PCIT to maintain judicial discipline even if appeal is filed against the issue

Vodafone Idea Limited Vs PCIT (ITAT Mumbai)

ITA allows depreciation @ 25% on spectrum fee and held that provisions contained under section 35ABB are not applicable to spectrum fee and it further held that PCIT cannot keep an issue alive on the pretext that the order passed by the Tribunal is not accepted by the Department.

Since the issue as to the allowability of depreciation on spectrum fee as claimed by the assessee under section 32 of the Act and the provisions contained under section 35ABB are not applicable has already been decided in favour of the assessee by the Tribunal, the order of the Tribunal cannot be allowed to be disobeyed by Ld. PCIT merely on the pretext that the department has not accepted the said decision and appeal has already been filed before the Hon’ble High Court. In order to maintain judicial discipline Ld. PCIT had no option but to follow the order.

Following the order passed by the co-ordinate Bench of the Tribunal, we are of the considered view that even on merits the assessee’s claim for depreciation on “spectrum fee” is allowable under section 32 of the Act as the provisions contained under section 35ABB of the Act being not applicable to the issue at hand. Hence, the order passed by the AO is not erroneous. So we are of the considered view that the AO has rightly allowed the claim by virtue of the assessment order framed under section 143 of the Act.

we are of the considered view that the AO has allowed the depreciation @ 25% claimed by the assessee company on spectrum fees by treating the same as ‘intangible assets’ under section 32 of the Act by making a discreet enquiry and as such it is neither a case of non application of mind on the part of the AO nor a case of inadequate enquiry. Hence, invoking revisionary jurisdiction by the Ld. PCIT under section 263 of the Act is not sustainable in the eyes of law and the question No.I framed in the preceding para is answered in favour of the assessee, that the assessment order passed by the AO under section 143(3) of the Act allowing depreciation claimed by the assessee @ 25% on “spectrum fee” under section 32 of the Act was not erroneous in so far as prejudicial to the interest of revenue.

In order to address the second question framed in the preceding para that “As to whether depreciation claim made by the assessee @ 25% on the spectrum fee is allowable on merits under section 32 of the Act or it has to be amortized on pro-rata basis over the period of license in force under the provisions contained under section 35ABB of the Act as has been held by the PCIT?” the Ld. A.R. for the assessee contended that this issue has already been decided in favour of the assessee by the co-ordinate Bench of the Tribunal in assessee’s own case titled as Idea Cellular Ltd. vs. Principal Commissioner of Income Tax-14, Mumbai vide order dated 06.12.2017 in ITA No.360/M/2016 and as such the AO has legally and validly allowed the depreciation on spectrum fee claimed by the assessee under section 32 of the Act and section 35ABB is not applicable. This factual and legal position has not been controverted by the Ld. D.R. for the Revenue nor by the Ld. PCIT while passing the order under section 263 of the Act.

A perusal of para 5.13 of the impugned order passed by the Ld. PCIT shows that the Ld. PCIT has himself admitted this fact that on identical issue order passed under section 263 of the Act in assessee’s own case for A.Y. 2011-12 has been set aside but he has kept this issue alive on the pretext that the order passed by the Tribunal is not accepted by the Department.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

Appellant Vodafone Idea Limited (hereinafter referred to as the ‘assessee’) by filing present appeal sought to set aside the impugned order passed by Pr. Commissioner of Income Tax (hereinafter referred to as PCIT) under section 263 of the Income Tax Act (for short the Act) by invoking the revisionary jurisdiction qua the assessment order dated 29.12.2017 framed by the Assessing Officer (for short the AO) under section 143(3) of the Act on the grounds inter-alia that:-

“1. Re.: Validity of Order u/s. 263:

1.1 On the facts and in the circumstances of the case and in law, the impugned Order dated 31 March 2021 passed under section 263 of the Income-tax Act 1961 is without jurisdiction, illegal, bad in law and void ab-initio.

Without prejudice to the above,

1.2 On the facts and circumstances of the case and in law, the Principal Commissioner of Income Tax (“PCIT”) has erred in passing the Order dated 31 March 2021 u/s. 263 of the Income-tax Act, 1961.

1.2.1 On the facts and circumstances of the case and in law, the PCIT has erred m holding that the Order dated 29 December 2017 passed by the Deputy Commissioner of Income Tax – 14(2)(1) (“DCIT”) u/s. 143(3) of the Income-tax Act, 1961 was erroneous and prejudicial to the interests of revenue and in thereby revising the same.

