Brief of the case
The Hon’ble High Court, in the present case held that the licence fee payable after 31st July 1999 should be treated as revenue expenditure. Similarly, if the interest was payable on license fee for the period post 31st July, 1999, it should be treated as revenue in nature.
Facts of the Case
The question is whether the licence fee payable by telecom service providers to the Department of Telecommunications is to be treated as capital or revenue expenditure.
Contention of the revenue
The revenue urges that the interest on payment qua the license fee, could not be amortised in view of Section 35ABB.
Contention of the Assessee
The contentions of the assessee have been derived from the Judgment relied upon by the Hon’ble High Court in the case of the Commissioner of Income Tax V. Bharti Hexacom (2014) 221 Taxman 323 (Del.), where the Assessee contended that there cannot be any factual dispute that this interest was paid to the Department of Telecommunication on delayed payment of license fee under the 1999 policy and not on account of license fee payable for period prior to 31st July, 1999.
Held by the Tribunal
In the case of the Commissioner of Income Tax V. Bharti Hexacom (2014) 221 Taxman 323 (Del.)The tribunal has held that interest paid was revenue in nature because the license fee payable itself was revenue in nature, irrespective of fee payable prior to 31st July, 1999.
