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TMI Blog2013 (6) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... od 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 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y ground or add a new ground which may be necessary. 2. Assessee-PSU, engaged in the business of telecommunication services, filed its return of income on 31.12.1999 declaring total income of Rs.1439.82 Crores. AO finalised the assessment order u/s.143(3)of the Income-tax Act,1961(Act) on 26.02.2002, determining the total income at Rs.18, 71,96,93,887/-. 3. First Ground of appeal pertains to disallowance of claim of Rs. 17,95,493/- u/s.35 D of the Act. During the assessment proceedings AO found that that the assessee has claimed deduction u/s.35D amounting to Rs.17,95,493/-, that the assessee had incurred expenditure on GDR issue amounting to Rs.33,93,06,267/-, that the assessee intended to invest the GDR proceeds in satellite undersea cables, switching facilities. He held that the expenses which are to be allowed should not exceed 2.5% the of the cost of the project or at the option of the company 2.5% of the capital employed in the business, that the capital employed was the aggregate of the share capital of debentures and long term borrowings on the last day of the previous year in which the undertaking or the project was completed, that in the assessee s case there was no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing telecommunication services between 1.4.1995-31.03.2000,that assessee did not start providing said services on or after 1.4.1995. He disallowed the claim made by the assessee of Rs.4,12,37,88,812/-. Assessee preferred an appeal before the FAA. We find that while deciding the issue against the assessee, he has followed the order passed for the AY. 2000-01 by his predecessor. It is further observed that he also relied upon the orders for AY.1996 - 97 to 1998-99. 4.1. Before us, AR submitted that issue of allowing deduction for the earth station was decided against the assessee, that deduction claimed for internet services was allowable, that from a broad commercial sense and from a common sense point of view assessee organisation was an undertaking, that section 80IA provided deduction for undertakings, that as per the amended provisions of section 80IA of the Act digital data transmission was entitled for deduction under the Act. DR supported the order of the FAA. 4.2. We have heard the rival submissions. We find that, neither the AO nor the FAA had deliberated upon the allowabililty of section 80IA of the Act with regard to internet services.AR fairly conceded that is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the appellate proceedings for the AY.1997-98 ITAT(ITA/3061 and 3474/Mum/2003 dtd.30.03.2011) had allowed similar kind of expenditure though same pertained to earlier years.He relied upon the cases of Saurashtra Cement and Chemicals Industries Ltd.(213 ITR 523), Exxon Mobile Lubricants(328 ITR 17), Toyo Engg. India Ltd.(100 TTJ 373). DR supported the order of the FAA. 5.3. We have heard the rival submissions and perused the material available on file. As per the established principles of taxation jurisprudence prior period expenses can be allowed in a particular AY provided same are crystallised in that year. We find that while deciding the appeal filed by the AO for the AY.1997-98 (supra) Tribunal has dealt the issue of prior period expenses at pg.3-4 at paragraphs 10-12. Following are the findings of the Tribunal: Ground No. 2 to 4 relate to allowability of prior period expenses on account of travelling, professional fees, audit fees, printing and advertisement expenses, medical and HRA arrears, municipal tax etc., as well as prior period expenses on account of repairs and maintenance. The First Appellate Authority in his order stated that on examination of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of plant and machinery acquired in the undersea cable FLAG; held that in the earlier AY.i.e.1998-99 the then AO had disallowed the benefit of depreciation to the assessee, that facts and circumstances had not changed during the year under consideration, that assessee was not entitled to depreciation. Thus, following the order for the AY.1998-99 he denied the assessee depreciation on FLAG cable system. Assessee preferred an appeal before the FAA.After considering the submissions of the assessee he held that in appellate proceedings for the AY.1998-99, CIT (A)-XXIV, Mumbai had allowed the appeal filed by the assessee, that FAA had directed the AO to allow depreciation on FLAG cable system. Following the order for the earlier year of CIT (A)-XXIV, he allowed the appeal of the assessee for the AY. under consideration. 6.1. Before us, DR relied upon the orders of the AO.AR submitted that issue has been decided in favour of the assessee by the Bench of the Mumbai Tribunal vide its order dtd. 05.12.2012 (ITA 3062 3438/Mum/03-AY.1998-99 and ITA/3061 3474/ Mum/ 03 dtd.30. 03.2011-AY.1997-98).He further relied upon the cases of Podar Cement Ltd.(226 ITR 625), SBI Home Finance L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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