1.2.2. On the facts and circumstances of the case and in law, the Appellant submits that the Order passed by the Ld DCIT was neither erroneous nor prejudicial to the interest of the revenue and hence the revision of the same by the PCIT u/s. 263 of the Income-tax Act, 1961 is erroneous and bad in law.

1.2.3. The learned AO had not only made adequate inquires, but had also undertaken necessary verification basis the details/ documents sought from the Appellant during the course of assessment proceedings, and hence, the assessment order dated 29 December 2017 passed by learned AO is neither ‘erroneous’ nor ‘prejudicial’ to the interest of the revenue. Also, the Mumbai ITAT vide its order dated 6 December 2017 (ITA No. 360/Mum/2016) has quashed the proceedings u/s 263 of the Act in AY 2011-12 and held that the VIL has rightly claimed tax depreciation under section 32 of the Act on spectrum so acquired.

1.2.4 The learned PCIT passed the revisionary order on the issues not following binding judicial precedents (also submitted during the revisionary proceedings) leading to unwarranted litigation.

1.3 On the facts and circumstances of the case and in law, the Appellant prays that the impugned Order passed u/s. 263 of the Income-tax Act, 1961 by the PCIT is to be struck down.

Without prejudice to the aforesaid grounds:

2. Re: Disallowance of tax depreciation on spectrum :

2.1 On the facts and in circumstance of the case and in law, the learned PCIT has erred in concluding that the order passed by the learned AO, accepting the depreciation Claimed by the Appellant under section 32(1) of the Act on the right to use spectrum, is erroneous as well as prejudicial to the interest of the revenue and thereby, erred in directing the learned AO to amortize the spectrum acquired by the Appellant.

2.2 On the facts and circumstances of the case and in law, the Learned PCIT erred m directing the AO to disallow depreciation on Spectrum as claimed by the Appellant under section 32(1) of the Act and in further directing the AO to instead allow deduction under section 35ABB of the Act on the same on the ground that the spectrum was only an extension of the original license for operating telecom services and not a separate intangible asset.

The Appellant prays that it be held that on the facts and Circumstances, invoking section 263 for directing disallowance of depreciation on Spectrum cost and treating it as an extension of the original telecom license, is not in accordance with law and that disallowance of said depreciation is not called for.

2.3 On the facts and in circumstance of the case and in law, the Order of the PCIT directing the AO to reexamine the issue needs to be struck down.

The Appellant craves to add, alter, amend, substitute and/or modify in any manner whatsoever modify all or any of the foregoing grounds of appeal at or before the hearing of the appeal.”

2. Briefly stated facts necessary for adjudication of the controversy at hand are that; assessee company is into the business of providing cell phone and data services. In its books of accounts assessee company amortized amount spent on acquiring 3G spectrum and claimed 1/20^th of the expenditure for the year as fee paid for spectrum. However, for the income tax purposes the assessee company capitalized the item and claimed depreciation @ 25% treating the spectrum as an ‘intangible asset’. The assessee company by filing return of income for A.Y. 2015-16 declared total income at Rs.4350,27,68,335/- by claiming depreciation to the tune of Rs.1682.48 crores @ 25% on the spectrum fees paid by treating it as ‘intangible asset’, which was allowed by the AO under section 32 of the Act.

3. However, the Ld. PCIT by invoking the revisionary jurisdiction called upon the assessee company by way of issuance of notice under section 263 of the Act, as to why the spectrum fee claimed as depreciation by the assessee company, should not have been amortized on pro-rata basis over a period of license in force as per provisions of section 35AB of the Act as the assessment order is erroneous in so far as prejudicial to the interest of the Revenue.

4. After considering the written submissions and contentions raised by the assessee company the Ld. PCIT reached the conclusion that the AO has neither questioned nor examined nor verified qua the issue of depreciation claim made by the assessee on spectrum fee and as such depreciation claim allowed by the AO is incorrect being not examined in accordance with provisions contained under section 35ABB and thereby held the assessment order framed under section 143(3) of the Act under consideration, erroneous in so far as prejudicial to the interest of the Revenue.

5. Aggrieved with the impugned order passed by the Ld. PCIT under section 263 of the Act, the assessee company has come up before the Tribunal by way of filing the present appeal.

6. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the order passed by the Ld. Lower Revenue Authorities in the light of the facts and circumstances of the case and case law relied upon.

