Business Expenditure Share Based Licence FeeWhether Allowable As Expense Under Section 37(1)

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The Tax Publishers Income Tax--Business Expenditure Share Based Licence Fee--Whether Allowable As Expense Under Section 37(1) Akhilesh Kumar Sah In AT & T Global Network Services (India) Pvt. Ltd. v. JCIT [ITA Nos. 5535/Del/2016 & 7115/Del/2017 Assessment Years: 2012-13 & 2013-14, decided on 27-5-2019] the assessee claimed that annual revenue share based license fee paid by the telecom operators is revenue expenditure, allowable under Section 37(1) of the Act. The assessee relied on judgment of the jurisdictional Delhi High Court in the case of Bharti Hexacom Ltd. (2014) 265 CTR (Del) 130. Revenue argued that decision of Delhi High Court has not been accepted by the department and an SLP has been filed against the said order. The ITAT Delhi Bench held that merely because the Revenue has filed SLP against the order of the Delhi High Court, the same cannotbe a ground to take a contrary view than the view taken by the High Court unless and until the same is reversed or stayed by the Apex Court. Therefore, the disallowance made by the Assessing Officer on account of annual revenue share based licence fee was deleted. 1. Case in AT & T Global Network Services (India) Pvt. Ltd. In AT & T Global Network Services (India) Pvt. Ltd. v. JCIT [ITA Nos. 5535/Del/2016 & 7115/Del/2017 Assessment Years: 2012-13 & 2013-14, decided on 27-5-2019], one of the grounds related in ITA Nos. 5535/Del/2016 to the disallowance of annual revenue share based licence fee, which was as follows: -- On the facts, in the circumstances of the case and in law, the AO/DRP erred in disallowing an amount of Rs. 27,42,18,112 (being disallowance of Rs 30,53,49,361 for assessment year 2012-13 less credit of Rs. 1,66,89,296 for assessment year 2011-12 and of Rs. 1,44,41,953 for assessment year 2010-11) under the head licence fees debited to Profit & Loss Account by holding that annual license fee is not allowable as a revenue expenditure and it should be amortised under Section 35ABB of the Act. SUBSCRIBE FOR FULL CONTENT

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Income Tax--Business Expenditure

Share Based Licence Fee--Whether Allowable As Expense Under Section 37(1)

Akhilesh Kumar Sah

In AT & T Global Network Services (India) Pvt. Ltd. v. JCIT [ITA Nos. 5535/Del/2016 & 7115/Del/2017 Assessment Years: 2012-13 & 2013-14, decided on 27-5-2019] the assessee claimed that annual revenue share based license fee paid by the telecom operators is revenue expenditure, allowable under Section 37(1) of the Act. The assessee relied on judgment of the jurisdictional Delhi High Court in the case of Bharti Hexacom Ltd. (2014) 265 CTR (Del) 130. Revenue argued that decision of Delhi High Court has not been accepted by the department and an SLP has been filed against the said order. The ITAT Delhi Bench held that merely because the Revenue has filed SLP against the order of the Delhi High Court, the same cannotbe a ground to take a contrary view than the view taken by the High Court unless and until the same is reversed or stayed by the Apex Court. Therefore, the disallowance made by the Assessing Officer on account of annual revenue share based licence fee was deleted.

1. Case in AT & T Global Network Services (India) Pvt. Ltd.

In AT & T Global Network Services (India) Pvt. Ltd. v. JCIT [ITA Nos. 5535/Del/2016 & 7115/Del/2017 Assessment Years: 2012-13 & 2013-14, decided on 27-5-2019], one of the grounds related in ITA Nos. 5535/Del/2016 to the disallowance of annual revenue share based licence fee, which was as follows:

-- On the facts, in the circumstances of the case and in law, the AO/DRP erred in disallowing an amount of Rs. 27,42,18,112 (being disallowance of Rs 30,53,49,361 for assessment year 2012-13 less credit of Rs. 1,66,89,296 for assessment year 2011-12 and of Rs. 1,44,41,953 for assessment year 2010-11) under the head licence fees debited to Profit & Loss Account by holding that annual license fee is not allowable as a revenue expenditure and it should be amortised under Section 35ABB of the Act.