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TMI Blog2021 (6) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of amortized license fees of Rs. 23,95,81,194/- without appreciating the fact that when NTP 1999 had been enunciated and accepted by the assessee; assessee's claim u/s.35ABB under earlier telecom policy was not in accordance with law." (ii) "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in allowing the appeal and allowing the entire deduction u/s. 35ABB of Rs. 40,24,22,970/- claimed by the assessee contrary to the order of Ld. CIT(A)-XIII, New Delhi in assessee's own case for A.Y.2000-01 which in fact was relied upon by the Ld. CIT(A)-V New Delhi." (iii) "Whether on the facts and circumstances of the case and in law, the Ld. C1T(A) was right in allowing the entire deduction u/s. 35ABB of Rs. 40,24,22,970/- claimed by the assessee contrary to the order of ITAT "I" Bench, New Delhi, in assessee's own case for A.Y.2001-02 which in fact was relied upon by the Ld. CIT(A)-V New Delhi." 2. "Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was right in allowing claim of the assessee for deduction u/s. 37(1) in respect of revenue License Fees of Rs. 19,25,06,859/- ignoring the fact that such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese expenses as repair and maintenance expenses and accordingly called upon the assessee vide order sheet entry dated 12.11.2007 as to why these should not be added back to the income of the assessee which was replied by the assessee vide letter dated 04.12.2007 submitting that the details of repair and maintenance and further submitted that prior period expenses can not be disallowed as these are not in fact prior period but expenses crytalised during the year as the assessee is following mercantile system of accounting. 5. In the appellate proceedings, the appeal of the assessee was dismissed by the Ld. CIT(A) by observing and holding as under: "5.1. Finding on Ground of appeal No.III In facts of the case the A.O. has disallowed the foregoing prior period expenses (described as Repair and Maintenance expenses in the Order) on the ground that since the assessee is following the Mercantile System of accounting, therefore any expenditure in the nature of prior period will not be allowable expenditure during the year under consideration. In doing. so, the AO placed reliance on the decision of Madras High Court in the case of Madras Fertilizers Limited v. CIT (209 ITR 174). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Ld. CIT(A), the assessee has raised an additional ground requesting the Ld. CIT(A) to allow the provisions for bad and doubtful debts since the assessee has not only debited the profit & loss account under the head "provision for bad and doubtful debts" but also reduced the same from the sundry debtors in the balance sheet and thus it amounted to write off of debts of the assessee. However, the Ld. CIT(A) rejected the additional ground raised by the assessee by holding that the assessee has correctly added back the amount of Rs. 1,97,50,000/- being provisions for bad and doubtful debts and now the claim vide additional ground is a an afterthought. 9. The Ld. A.R. submitted before the Bench that the assessee has debited the said amount of provisions for bad and doubtful debts amounting to Rs. 1,97,50,000/- in the financial statement, schedule No.14 and simultaneously reduced the said provisions for bad and doubtful debts from sundry debtors in the balance sheet in schedule 5 a copy of which is filed at page No.12 to 15 of the paper book. The Ld. A.R. submitted that in view of the Hon'ble Apex Court decision in the case of Vijay Bank vs. CIT (2010) 323 ITR 166 the said amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and doubtful debts and doubtful advances are not allowable while computing book profit under section 115JB of the Act for the reason that these provisions are created towards unascertained liability. The AO observed that there is no correlation between the provisions made and actual write off of debts and advances. Besides, the AO also noted that the assessee could not furnish the specific details as to the period and amount for which the provisions were actually made and consequently added the same to the income of the assessee. 16. In the appellate proceedings the Ld. CIT(A) upheld the order of AO by holding that provisions for bad and doubtful debts and doubtful advances amounted to provisions for diminution in the value of assets as per clause 'i' of Explanation 1 to section 115JB of the Act and were rightly disallowed. 17. We have already decided the issue of provision of bad and doubtful debts in favour of the assessee in ground No.2 directing the AO to allow the same. This grounds is consequential ground and accordingly we are inclined to hold that assessee is entitled to deduction of provisions for bad and doubtful debts and provision for advances while computing book pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for unascertained liability within the meaning of clause (c) of the Explanation to section 115JB of the Act. 2. The Appellant prays that the AO be directed to delete the addition of aforesaid amounts of Rs. 2,68,10,000/- made to Book Profit under clause (c) of the Explanation to section 115JB of the Act." 20. The issue raised in first ground of appeal is against the order of Ld. CIT(A) allowing the claim of the assessee for deduction under section 35ABB of the Act to the tune of Rs. 23,95,81,194/-. 21. The facts in brief are that the AO observed on the basis of computation of income that assessee had added back a sum of Rs. 18,53,22,781/- on account of license fee paid to DOT against which a deduction of Rs. 40,24,22,970/- have been claimed under section 35ABB of the Act and accordingly called upon the assessee to explain the same. The assessee vide letter dated 23.11.2007 filed the detailed working of license fee claimed under section 35ABB of the Act. The AO noted that in assessment year 2001-02 disallowance of claim in respect of variable license fee was made and the same was upheld by Ld. CIT(A). Following the said, the AO held that assessee is entitled to amortize Rs. 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings, the AO noted that assessee is eligible for deduction of Rs. 7,18,89,454/- as against Rs. 26,43,96,313/- claimed by it. The AO observed the said facts from the letter filed by the assessee giving details of amount to be allowed and disallowable on account of Revenue sharing license fee paid. 27. In the appellate proceedings, the Ld. CIT(A) allowed the claim of the assessee by following the decision of the co-ordinate bench of the Tribunal in assessee's own case for A.Y. 2001-02, 2003-04 & 2004-05 and accordingly directed the AO to allow the full amount of Rs. 26,43,96,313/- paid towards RSLF under section 37(1) of the Act. 28. The Ld. A.R., at the outset, submitted that the issue is squarely covered by the decision of the Hon'ble Bombay High Court in ITA No.1551 of 2013 order dated 11.04.2016 A.Y. 2003-04. The Ld. A.R. therefore prayed that the ground of the Revenue may kindly be dismissed following the said order. 29. We have heard the rival submissions of both the parties and perused the material on record. We find that the issue is squarely covered in favour of the assessee by its own case by the decision of the Hon'ble Bombay High Court in ITA No.1551 of 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see by observing and holding as under: "6.1 Finding on Ground Of Appeal No. IV I have considered of the submissions of the appellant and the facts of the case. The appellant has pointed -that the foreign exchange loss amounting to Rs. 6,42,10,000/- is capitalized as part of the fixed Assets Block in Schedule -3 of the Audited Accounts . The appellant has further invited my attention to the Significant Accounting Polices of the Company pertaining to fixed Assets. As per this Policy foreign exchange loss/ gains are charged / credited to the P/L Account except when they relate to the fixed assets. Thus, from the above the appellant has shown that it has charged only that portion of foreign exchange loss which pertains to revenue items. Resultantly, the case of the appellant is covered by the decision of the Hon'ble Supreme Court in CIT Vs. Woodward Governor (312 ITR 254), discussed above. Accordingly, 1 agree with the appellant that the loss for Rs. 96,80,000/- ought to be allowed as a deduction in computing it's business income. The AO is directed to allow the sum of Rs. 96,80,000/- in the computation of income of -the appellant. This ground of appeal is accordingly allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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