7. Undisputedly, the assessee has claimed depreciation of Rs.1682.48 crores @ 25% on the spectrum fees paid by treating it as ‘intangible asset’ which was allowed by the AO under section 32 of the Act. It is also not in dispute that by exercising revisionary jurisdiction under section 263 of the Act the Ld. PCIT sought to amortize spectrum fee on pro-rata basis over the period of license under section 35AB of the Act and held the assessment order erroneous insofar as prejudicial to the interest of the revenue.

8. In the backdrop of the aforesaid facts and circumstances of the case two questions arise for determination are :-

“I. As to whether the assessment order passed by the AO under section 143(3) of the Act by allowing depreciation claimed by the assessee @ 25% on the spectrum fees under section 32 of the Act was erroneous in so far as prejudicial to the interest of the revenue as has been held by the Ld. PCIT?.

II. As to whether depreciation claim made by the assessee @ 25% on the spectrum fee is allowable under section 32 of the Act or it has to be amortized on pro-rata basis over the period of license in force under the provisions contained under section 35ABB of the Act?”

9. Addressing the argument on first question framed in this case the Ld. A.R. for the assessee contended inter-alia that the assessment order passed in this case is neither erroneous nor prejudicial to the interest of the revenue nor it is a case of no application of mind on the part of the AO; that AO has duly thrashed the issue as to the allowability of depreciation @ 25% on spectrum fees as claimed by the assessee company by raising repeated queries and has taken the Bench to numerous letters/questionnaire issued by the AO and reply filed thereto.

10. However, on the other hand, to repeal the argument addressed by the Ld. A.R. for the assessee company, the Ld. D.R. for the Revenue contended inter-alia that the AO has failed to do adequate enquiries rather accepted the claim of the assessee without raising any specific question as to the use of spectrum as well as qua the claim of depreciation on “spectrum fee” made by the assessee; that in all the questionnaires the AO raised generic queries which lead to the conclusion that no enquiry has been made by the AO; that impugned order under section 263 of the Act has been rightly passed by the Ld. PCIT under explanation 2 to section 263 of the Act as depreciation claim has been allowed without making enquiry and relied upon the case cited as Malabar Industrial Co. Ltd. vs. CIT (2000) 109 taxman 66 (SC).

11. First of all, the Ld. A.R. for the assessee has taken us to the page 76 of the paper book wherein detail qua claim of depreciation on spectrum as made by the assessee company has been given under the head “Background on claim of depreciation” on spectrum fee by the assessee and assessment proceedings and drew our attention towards financial statements – “Note 2d and 12-fixed assets” and tax audit report. Thereafter, the Ld. A.R. has taken us to page 79 wherein detail of depreciation claim on ‘intangible assets’ amortized on straight-line method has been given. Then on page 82 particulars of allowable depreciation in respect of the each block of assets has been given under the head ‘intangible asset’ by the assessee company.

12. In the backdrop of the claim of the assessee company qua depreciation on “spectrum fees” and detail thereof the Ld. A.R. for the assessee drew our attention towards page 84 of the paper book which is a notice issued under section 142(1) read with section 129 of the Act by the AO wherein detail of addition to the fixed assets, rate of depreciation claimed, proof of installation etc. is sought vide question no.13 which is extracted for ready perusal as under:

“13. Details of addition to fixed assets and capital work in progress along with items purchased, date of purchase and its value, rate of depreciation claimed and proof of installation with copy of individual assets above Rs.2 lakh.

14. Details of Unsecured Loans & Advances (including squared up loans) in the following format:

Also submit confirmation of new loans taken during the year along with copy of bank statement and financial statement of the lender.”

13. Furthermore, when we examine another notice dated 27.10.2017 issued under section 142(1) of the Act by the AO available at page 90 of the paper book, again AO called for copy of agreement for purchase of bandwidth detail of upfront fees, detail of entry/license fee and spectrum with date from which obtained and proof of putting the same to use, by putting pertinent question as under:

“iv) Copy of agreement for purchase of bandwidth. Details of upfront fees and operation and maintenance charges paid for such acquisition.

v) Details of entry / license fees and spectrum with date from which obtained and proof of put to use.”

