Case Law Details
DCIT Vs Ms Alliance Broad Band Services Pvt. Ltd. (ITAT Kolkata)
The ld DR vehemently relied on the order of the ld AO and further stated that the optic fibre cables are generally laid only in the underground and hence the assessee’s explanation that the same would get damaged by heavy downpour, lightning, heat etc does not hold any water. He argued that the amount incurred towards optic fibre cables are very huge and assessee gets enduring benefit out of the same and hence the same has to be treated as capital expenditure which had been rightly treated by the ld AO. The laying of optical fibre cables cannot be compared with regular cable wires as was the case before the Hyderabad Tribunal which had been relied upon by the ld CITA. In response thereto, the ld AR drew our attention to pages 37 to 83 of paper book containing the various bills for optic fibre cables and its laying wherein he stated that the unit rate of the same ranges from Rs 9.62 to Rs 17.30 per meter . He also drew our attention to the list of expenditure towards optic fibre cables wherein the same were replaced on a monthly basis regularly by the assessee. At the outset , we agree with the argument of the ld DR that the replacement of optic fibre cables used in smooth functioning of internet broadband services cannot be compared with normal cable wires which are used in the business of television channels through cable network. We find that in the facts before the co-ordinate bench of Hyderabad Tribunal in the case of DCIT vs Akash Cable TV Network (P) Ltd in ITA No. 678/Hyd/2009 for Asst Year 2006-07 dated 30.6.2010 also, the assessee there had replaced the traditional cable into optical fibre cable. The contention of that assessee was that the traditional cable was cut and damaged by the rival cable network operators. The assessee therein had to necessarily replace the damaged part of the cables alone and not the entire cable by optical fibre cable for transmitting TV signals. It was held that these are done only for better signals for the viewers and due to this no new customers could be obtained by that assessee. The replacement of optic fibre cables were done only for satisfying the existing customers and for retaining the existing customers with that assessee. In these circumstances, the Hyderabad Tribunal held that optical fibre cables were laid by the assessee for continuing in the business of transmitting signals through cable net work system establishes that the assessee did not acquire any new asset which is enduring in nature. Accordingly it was held that this enduring benefit is only in the revenue field to the assessee and accordingly held the replacement of optical fibre cables as revenue expenditure. We find to counter this judgement, the ld DR placed reliance on the decision of Delhi Tribunal in the case of SAIL vs Addl CIT dated 25.11.2010 vide para 38 of the judgement but he did not place a copy of the said decision before us. Hence we deem it fit to ignore the said citation of the ld DR. We find from the entire details of optic fibre cables purchased that are enclosed in page 36 of the paper book, the assessee herein had been incurring expenses towards the same towards replacement on a monthly basis, which itself goes to prove that the same is incurred on a recurring basis and there is no enduring value benefit to the assessee on the previously replaced cable wires and same is revenue expenditure.
Full Text of the ITAT Order is as follows:-
1. This appeal by the Revenue arises out of the order of the Learned Commissioner of Income Tax (Appeals) -I, Kolkata [ in short the ld CITA] in Appeal No. 256/CIT(A)-4/Circle-11/Kol/14-15 dated 10.08.2015 against the order passed by the DCIT, Circle-11, Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short “the Act”) dated 07.03.2013 for the Assessment Year 2010-11.
2. The first issue to be decided in this appeal is as to whether the ld CITA was justified in deleting the addition of Rs 19,31,097/- made by the ld AO by treating the technology upgradation expenses as capital expenditure in the facts and circumstances of the case.
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