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TMI Blog2019 (1) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... rs but entire amount could not be recovered. AO held that late payment charges or cheque bouncing charges was in the nature of penalty and was not income derived from telecommunication business by referring to the judgments defining the scope and ambit of the expression income derived from . We have already noted that the said expression is missing and is not the mandate of the legislature in sub-section (2A) to Section 80IA. As held that the late payment charges or cheque bounce charges were relatable and directly linked with the telecommunication business of the assessee. Further, as noted above, the expression derived from is not relevant for claim for computation of deduction under sub-section (2A) to Section 80IA of the Act as held by the Delhi High Court in the case of Bharat Sanchar Nigam Limited [2016 (8) TMI 270 - DELHI HIGH COURT]. We uphold the finding of the Tribunal that income from sharing of fibre cables and cell-sites qualify for deduction under Section 80IA(2A). Tribunal was also right and justified in upholding the reasoning and order of the Commissioner of Income Tax (Appeals) on cheques bouncing and late payment charges. - INCOME TAX APPEAL Nos. 782/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness for ten consecutive assessment years. (2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops an industrial park or develops a special economic zone referred to in clause (iii) of sub-section (4) or generates power or commences transmission or distribution of power or undertakes substantial renovation and modernisation of the existing transmission or distribution lines : Provided that where the assessee develops or operates and maintains or develops, operates and maintains any infrastructure facility referred to in clause (a) or clause (b) or clause (c) of the Explanation to clause (i) of sub-section (4), the provisions of this sub-section shall have effect as if for the words fifteen years , the words twenty years had been substituted. (2A) Notwithstanding anything contained in sub-section (1) or sub-section (2), the deduction in computing the total income of an underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Senior Standing Counsel for the Revenue has submitted that sub-section (2A) to Section 80IA refers to clause (ii) of sub-section (4) to Section 80IA of the Act. Telecommunication services would mean the business services specified in clause (ii) of sub-section (4) to Section 80IA and the said services alone would be eligible business. The argument is correct but would not affect our final decision since the services rendered by the respondent- assessee fall within the expression telecommunication service . Profits and gains attributable and relatable to the telecommunication service qualify and are to be allowed as a deduction under Section 80IA of the Act. 7. Clause (ii) of sub-section (4) to Section 80IA reads as under:- 80-IA. Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. (4) This section applies to- (ii) any undertaking which has started or starts providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services on or after the 1st day of April, 1995, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of its telecommunications operations, the Appellant has entered into cell site sharing arrangements with other telecom operators wherein it makes available spare space/capacity on its telecommunication cell sites to other telecom operators for setting up their antenna and placing microwave and BTS equipment. The above arrangements are not in the nature of leasing arrangement since the cell sites continue to be under the operation and control of the Appellant and are used by the Appellant for undertaking its telecommunications business. (iii) Under the above arrangement, the Appellant incurs the initial set-up cost on the cell sites and ensures supply of electricity, security, air-conditioning, etc. The costs incurred by the Appellant are shared by all the telecommunication operators who have been made available space on such cell sites, based on actual expenses incurred / to be incurred by the Appellant. The above arrangements, therefore, assist the Appellant in reducing its establishment, operation and maintenance costs in relation to the cell sites and achieving greater financial efficiencies. (iv) Since the above arrangements are entered into by the Appellant in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or restricted to end user service. Domestic satellite services would be business to business service. 13. Finding of the Assessing Officer that income from sharing fibre cables and cell-sites was income by way of leasing and hence not includable in revenue earned for computing profits from telecommunication service was farfetched and misconceived. The assets i.e. cell-sites and fibre cables were not transferred. Third parties wanting to avail the spare capacity were only allowed usage of the said facilities for consideration. Payments so made by the third parties were to avail and use the telecom infrastructure. It would qualify as payments received for availing 'telecommunication services' as is the case when a mobile phone user pays the respondent-assessee for availing the mobile telecom infrastructure. Income from 'telecommunication services' can be earned in different ways and manner. 14. In view of language of clause (ii) to sub-section (4) to Section 80IA, which states that for the purpose of the said clause an undertaking shall be treated as providing telecommunication services, if it is engaged in basic or cellular, including radio paging, domestic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Nirma Industries Limited v. DCIT (supra) is not applicable in the present case as the facts are different and the issue involved in that case was the late payment charges received from the customers. However, the appellant has pointed out that he has incurred bank charges of ₹ 32.2 million during the assessment year as against which the cheque bouncing charges recovered from the customer were ₹ 7.22 million and, therefore, the cheque bounce charges should be adjusted from the bank charges paid by the customers. I am inclined to accept this, argument of the appellant as the cheque bouncing charges recovered from the customers are infact the charges that has been paid to the bank as penal charges. The A.O. is, therefore, directed to work out the deduction u/s. 80IA after reducing the cheque bounce charges from the bank charges.. 8.6.2 Late payment charges: The late payment charges are recovered from the customers for the delay in payment of telephone bills. These charges are in inextricably linked to the business of the appellant and are collected at the time of billing. These are, therefore, in the nature of trading receipt which is derived by the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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