14. The assessee company, on the other hand, in order to submit reply/explanation to the queries raised by the AO during assessment proceedings had written a letter dated 22 August, 2017 available at page 95 giving complete details of addition made to the fixed assets and sample invoices of fixed assets purchased as annexure II(A) and annexure II(B). Then again written letter dated 21^st November 2017 available at page 97 wherein in para 1 the details of spectrum capitalized is given as annexure I, examined by the tax auditor with necessary calculation of depreciation claimed and certified by the tax auditor as annexure II. Then again assessee company issued letter dated 26.12.2017 available at page 99 wherein detail as to bidding by the assessee company in various spectrum options conducted by the department of telecommunication (DOT) in order to acquire right to use spectrum is given.

15. Then Ld. A.R. for the assessee has taken us to the letter dated 5 April, 2017 issued to the AO giving complete detail of depreciation on cost of right to use spectrum as under:

“2. Depreciation on cost of right to use Spectrum (“the Spectrum Cost”):

In respect of the Spectrum (being distinct from license) won by the Assessee in various auctions conducted by the DOT in past, the Assessee capitalizes the spectrum cost under the block “Intangible Assets” and claims depreciation u/s. 32 of the Act thereon at the applicable rate on being put to use.

That the Spectrum is distinct from the Telecom License fee paid to the DOT, is borne out by the New Telecom Policy 1999, Notice inviting Applications for allotment of spectrum, dated 28 September 2012 and 12 December 2013 as also the individual Letters of Allotment issued by DOT in respect of the respective service areas. Further, as per the foregoing Notice, the allottee, has an obligation to roll out mobile telephone services using the spectrum allotted. Hence, the spectrum is a “business or commercial right” with which the Assessee carries on its business of providing telecom services. The Assessee’s stand is based on the following decisions:

> Skyline Caterers (P.) Lid. (2008) (118 TTJ 344);

> Kotak Forex Brokerage Lid. (2009) (33 SOT 237); etc.

During the F.Y. 2014-15, the Assessee has capitalized Rs.52,059.69 million under the block of “Intangible Assets”, towards the Spectrum Cost in respect of 2G and 3G Spectrum, based on “put to use” test. Interest on Deferred payment liability taken to acquire this spectrum has been capitalised as actual cost till the date on which the spectrum was put to use.”

16. Terming the aforesaid queries raised by the AO as generic in nature, the Ld. D.R. for the Revenue contended that no specific question on depreciation of spectrum fee has been raised and has further contended that the suo-moto letter dated 5 April, 2017 containing information extracted in the preceding paras is of no help to the assessee because no such information was ever called for by the AO. We are of the considered view that when we examine the queries raised by the AO by virtue of the numerous notices issued under section 142(1) of the Act and replies filed thereto by the assessee company discreet enquiry has been made by the AO in order to determine the issue as to the allowability of depreciation on “spectrum fee”.

17. So far as suo-moto information supplied by the assessee company to the AO vide letter dated 5 April, 2017 available at page 111 to 117 providing detail qua depreciation on cost of right to use spectrum as extracted in preceding para 13 is concerned, the arguments addressed by the Ld. D.R. for the Revenue are misconceived because information duly received by the AO during the official course of assessment proceedings in continuation of earlier communications, though submitted on its own by the assessee, are deemed to be examined by the AO by applying his mind.

17A. So far as the contention raised by the Ld. D.R. for the Revenue that Ld. PCIT has passed the order by invoking explanation 2 to section 263 of the Act is concerned, the Ld. A.R. for the assessee contended that unless explanation 2 to section 263 of the Act is used in the show cause notice under section 263 of the Act the same cannot be invoked while passing the order under section 263 of the Act and relied upon the decision rendered by the Hon’ble Supreme Court in the case of Principal Commissioner of Income Tax vs. Shreeji Prints (P.) Ltd. reported in (2021) 130 taxmann.com 294 (SC).

18. Bare perusal of the notice issued by the Ld. PCIT under section 263 of the Act available at page 11 of the paper book shows that explanation 2 to section 263 of the Act has not been used in notice and as such the view taken by the Hon’ble High Court of Gujarat having been upheld by the Hon’ble Supreme Court by holding that “when the Ld. PCIT has not mentioned in the show cause notice to invoke explanation 2 to section 263 of the Act the same cannot be invoked while passing the order under section 263 of the Act” is squarely applicable to the contentions raised by the Ld. A.R. for the assessee.

