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TMI Blog2016 (5) TMI 1592X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of brought forward business loss. In the course of assessment proceedings, the Assessing Officer noticing that the assessee has debited an amount of Rs. 3,41,10,000 towards provisions of unpaid leave encashment called upon the assessee to explain why it should not be disallowed being merely a provision. In response to the query raised by the Assessing Officer, it was submitted by the assessee that the provision made is on account of leave encashment during the year. However, the assessee admitted that the provision made was inadvertently not disallowed by the assessee in the computation of total income, hence, he requested the Assessing Officer to make addition of Rs. 3,41,10,000. Accordingly, the Assessing Officer added back the amount to the income of the assessee. However, the assessee challenged the addition made before the learned Commissioner (Appeals) relying upon the decision of the Hon'ble Calcutta High Court in Exide Industries Ltd. v/s Union of India, [2009] 292 ITR 470 (Cal.), claiming that it is an allowable expenditure. 4. The learned Commissioner (Appeals), after considering the submissions of the assessee and having found that the decision of the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction in the return of income. It is observed, following the aforesaid order of the Hon'ble Supreme Court, the Tribunal, Mumbai Bench, in Birla Sunlife Asset Management Co. Ltd. (supra), held as under:- "9. In view of the observations of the Hon'ble Supreme Court, in our view, it will be proper to dispose of this appeal in the light of the order of the Hon'ble Supreme Court dated 08.05.2009 passed in the case of "CIT vs. Exide Industries Ltd." (supra). We therefore dispose of the present appeal with a direction that the assessee will pay the tax as if section 43B(f) is on the statute book, however, till the decision of the Hon'ble Supreme Court in the case of "CIT vs. Exide Industries Ltd." (supra), the Revenue will not recover the penalty and interest which may accrue till the decision of the appeal by the Hon'ble Supreme Court in the case of "Exide Industries Ltd." It would be open to the Department to recover the outstanding interest demand in case the Civil Appeal of the Department in the case of "Exide Industries Ltd." (supra) is allowed by the Hon'ble Supreme Court. Subject to our above observations, the matter is restored to the file of the AO to be adjudicated afre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, considering the fact that similar disallowance in earlier assessment year were upheld by him dismissed the ground raised by the assessee. 12. Learned Authorised Representative submitted, the issue stands covered in favour of the assessee by the decision of the Tribunal in assessee's own case for the assessment years 2001-02 to 2005-06. He also placed before the Bench the orders of the Tribunal. 13. Learned Departmental Representative, though, fairly submitted, the issue is covered by the decision of the Tribunal in assessee's own case, he nevertheless relied upon the observations of the authorities below. 14. We have considered the submissions of the parties and perused the material available on record. It is found from the record that this is recurring dispute between the assessee and the Department right from the assessment year 2000-01. However, in a series of decisions in assessee's own case, the Tribunal has decided the issue in favour of the assessee holding that the amount paid to DOT towards revenue sharing license fee as revenue expenditure. In the latest order of the Tribunal for the assessment years 2004-05 and 2005-06 in ITA no.6736/Mum./2012 and others date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts this issue is covered by the series of decisions as relied upon by the assessee then we are of the view that the CIT(A) has committed an error in not admitting the additional ground raised by the assessee. Hence this ground stands admitted. On merits there are various decisions where this issue has been decided by holding that the license fee paid under revenue sharing is an allowable revenue expenditure. In the latest decision of Hon'ble High Court of Delhi dated 9th December 2013 in the case of CIT Vs. Bharati Hexacom ltd. & Others, one of the issues before the Hon'ble High Court was regarding the allowability of variable license fee on revenue sharing basis paid under the new telecom policy of 1999. The Hon'ble High Court has discussed the issue and held in para 42 and 47 as under:- "42 The next obvious question is, on what basis apportionment should be done and what could be the proportion of apportionment between capital and revenue expenditure. In this regard it would be appropriate and proper to divide the licence fee into two periods i.e. before and after 31-7-1999. The licence fee paid or payable for the period upto 31-7-1999 i.e. the date set out in the 1999 policy sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Y. 2006-07 is allowed. ITA no.1853/Mum./2013 - Department's Appeal (A.Y. 2006-07) 17. Ground no.1, raised by the Department is on the issue of allowance of assessee's claim of depreciation on revenue sharing license fee. 18. As discussed while deciding similar issue in assessee's appeal in ITA no.1977/Mum./2013, the assessee in the course of assessment proceedings filed a revised return of income claiming the amount of 1,42,30,76,399, paid towards revenue sharing license fee as revenue expenditure and thereby withdrawing its claim of depreciation on the said amount. Learned Commissioner (Appeals), however, allowed depreciation on revenue sharing licence fee. Being aggrieved, department has challenged the same. Since we have allowed assessee's claim of deduction in respect of revenue sharing license fee by holding it as revenue expenditure, this ground raised by the Department has become infructuous. Suffice to say, the expenditure incurred having allowed as revenue expenditure, there is no question of allowing depreciation on the same. Ground no.1, is dismissed as infructuous. 