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3. Ground No. 2 is regarding disallowance of claim u/s 35ABB of the Income Tax Act.

3.1 On 01st January 2001, the assessee company taken over TATA Cellular Ltd and accordingly the TATA cellular Ltd. merged with the assessee. At that point of time the license fee was paid by the operators as fixed license fee M/s Idea Cellular Ltd.

under the license agreement. The TATA Cellular Ltd had paid the license fee upto 31st December 2000 and also claimed the expenditure u/s 35ABB. From 01st January 2001 on wards. The assessee paid the license fee for the area of operation which were earlier with the TATA Cellular Ltd. merged with the assessee. In the return of income the assessee did not make claim u/s 35ABB with respect to the licensefee paid by the TATA Cellular Ltd upto 31st December 2000. However during the assessment proceedings the assessee claimed that in terms of section 35ABB, consequent to the amalgamation of TATA Cellular Ltd, with the assessee the entire license fee paid by the TATA Cellular Ltd till 31st December 2000 ought to have been allowed to the assessee. The AO declined to accept the claim of the assessee.

3.2 On appeal, CIT(A) has confirmed the action of AO on the ground that the assessee has made this claim by a letter without claiming in the return of income or revised return of income. Thus the CIT(A) was of the view that the claim made by a simple letter without filing a revised return is not a valid claim.

3.3 Before us, the Ld.Senior Counsel has submitted that as per the provisions of section 35ABB(6), in a case of amalgamation the provisions of sub-section 2 to 4 shall not apply to the amalgamating company but these provisions of this section shall apply to the amalgamated company as they would have applied to the amalgamating company when the later has not transferred the business. Thus the Ld. Senior Counsel has submitted that under the provisions of section 35ABB(6), the license fee paid by the TATA Cellular Ltd for the entire financial year/previous year relevant to the assessment year under consideration for the period prior to the amalgamation is eligible for deduction u/s 35ABB in the hands of the amalgamated company i.e. assessee. He has further contended that the claim made by the TATA Cellular Ltd in respect of license fee u/s 35ABB has been rejected by the AO as it was not allowable in the hands of amalgamating company. Thus the revenue is taking M/s Idea Cellular Ltd.

3.6 Therefore, in the facts and circumstances of the case we are of the view that there is no bar in entertaining the present claim in question by the CIT(A) even without filing the revised return. On merits it is apparent that the provisions of section 35ABB(6) permits such claim only in the hands of the amalgamated company and not in the hands of the amalgamating company. For ready refernce we quote sub-section (6) of section 35ABB.

"(6) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers the licence to the amalgamated company (being an Indian Company),-

company then license fee paid for the entire year is eligible for amortization u/s 35ABB only in the hands of amalgamated company. Accordingly in view of the above discussion, we allow the claim of amortization of license fee relating to Tata Cellular Ltd merged with assessee for entire year u/s 35ABB.

4. Ground No. 4 is regarding claim for revenue sharing license fee to be allowed u/s 37(1).

4.1 In the return of income the assessee has not claimed the deduction in respect of amount paid towards revenue sharing expenses to the Govt. of India as it was capitalized in the books of accounts. Only before the CIT(A) the assessee has raised an additional ground towards the amount paid under revenue sharing basis of license fee. The CIT (A) has rejected the claim of the assessee on the ground that this issue has not emerged from the order of assessment.