19. In view of what has been discussed above, we are of the considered view that the AO has allowed the depreciation @ 25% claimed by the assessee company on spectrum fees by treating the same as ‘intangible assets’ under section 32 of the Act by making a discreet enquiry and as such it is neither a case of non application of mind on the part of the AO nor a case of inadequate enquiry. Hence, invoking revisionary jurisdiction by the Ld. PCIT under section 263 of the Act is not sustainable in the eyes of law and the question No.I framed in the preceding para is answered in favour of the assessee, that the assessment order passed by the AO under section 143(3) of the Act allowing depreciation claimed by the assessee @ 25% on “spectrum fee” under section 32 of the Act was not erroneous in so far as prejudicial to the interest of revenue.

20. In order to address the second question framed in the preceding para that “As to whether depreciation claim made by the assessee @ 25% on the spectrum fee is allowable on merits under section 32 of the Act or it has to be amortized on pro-rata basis over the period of license in force under the provisions contained under section 35ABB of the Act as has been held by the PCIT?” the Ld. A.R. for the assessee contended that this issue has already been decided in favour of the assessee by the co-ordinate Bench of the Tribunal in assessee’s own case titled as Idea Cellular Ltd. vs. Principal Commissioner of Income Tax-14, Mumbai vide order dated 06.12.2017 in ITA No.360/M/2016 and as such the AO has legally and validly allowed the depreciation on spectrum fee claimed by the assessee under section 32 of the Act and section 35ABB is not applicable. This factual and legal position has not been controverted by the Ld. D.R. for the Revenue nor by the Ld. PCIT while passing the order under section 263 of the Act.

22. A perusal of para 5.13 of the impugned order passed by the Ld. PCIT shows that the Ld. PCIT has himself admitted this fact that on identical issue order passed under section 263 of the Act in assessee’s own case for A.Y. 2011-12 has been set aside but he has keept this issue alive on the pretext that the order passed by the Tribunal is not accepted by the Department by returning following findings:

“5.11 As regards, the legal objection to taking action against 263 and maintainability of this provision suffice to say that perusal of records and filing does not indicates any debate or discussion for considering Section 35ABB or Section 32 at all. It is thus, not the case that the AO has examined both the provisions and took a conscious decision after detailed enquiry, examination and verification of facts that it is not 35ABB but Section 32 which should be invoked and depreciation is to be allowed.

5.12 The submissions made before the AO only indicates what the assessee had to tell about various expenditures items he had claimed. It is interesting to note that the AO queried about amortization and apparently was satisfied that amortization was done. There is no question about depreciation claim nor any examination or verification. The AO thus apparently was not even alert to the difference between book treatment and income tax claim. Hence, to say that there was application of mind and conscious decision to not invoke 35ABB and allow depreciation is incorrect.

5.13 In assessee’s own case for A.Y 2011-12, order u/s 263 of the act was passed on the similar issue. The said order u/s 263 has been set aside by the Hon’ble ITAT. With due respect, since, the department is not in agreement with the decision of Hon’ble ITAT, further appeal has been filed before the Hon’ble Bombay High Court for A.Y 2011-12 on the same issue, which is still pending.

5.14 In the light of the above, the order made by the Assessing Officer accepting the depreciation claimed on spectrum is erroneous as well as prejudicial to the interest of revenue. The assessment order is therefore set-aside with a direction to amortize and consider appropriate expenditure on the cost incurred on spectrum.”

23. We have perused the order passed by the co-ordinate Bench of the Tribunal available at page 14 to 41 of the paper book in assessee’s own case for A.Y. 2011-12 on identical issues which have been decided in favour of the assessee even on merits. Operative findings thereof are extracted for ready perusal as under:

“19. Before us, the learned Counsel for the assessee relied on the decision of the Hon’ble Supreme Court for the proposition that license is an asset under Explanation 3(b) to section 32(1) of the Act and, thus, it is eligible for depreciation. He relied on CIT vs. Smifs Securities Ltd. (2012) 348 ITR 302 (SC), wherein Hon’ble Supreme Court has considered the issue of goodwill and held as under: –

“3. The Assessing Officer held that goodwill was not an asset falling under Explanation 3 to Section 32(1) of the Income Tax Act, 1961 [`Actç for short]. We quote hereinbelow Explanation 3 to Section 32(1) of the Act: “Explanation 3.– For the purposes of this subsection, the expressions `assets’ and `block of assets’ shall mean—

(a) tangible assets, being buildings, machinery, plant or furniture;

(b) intangible assets, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature.”