19. In ground no.2 and 3, the Department has challenged the decision of the learned Commissioner (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal followed its earlier order in assessee's own case for assessment year 2003-04 and held as under:- "24. We have considered the submissions of the parties and perused the material available on record. As could be seen, identical issue arose for consideration before the Tribunal in assessee's own case for assessment year 2003-04. On a perusal of the order dated 29th December 2014, passed by the Tribunal in ITA no.3261 and 3568/Mum./2008, it is observed, the Tribunal, while deciding the issue, has held as under:- " 19. We have considered the rival contentions and found that Tata Group were promoters of idea Cellular Ltd. and they were in land line telephone service in area of Madhya Pradesh. Because of this operation of Tata's in Madhya Pradesh and because of connection between Tata's and assessee company, assessee could not have entered into Mobile telephone services in the area of Madhya Pradesh. However, assessee wanted to enter into Madhya Pradesh for providing Cellular facilities. They have therefore given funds to its own subsidiary. Thus the advances to subsidiaries were out of this commercial consideration. The decision of Hon'ble Supreme Court in the case of S.A. Build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee by the decision of the Tribunal in assessee's own case for the assessment year 2003-04. On a perusal of the order dated 29th December 2014, passed in ITA no.3261 and 3568/Mum./2008, it is noted that the Tribunal, while deciding the issue has held as under:- "10. We have considered the rival contention and we do not find any infirmity in the order of ld. CIT(A) for allowing club fees by following the decision of Hon'ble Bombay High Court in the case of Otis Elevators and the decision of Hon'ble Gujarat High Court in the case of Gujarat Estate Export Corporation Ltd. reported in 209 ITR 649 (supra). As the expenditure was incurred was revenue in nature as held by the Hon'ble High Court, we do not find any infirmity in the order of ld. CIT(A) deleting the disallowance of Club fees paid by the assessee company." As there is no difference in fact, respectfully following the decision of the co-ordinate bench in assessee's own case, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised. 28. Respectfully following the consistent view of the Tribunal, we uphold the order of the learned Commissioner (Appeals) by dismissing ground no.4, raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure claimed was disallowed on the ground that no merger has take place. He, therefore, observed that as the assessee had not claimed deduction under section 35DD in the return of income, the Assessing Officer could not examine whether Escotel Mobile Communication Ltd. has merged with the assessee. He also observed, the claim of expenditure is also required to be verified factually whether it actually relates to merger of Escotel Mobile Communication Ltd. On the aforesaid reasoning, he dismissed the ground raised by the assessee. 35. Learned Authorised Representative referring to the observations of the Tribunal in assessee's appeal for the assessment year 2004-05 submitted, while disallowing assessee's claim in assessment year 2004-05 submitted, the Tribunal has observed that assessee's claim of deduction in the year of merger can be considered. 36. Learned Departmental Representative on the other hand submitted that as per the observations made in assessment year 2004-05, the expenditure incurred towards project alchemy, therefore, whether it is related to merger requires verification. 37. We have considered the submissions of the parties and perused the material available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re inclined to restore this issue to the file of the Assessing Officer for deciding afresh after providing due opportunity of being heard to the assessee. Ground no.2, is allowed for statistical purposes. 39. In the result, assessee's appeal for A.Y. 2007-08 is allowed for statistical purposes. ITA no.4418/Mum./2013 - Department's Appeal (A.Y. 2007-08) 40. In ground no.1, the Department has challenged the decision of the learned Commissioner (Appeals) in allowing assessee's claim of depreciation on revenue sharing license fee. 41. This issue is identical to the issue raised in ground no.1, by the department in its appeal being ITA no.1853/Mum./2013, for assessment year 2006-07. As payment made by the assessee towards revenue sharing licence fee is allowed as revenue expenditure, there is no question of allowing depreciation. The ground no.1 raised by the Department having become infructuous is dismissed. 42. In ground no.2, Department has challenged allowance of assessee's claim of depreciation on revenue sharing license fee carried over by BTA Cellular Ltd. in continuation of amalgamation with the assessee. 43. Brief facts are, in the course of assessment proceedings, the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted there is no reason to interfere with the order of the learned Commissioner (Appeals). 46. Learned Departmental Representative relied upon the order of the Assessing Officer. 47. We have considered the submissions of the parties and perused the material available on record. It is evident from the assessment order, the Assessing Officer denied the claim of depreciation on revenue sharing license fee relating to BTA primarily for the reason that the BTA has claimed deduction under section 35ABB. However, the learned Commissioner (Appeals) having found that neither BTA nor the assessee have claimed deduction under section 35ABB directed the Assessing Officer to verify the fact and allow assessee's claim of depreciation. We do not find any infirmity in the aforesaid direction of the learned Commissioner (Appeals). As already held by us, revenue sharing license fee paid to DOT is otherwise allowable as revenue expenditure. 48. Since the BTA was claiming depreciation on revenue sharing license fee after treating it as intangible asset after capitalization the assessee continued with the same accounting principle after merger of BTA insofar as revenue sharing business fee paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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