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The Tax Publishers2020 TaxPub(DT) 0801 (Mum-Trib) : (2020) 205 TTJ 0027 INCOME TAX ACT, 1961
Section 35ABB(2)
The allegation of AO was that NLD was an intangible asset eligible for depreciation under section 32. However, assessee had never claimed depreciation against the same and said fact remained unrebutted also. Perusal of financial statements also corroborated by the fact that assessee has not claimed any depreciation on intangible assets in its IT Return. This being the case, assessee was clearly eligible to claim the write-off of Rs. 2.50 Crores as normal business loss as well as in terms of provisions of section 35ABB(2) read with CBDT Circular No. 763, dated 18-2-1998. Also, loss on account of surrender of NLD licence was in the normal course of business of providing telecom services and, therefore, same was allowable as normal business losses.
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Business deduction under section 35ABB - Payment made to DOT on account of surrender of NLD licence - No depreciation claimed by assesse ever on NLD licence -
Assessee engaged in providing telecom services claimed deduction of Rs. 2.50 crores paid to DOT as expenses on surrender of National Long Distance (NLD) licence. AO disallowed deduction holding that NLD licence was an intangible asset eligible for depreciation and if sucy intangible asset was extinguished because assessee surrendered the same before it was put to use, gain/losses would be capital gian/losses therefore, losses could not be allowed as busienss expenses.Held: The allegation of AO was that NLD was an intangible asset eligible for depreciation under section 32. However, assessee had never claimed depreciation against the same and said fact remained unrebutted also. Perusal of financial statements also corroborated by the fact that assessee has not claimed any depreciation on intangible assets in its IT Return. This being the case, assessee was clearly eligible to claim the write-off of Rs. 2.50 Crores as normal business loss as well as in terms of provisions of section 35ABB(2) read with CBDT Circular No. 763, dated 18-2-1998. Also, loss on account of surrender of NLD licence was in the normal course of business of providing telecom services and, therefore, same was allowable as normal business losses.
Supported by:CIT v. Evergrowth Telecom Ltd. (2013) 29 Taxmann.com 273 (Bom) : 2013 TaxPub(DT) 0600 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
IN THE ITAT, MUMBAI BENCH
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