). 5) Regarding question (B): a) The respondent assessee had sought a deduction on account of expenses incurred of Rs.72.46lacs as PSTN charges and Rs.95.35 lacs as dealer's commission. The Assessing officer by order dated 20/2/2001 disallowed both these expenses on the ground that they were expenses incurred prior to the date of commercial launch of service i. e. 12/1/1998. Therefore, the expenses being incurred during the pre-operative period are not admissible as deduction and added the same to respondent's income. b) In appeal, the Commissioner of Income Tax (Appeals) by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the commencement of business is allowable as a deduction under Section 37(1) of the Act. The issue whether the expenditure has been incurred for purposes of business is an issue of fact and two authorities under the Act have rendered a finding of fact that expenses incurred on account of PSTN charges and dealer's commission are incurred for purposes of business and allowable under Section 37(1) of the Act. In view of the above, we find that no substantial question of law arises with regard to question (B). 6) Regarding question (C):- a) The respondent-assessee had claimed in its return of income deduction of Rs.12.63lacs on account of foreign travel expenses incurred by the respondent-assessee for its employees. The assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X
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