Bharti Airtel Ltd. Vs PCIT (ITAT Delhi)
ITAT Delhi held that interest and penalty due to default in payment of license fee is merely compensatory in nature and hence the same is revenue expenditure. Accordingly, PCIT classifying them to be capital expenditure is not sustainable.
Facts- The assessee is engaged in the business of providing cellular mobile telephone services and landline services and other associated value added services and internet service. The case of the assessee was selected for complete scrutiny assessment.
After conclusion of this assessment u/s 143(3) r.w.s. 144C(3) dated 10.10.2023, the jurisdictional PCIT issued show cause notice dated 22.12.2023 u/s 263 proposing to revise the assessment order dated 10.10.2023. The said show cause notice was primarily on the basis that proper inquiries were not conducted by the AO in so far as huge claims had been allowed without verification and examination, thereby rendering the assessment order erroneous and prejudicial to the interest of the Revenue. The assessee had responded to the show cause notice by submissions dated 22.12.2023 and after taking into consideration the submissions and the objections to the exercise of jurisdiction, the impugned order was passed whereby the revisional authority enhanced the assessment on certain issues and set aside the assessment on some other issues.
