Supreme Court - Daily Orders
Vodafone Idea Ltd. vs Deputy Commissioner Of Income Tax ... on 16 October, 2019
Bench: Uday Umesh Lalit, Indu Malhotra, Krishna Murari
Civil Appeal No. 8041 of 2019
Vodafone Idea Ltd. vs. Deputy Commissioner of Income Tax Circle 17(1)
1
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.8041 OF 2019
(Arising out of SLP (C) No.246/2019
VODAFONE IDEA LTD. Petitioner(s)
VERSUS
DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 17 (1) Respondent(s)
O R D E R
Leave granted.
Heard Mr. Arvind P. Datar, learned Senior Advocate in support of the appeal and Mr. Sanjay Jain, learned ASG for the respondent.
The judgment under appeal was passed by the High Court in Income Tax Appeal No.660 of 2018.
For the sake of facility, the questions which were raised Signature Not Verified in the appeal memo are set-out as under:
Digitally signed by MUKESH KUMAR Date: 2019.10.22 19:35:26 IST Reason:“A. Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in upholding the disallowance of depreciation to the tune of Civil Appeal No. 8041 of 2019 Vodafone Idea Ltd. vs. Deputy Commissioner of Income Tax Circle 17(1) 2 Rs.5,10,79,752/- claimed on account of Asset Reconstruction Cost (‘ARC’) being an ascertained liability, or alternatively allowing deduction for such expenditure in the year of execution of lease agreements or over the period of lease?
B. Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in holding that installation of cell site towers amounted to ‘extension of existing business’ as stipulated in proviso to Section 36(1)(iii) of the Act and, thereby warranting proportionate disallowance of interest under that provision?
C. Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in misbranding the discount offered by the Appellant to the pre-paid sim card distributors as commission and hence upholding disallowance made by the AO under section 40(a)(ia) of the Act?
D. Whether the Tribunal erred in rejecting the comparable i.e. payment by Forward Industries Inc., USA to Motorola Inc. USA used by the Appellant in benchmarking its international transaction of payment of royalty by holding that the said agreement is a transaction between two foreign parties and the same is not functionally comparable with the transaction entered into by the Appellant?
E. Whether on the facts and in the circumstances of the case and I law, the Tribunal erred in remanding the issue pertaining to the advertising, marketing and promotion (‘AMP’) expenses for fresh consideration, despite the fact that all the relevant materials in this regard were already placed on record by the Appellant?
F. Whether on the facts and in the circumstances of the case and in law, the findings of fact arrived at by the ITAT in the Impugned Order are vitiated inasmuch as they are unreasonable and perverse in nature, having been arrived at by improper rejection of evidence/material available on record of the proceedings or having been based substantial on conjectures, surmises and suspicious?Civil Appeal No. 8041 of 2019
Vodafone Idea Ltd. vs. Deputy Commissioner of Income Tax Circle 17(1) 3 It must be mentioned that said appeal stands admitted as regards Questions ‘A & C’ while as regards Question ‘D’ onwards, the matter stands remitted to the Income Tax Appellate Tribunal. We are thus left with the issue regarding refusal of the High Court to consider Question ‘B’ as substantial question of law.
The discussion in the Order under appeal regarding Question ‘B’ was as under:
“The assessee has urged other questions. He submits that the installation of cell-site towers did not amount to extension of existing business and the ITAT had disallowed the proportionate interest claimed, on account of Section 36(1)(iii) in the circumstances of the case. The Court is of the opinion that the assessee’s argument that the improved efficiency within the circle if it was allowed for operation of its licences, did not amount to extension of business, is unpersuasive. The facts are that the assessee is a licence holder in respect of three telecom circles. At the relevant time, it sought to install cell-site towers claiming that they would merely improve its efficiency. The lower authorities discerned that materials on record clearly show that the object of such exercise was to reach the greater number of customers and thus increase subscriber base. In these circumstances, the finding of the lower authorities cannot be faulted. No substantial question of law arises. This, however, will not preclude the lower authorities from deciding the issues which have been remitted by the ITAT, in accordance with law.” The appellant has a licence for extending telecom services in certain Circles and the present issue arises from its activities in relation to the Circle of Rajasthan, Civil Appeal No. 8041 of 2019 Vodafone Idea Ltd. vs. Deputy Commissioner of Income Tax Circle 17(1) 4 Haryana, U.P.(East). As a result of the view taken by the High Court, the decision of the Tribunal rejecting the claim of the appellant would be final with respect to said Circle.
However, as regards its activities pertaining to Mumbai Circle, the very same issue was answered by the Dispute Resolution Panel in favour of the appellant’s group companies. The decision rendered by the Dispute Resolution Panel-2, Mumbai on 21.09.2017 in respect of Objection No.101 has been placed on record.
We had adjourned the matter on few occasions to enable the respondent to place material indicating whether the decision of the Dispute Resolution Panel was under challenge before any of the authorities but no such affidavit has been filed.
In any case, in our considered view, Question ‘B’ raised by the Appellant is a substantial question meriting consideration and the High Court ought to have admitted the appeal even with respect to Question ‘B’.
The appeal is therefore allowed and the order passed by the High Court is modified to the effect that in addition to the questions framed by the High Court for its consideration, Civil Appeal No. 8041 of 2019 Vodafone Idea Ltd. vs. Deputy Commissioner of Income Tax Circle 17(1) 5 Question ‘B’ shall also be considered by the High Court while considering Income Tax Appeal No.660 of 2018.
We have considered the matter only from the perspective whether Question ‘B’ ought to be considered or not and we shall not be taken to have expressed any opinion on the merits of the submissions pertaining to said Question, which will be gone into independently.
.................................J. [UDAY UMESH LALIT] .................................J. [INDU MALHOTRA] .................................J. [KRISHNA MURARI] NEW DELHI;
OCTOBER 16, 2019 Civil Appeal No. 8041 of 2019 Vodafone Idea Ltd. vs. Deputy Commissioner of Income Tax Circle 17(1) 6 ITEM NO.24 COURT NO.7 SECTION XIV S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS Petition for Special Leave to Appeal (C) No.246/2019 (Arising out of impugned final judgment and order dated 01-06-2018 in ITA No.660/2018 passed by the High Court Of Delhi At New Delhi) VODAFONE IDEA LTD. Petitioner(s) VERSUS DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 17 (1) Respondent(s) Date : 16-10-2019 This petition was called on for hearing today. CORAM :
HON'BLE MR. JUSTICE UDAY UMESH LALIT HON'BLE MS. JUSTICE INDU MALHOTRA HON'BLE MR. JUSTICE KRISHNA MURARI For Petitioner(s) Mr. Arvind P. Datar, Sr. Adv.
Mr. Sachit Jolly, Adv.
Ms. Anuradha Dutt, Adv.
Ms. Fereshte D. Sethna, Adv.
Mr. Siddharth Joshi, Adv.
Ms. B. Vijayalakshmi Menon, AOR For Respondent(s) Mr. Sanjay Jain, ASG Mr. Zoheb Hossain, Adv.
Mr. Rupesh Kumar, Adv.
Mr. Ashok Panigrahi, Adv.
Mr. Padmesh Mishra, Adv.
Mrs. Anil Katiyar, AOR UPON hearing the counsel the Court made the following O R D E R Leave granted.
The appeal is allowed, in terms of the signed order. Pending application(s), if any, shall stand disposed of.
(MUKESH NASA) (SUMAN JAIN)
COURT MASTER BRANCH OFFICER
(Signed Order is placed on the File)