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TMI Blog2023 (7) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... 103,63,54,345/- made on account of amortization of variable license fee u/s 35ABB of the I.T. Act, 1961 u/s 37(1) of the I.T. Act, 1961 by treating as revenue expenditure. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in deleting the addition of Rs. 13,4,65,160/- made on account of subscriber verification penalty u/s 37(1) of the I.T. Act, 1961 by ignoring the fact that expenditure is totally penal in nature and not allowable as business expenditure u/s 37 of the I.T. act, 1961. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in deleting the addition made on account of disallowance u/s 40(a)(ia) of the I.T.Act, 1961 amount to Rs. 40,71,40,308/-. 4. The appellant craves leave for reserving the right to amend, modify, alter, add or forgo any grounds(s) of appeal at any time before or during the hearing of this appeal." ITA No.6548/Del/2019 "1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in deleting the allowance of Rs. 459,23,08,476/- made on account of amortization of variable license fee u/s 35ABB of the I.T. Act, 1961 u/s 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence in order to keep issue alive, the Ld. AO proceeded to disallow the same as revenue expenditure and allowed amortization of expenditure in terms of section 35ABB of the Act. The Ld. CIT(A) deleted the same and allowed the expenditure as revenue expenditure by following the decision of Hon'ble Jurisdictional High Court in assessee's own case. We find that since the relief has been granted by the Ld. CIT(A) by following the decision of Hon'ble Jurisdicitonal High Court in assessee's own case on the impugned issue, we do not find any infirmity in the order of the Ld. CIT(A). Accordingly, ground no.1 raised by the revenue is dismissed. 6. Ground no.2 raised by the Revenue is challenging the deletion of disallowance of Rs. 13,54,65,160/- towards Subscriber Verification Penalty u/s 37(1) of the Act. 7. We have heard the rival submissions and perused the material available on record. The assessee during the year had paid an amount of Rs. 13,54,65,160/- towards Subscriber Verification Penalty to the Department of Telecom. As per the licence agreement entered by the assessee with the Department of Telecommunication ("DOT"), the assessee is supposed to ensure adequate verification of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of expenditure incurred towards an offense or is prohibited by law. 11. Before us, learned Departmental Representative has furnished certain circulars/guidelines issued by the Department of Telecommunication, Government of India. As could be seen from the documents furnished before us, one of the conditions of the license agreement between the Department of Telecommunication and the service provider/licensee, is that the licensee shall ensure adequate verification of each and every customer before enrolling him as a subscriber and instructions issued by the licensor in this regard, from time to time, shall be scrupulously followed by the licensee. One more condition of the license agreement is, the licensor may also impose financial penalty for violation of terms and conditions of license agreement. 12. The communication dated 24.12.2008 issued by the Department of Communication, Government of India, further stipulates that if any number is found working without proper verification, a minimum penalty of Rs. 1000/- per violation of subscriber number verification shall be levied on the licensee apart from immediate disconnection of the subscriber number by the licensee. It fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istributors would be that of Principal and the Agent. Accordingly, difference between the maximum retail price and discounted price i.e., Rs. 30/- in the aforesaid example (100-70), in the opinion of the Department, amounts to commission warranting deduction of tax at source in terms of section 194H of the Act. Since, no tax was deducted on the said transaction, the Ld. AO provided to treat the discount charges on prepaid SIM Card as not allowable in terms of section 40(a)(ia) of the Act. The Ld. CIT(A) followed the decision of various High Courts on the issue and deleted the disallowance. We find that this issue is covered in assessee's own case by the decision of this Tribunal in assessment year 2015-16 in ITA No.3522/Del/2019 dated 16/06/2012 wherein it was held as under: 14. In ground No. 3, Revenue has challenged deletion of disallowance of Rs 14.37,08,678/-made u/s. 40(a)(la) of the Act. 15. Briefly, facts are, in course of assessment proceedings, the Assessing Officer noticed that in the year under consideration, the assessee has provided discounts to pre-paid card distributors amounting to Rs. 32.61.66.998/- for Rajasthan Circle and R&1.12.40.84.755/- for North East Cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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