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07-06-2019, Indus Towers, Section 37(1), 36(1)(v), Tribunal Delhi

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1 week 4 days ago #9683 by amit
Section - 37(1), 36(1)(v), 40A(7), 37, 5, 2(28A)
Order Date - 07-06-2019
Favouring - Assessee Partly allowed for statistical purposes
Court - Tribunal Delhi
Appellant - DCIT
Respondent - Indus Towers Ltd.
Justice - G. D. AGRAWAL VP & SUCHITRA KAMBLE JM
Citation - 619Taxpundit99
Appeal No. - I.T.A. No.2242/DEL/2014
Asstt. Year - 2009-10

Order

PER : SUCHITRA KAMBLE, JM

These two appeals are filed by the Revenue as well as by the assessee against the order dated 31/01/2014 passed by CIT(A)-XV, New Delhi for Assessment Year 2009-10.

2. The grounds of appeal are as under:-

I.T.A. No.2242/DEL/2014

“1. On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 42,25,273/- made on account of disallowance of gratuity payments.

2. On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 30,32,30,226/- made on account of net accrual of equalization reserve.

3. On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,23,75,65,807- made on account of disallowance interest on loan and respectively erred in deleting the addition of Rs. 1,07,50,16,411/- on account of disallowance of depreciation on telecom towers.

4. On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in restricting the addition of Rs 31,03,91,544/- made on account of disallowance of IRU charges to the extent of Rs. 3,87,51,992/-.”

I.T.A. No.1040/DEL/2014

“1. That in the facts and circumstances of the case & in law, the Ld. CIT(A) erred in disallowing an amount of Rs. 3,87,51,992/- towards Indefeasible Right to Use ('IRU') charges while holding the said amount to be excessive and unreasonable, without appreciating that the entire amount of IRU charges claimed were duly confirmed by the recipient parties u/s 133(6) of the Act.

1.1. That the Ld. CIT (A) erred in not appreciating the relevant clauses of IRU agreement(s) wherein it was categorically stated that the Appellant was bound to pay fixed monthly amount for IRU charges irrespective of the number of telecom sites leased.

2. That the Ld. CIT(A) erred in treating loan processing fee of Rs.21,87,50,000/- which is revenue in nature allowable under section 37(1) of the Act, as capital expenditure and thereby allowing depreciation instead of allowing it as revenue expenditure u/s 37(1) of the Act. That the above grounds of appeal are without prejudice to each other.”

3. The assessee is a public limited company registered under the Companies Act, 1956 and was incorporated 011 20.11.2007 The assessee is a joint venture among Bharti Infratel Ltd., Vodafone Essar Limited and Aditya Birla Telecom Ltd in the ratio of 42,42,16 respectively The company has been formed with the main object of sharing telecom infrastructure among the various telecom service providers. It renders telecom supports services to several telecom operators viz. Bharti Airtel, Vodafone, Idea, Reliance, Aircel, Uninor, Datacom, Loop, BSNL, BNSL etc in 16 telecom circles through 93,723 telecom sites, out of which 79,239 telecom sites are taken under indefeasible right to use 011 01.01.2009 and remaining 14,484 sites are built and personalized by the assessee on its own during the financial year. The assessee company filed its E-return of income on 30.09.2009 declaring total loss, at Rs.452,16,70,660/- which was subsequently revised on 30.09.2010 revising the total loss at Rs.611,62,44,502/- (including unabsorbed depreciation of Rs.525,17,02,779/-). The return of income so revised is treated as valid return as it is furnished within the statutory time limit. The return was accompanied by the copies of final accounts and tax audit report u/s 44AB of the I.T. Act. The return was processed u/s 143(1) of the Act. The case was selected for scrutiny assessment and notice u/s 143(2) of the Act was issued and duly served on the assessee. In response to the above notices, Vice President-Taxation and Assistant Tax Manager of the company attended the proceedings from time to time, filed the details asked for as well as produced books of accounts which are examined by the Assessing Officer. On

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