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TMI Blog2019 (4) TMI 1577X X X X Extracts X X X X X X X X Extracts X X X X ..... and loss account, the amount of depreciation is shown at ₹ 95,01,65,233/- at Sl. No. 42. All these distorted figures shown in the return of the assessee need to be examined and verified thoroughly by the AO before arriving at correct business losses admissible to the assessee. No justification in the direction of the ld. CIT(A) to take the business loss of ₹ 94,10,62,358/-. Accordingly, this issue is restored back to the file of Assessing Officer for making proper verification of the figures returned by the assessee in ITR-6 as noted above and thereafter he shall work out correct business profit/losses of the assessee. The assessee is directed to reconcile all the figures shown in ITR-6. - ITA No. 5008/Del/2015 - - - Dated:- 24-4-2019 - Shri Bhavnesh Saini, Judicial Member And Shri L.P. Sahu, Accountant Member For the Appellant : Sh. P.V. Gupta, Sr. DR For the Respondent : Sh. Yogesh Agrawal, CA ORDER PER L.P. SAHU, A.M.: This is an appeal filed by Revenue against the order dated 28.05.2015 of ld. CIT(A)-I, New Delhi for the assessment year 2010-11 on the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 8,61,07,328/- in terms of clauses 12.2 to 12.4 of the license agreement dated 07.11.1997 entered with DoT, whereby it was obligatory on the part of assessee to pay interest and liquidated damages in case of failure to deliver the services or part thereof within the stipulated period. As the assessee company could not meet with time frame for delivery of service, liquidated damages and interest amounting to ₹ 8,61,07,328/- were paid to Dot, for which the assessee had claimed 1/15th deduction u/s 35- ABB. It was also submitted that the payment on account of liquidated damages and interest are incurred and paid in the course of obtaining the rights to operate telecommunication services and not for any breach/violation of any law. The liquidated damages and interest has been paid in business interest and commercial exigency. The Assessing Officer was not satisfied with the submissions of assessee and referring to the provisions of section 35ABB, disallowed the claim of assessee holding that liquidated damages and interest paid thereon were penal in nature and was not allowable u/s. 35ABB of the Act. 4. Regarding second issue, the facts are that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee in the return. 9. After hearing both the parties and perusing entire material on record, we find that first two issues regarding disallowance of deduction of ₹ 57,40,488/- claimed u/s. 35ABB and disallowance of deduction of ₹ 96,265/- paid towards membership fee to various clubs are covered in favour of the assessee by the consolidated order date 31.07.2017 in the cases of assessee itself for A.Yrs.2002-03 to 2008-09 (copy placed on record), observing as under : 3.6 Considering above submissions, we find that undisputedly payment of liquidated damages and interest charges thereon have been made as per clauses 12.2 to 12.4 of the afore-mentioned license agreement between, the assessee and DOT, whereby it has been made obligatory on the part of the assessee company to pay interest and liquidated damages in case of failure to deliver the services or part thereof within the period prescribed. Liquidated damages and interest thereon have been made to DOT due to non-fulfillment of obligations specified in the agreement in time, where time was an essence. These payments have been incurred in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee company. Clubs being common special plotfOrm are based for the officials of the assessee company to develop contract for promoting interest of the company and promote business. He cited following decisions in support (i) Hero Hondo Motors Ltd. Vs. JCIT 103 ITD 157 (Del.); (ii) JCIT Vs. Mukand 291 ITR 249 (Mum.) (SB); (iii) Gujarat Petro Synthesis Ltd. Vs. DCIT 76 ITD 257 (Ahd.); (iv) CIT Vs. Samtel Colour Ltd. 2009 - TMI - 32263 (Delhi High Court); 4.3 Considering the above submissions and the decisions cited in support we do not find any infirmity in the first appellate order on the issue as considering the expenditure incurred and nature of industry, the amount incurred by the assessee for corporate club membership fees is held for business promotion, The first appellate order in this regard is thus upheld. The issue is thus decided in favour of the assessee. The related grounds of the appeals are accordingly rejected. Thus, respectfully following the above decision of co-ordinate Bench in the identical facts and circumstances of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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