The Mumbai Bench of the Income Tax Appellate Tribunal has ruled in favour of Vodafone Idea, granting relief by allowing deduction under Section 80IA of the Income Tax Act 1961, for undertakings for providing telecommunication services.
The issue to be decided was whether the assessee was eligible to claim deduction under Section 80IA (4) (ii) of the Income Tax Act 1961.
The assessee filed appeal against the aforesaid assessment order before the CIT (A), however, the said appeal was withdrawn by the assessee. No revision proceedings were carried out by the Department for the Assessment Year 1995-96. Thus, the aforesaid assessment order attained finality
To substantiate the commencement of cellular services after April 1, 1995, The counsel for the assessee Ninad Patade provided evidence, including a May 31, 1995, communication from the Department of Telecommunications (DoT), Wireless Planning and Coordination (WPC) Wing, assigning Radio Frequency Channels for the Mumbai GSM Cellular Network. Documents, including an October 13, 1995, letter and subsequent clearances, revealed Ministry of Communications’ permission for launching cellular mobile telephone services, finalized by the Director (VAS-I), DoT, on October 20, 1995. Despite a November 1994 license agreement, the assessee initiated cellular services only after obtaining radio frequency allocation and necessary clearances.
The agreement explicitly mandated a separate license from the WPC Wing of the Ministry of Communication to utilize the appropriate radio frequency spectrum for cellular mobile telephone services. Permits and assignment letters from the DoT confirmed that these permissions and clearances were granted after April 1, 1995.
The counsel for the Revenue Ashok Kumar Abastha argued that the assessee initiated telecommunication business in the Financial Year 1994-95, citing pager sales in the assessee’s books., emphasized that Section 80IA(4)(ii) of the Income Tax Act 1961, focuses on the commencement of telecommunication services, not business initiation. Pager purchased mark the start of business, but telecommunication services only commence after obtaining radio frequency and technical approved from the Department of Telecommunications (DoT).
The two member bench of the tribunal comprising Pavan Kumar Gadale (Judicial Member) and B.R. Baskaran( Accountant Member) concluded that the assessee initiated telecommunication services after April 1, 1995, rendering them eligible for deduction under section 80IA(4) of the Income Tax Act 1961. Subsequently, the assessee’s deduction claims for the assessment years 2006-07 and 2007-08 were granted, following this established precedent. In the recent assessment year, the denial of the assessee’s deduction claim corresponds with the rationale applied in the assessment year 2006-07.
As a result, the appeal was allowed in accordance with the decision in the assessee’s case for the assessment year 2006-07. Furthermore, the co-ordinate bench had endorsed the assessee’s deduction claim under section 80IA of the Income Tax Act 1961, for interest income and miscellaneous income in the assessment year 2005-06.
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