Bharti Telemedia Ltd Vs DCIT (ITAT Delhi)
Variable licence fee of DTH operator not hit by s.35ABB; interest provision is ascertained liability — ITAT Delhi
Delhi Tribunal partly allowed Assessee’s appeals & dismissed Revenue appeals. Tribunal held that variable licence fee paid by a DTH operator to Ministry of Information & Broadcasting (MIB) is not covered by s.35ABB, as DTH/broadcasting services are distinct from telecommunication services contemplated under the Act. Tribunal observed that s.35ABB applies only to capital expenditure incurred for acquiring right to operate telecommunication services, whereas Assessee is engaged in broadcasting/DTH services, regulated by MIB & expressly excluded from “telecommunication services” under TRAI Act. Accordingly, variable licence fee linked to annual gross revenue was held to be revenue expenditure allowable u/s 37, & disallowance by AO was unsustainable.
On Revenue’s appeal, Tribunal upheld CIT(A)’s deletion of disallowance of provision for interest on delayed licence fee, holding that interest liability arose from a binding licence agreement, rate & method of computation were clearly defined, repeated demand notices were issued by MIB, & liability was capable of reliable estimation. Merely because AGR dispute is pending before Supreme Court does not render interest liability contingent. Applying principles laid down in Bharat Earth Movers, Rotork Controls & Delhi HC rulings, Tribunal held that provision represented an ascertained liability, allowable on mercantile basis. Consequently, Assessee succeeded on licence fee issue, & Revenue failed on interest disallowance, with appeals disposed accordingly