4. Explanation 3 states that the expression `asset’ shall mean an intangible asset, being knowhow, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. A reading the words `any other business or commercial rights of similar nature’ in clause (b) of Explanation 3 indicates that goodwill would fall under the expression `any other business or commercial right of a similar nature’. The principle of ejusdem generis would strictly apply while interpreting the said expression which finds place in Explanation 3(b).

5. In the circumstances, we are of the view that `Goodwill’ is an asset under Explanation 3(b) to Section 32(1) of the Act.

6. One more aspect needs to be highlighted. In the present case, the Assessing Officer, as a matter of fact, came to the conclusion that no amount was actually paid on account of goodwill. This is a factual finding. The Commissioner of Income Tax (Appeals) [`CIT(A)’, for short] has come to the conclusion that the authorised representatives had filed copies of the Orders of the High Court ordering amalgamation of the above two Companies; that the assets and liabilities of M/s. YSN Shares and Securities Private Limited were transferred to the assessee for a consideration; that the difference between the cost of an asset and the amount paid constituted goodwill and that the assessee Company in the process of amalgamation had acquired a capital right in the form of goodwill because of which the market worth of the assessee-Company stood increased. This finding has also been upheld by Income Tax Appellate Tribunal [`ITAT’, for short]. We see no reason to interfere with the factual finding.

7. One more aspect which needs to be mentioned is that, against the decision of ITAT, the Revenue had preferred an appeal to the High Court in which it had raised only the question as to whether goodwill is an asset under Section 32 of the Act. In the circumstances, before the High Court, the Revenue did not file an appeal on the finding of fact referred to hereinabove.

8. For the afore-stated reasons, we answer Question No.[b] also in favour of the assessee.”

20. From the above judgment of Hon’ble Supreme Court in the case of Smifs Securities Ltd. (supra) and the facts of the present case, it is clear that the assessee has rightly claimed depreciation under section 32 of the Act on 3G spectrum. It means that the expenditure towards 3G Spectrum is not expenditure for acquiring any right to operate telecommunications services. Out of the service areas in which 3G spectrum was won by the assessee, it had acquired the rights to operate telecommunication services in the year 1995-1997 for Maharashtra, Gujarat, Uttar Pradesh West, Madhya Pradesh, Haryana. Andhra Pradesh, Kerala, Punjab telecom circles. In year 2001-02 it acquired rights for Himachal Pradesh, Uttar Pradesh East and thereafter in the year 2007-08 for Jammu & Kashmir. Even if 3G Spectrum was not applied or allotted, assessee could have still continued providing telecommunication services under existing license. The license to operate telecom services is issued u/s. 4 of the Indian Telegraph Act, 1885 which provide rights to establish and operate telecom services. As stated above, without such license one is not ever eligible to bid for 3G Spectrum. 3G Spectrum fees are merely for right to use a particular frequency/spectrum while providing telecommunication services. In view of the above, even the provisions of section 35ABB of the act are not applicable to such payment. In view of these facts, we are of the view that the assessee is entitled for claim of depreciation on merits also and AO has rightly allowed the claim while framing assessment under section 143(3) of the Act and the revision order of CIT Under section 263 of the Act is bad in law. Accordingly, we quash the revision order.”

24. Since the issue as to the allowability of depreciation on spectrum fee as claimed by the assessee under section 32 of the Act and the provisions contained under section 35ABB are not applicable has already been decided in favour of the assessee by the Tribunal, the order of the Tribunal cannot be allowed to be disobeyed by Ld. PCIT merely on the pretext that the department has not accepted the said decision and appeal has already been filed before the Hon’ble High Court. In order to maintain judicial discipline Ld. PCIT had no option but to follow the order.

25. Following the order passed by the co-ordinate Bench of the Tribunal, we are of the considered view that even on merits the assessee’s claim for depreciation on “spectrum fee” is allowable under section 32 of the Act as the provisions contained under section 35ABB of the Act being not applicable to the issue at hand. Hence, the order passed by the AO is not erroneous. So we are of the considered view that the AO has rightly allowed the claim by virtue of the assessment order framed under section 143 of the Act. So the question No.II framed is also decided in favour of the assessee and against the Revenue.

26. In view of what has been discussed above, we are of the considered view that impugned order passed by the Ld. PCIT under section 263 of the Act by invoking revisionary jurisdiction is not sustainable in the eyes of law, hence hereby quashed. Resultantly, appeal filed by the assessee is allowed.

Order pronounced in the open court on 28.01.2022.