CIT Vs. VODAFONE ESSAR SOUTH LTD

JUDGEMENT

(1.) THE Revenue is aggrieved by an order of the Income Tax Appellate Tribunal (ITAT) dated 24.06.2011 in ITA 3238/Del/2009. The question of law sought to be urged by it is whether the impugned order is in error in setting aside the assessment made by the CIT, after invoking jurisdiction under Section 263 of the Income Tax Act.

(2.) BRIEFLY , the facts are that the respondent assessee, in its return for assessment year 2004-05, declared loss of '.234,75,55,861.00; the assessed loss was Rs. 229,92,11,019.00 under Section 143 (3) of the Act. The Assessing Officer had allowed a claim for Rs. 35,81,30,408 on account of regulatory fee and Rs.34,92,168.00 towards stamp duty, by the assessment order dated 22.12.2006. The Commissioner of Income Tax sought to exercise his jurisdiction under Section 263 of the Act and issued notice on 10.02.2009, stating that the license fee was, in fact, capital expenditure. The CIT also formed the opinion that loan arrangement charges and stamp duty under the bank guarantee were capital expenditure. The assessees contentions were rejected and an order was made by the CIT on 30.03.2009. The assessee carried the matter in appeal to the ITAT; that Tribunal by the impugned order allowed the appeal.

(3.) COUNSEL for assessee on the other hand relied upon the notices issued by the A.O. in the first instance during the assessment proceedings under Section 143(3), specifically enquiring into the expense and the Counsel also referred to the assessees amortization of the amounts. reply dated 06.11.2006, explaining the nature and character of the expenditure. It was argued further that the CIT (Appeal) was made aware after issuance of notice under Section 263 through the assessees representatives letter dated 24.03.2009 that in fact the decision of the Tribunal in Comsat Max Ltd. Vs. DCIT, ITA 728-701/Del/2005, had also been brought to the notice of the Commissioner. That ruling had considered the question of payment of one time regulatory fee which was held to be revenue expenditure under Section 37 of the Act. Learned counsel emphasized that once this Tribunal ruling as well as the ruling of the another Delhi Bench of the Tribunal in MTNL Vs. CIT (100 TTJ 1) decided on 25th June, 2007 existed and was available, the CIT ought to have dropped the proceedings.