Vodafone Idea Limited Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that disallowance of claim of depreciation in respect of 3G spectrum charges is not justified. Accordingly, depreciation on 3G spectrum charges allowed under section 32(1)(ii) of the Income Tax Act.
Facts- Appellant is a company engaged, inter alia, in providing cellular telecommunication services. The case of the Appellant was selected for regular scrutiny. During the assessment proceedings, the Assessing Officer noted that the Appellant has entered into international transactions with its Associated Enterprises (AEs) and therefore, a reference was made u/s. 92CA(1) to the Transfer Pricing Officer (TPO) for the determination of Arm’s Length Price (ALP) of the international transactions. The TPO, vide order, dated 30/10/2017, passed under Section 92CA(3) of the Act proposed, inter alia, making transfer pricing adjustments.
On 28/12/2017, AO passed Draft Assessment Order u/s. 143(3) read with Section 92CA read with Section 144C(1) of the Act incorporating the above transfer pricing adjustment. In addition the Assessing Officer also proposed other additions/disallowances as per the provisions of the Act. On 25/09/2018, the DRP disposed off the objections granting partial relief to the Appellant.
Conclusion- Held that Special Bench of the Tribunal in the case of ACIT Vs. Vireet Investments Pvt. Ltd. has held that for computing the disallowance under Rule 8D(2)(iii) of the IT Rules only the investments yielding exempt income are to be taken into consideration. Accordingly, we direct the Assessing Officer to recompute the disallowance.
