Vodafone Idea Ltd Vs ACIT (ITAT Delhi)
Vodafone Idea challenged the final assessment framed u/s 143(3) r.w.s. 144C for AY 2012-13 involving several major disallowances & TP adjustments; Delhi ITAT grants sweeping relief to Vodafone Idea – Royalty, Spectrum, Roaming & DoT penalty allowed
Tribunal deleted the TP adjustment of ₹120.54 crore on royalty for ‘Vodafone’ & ‘Essar’ brands, holding that TPO wrongly used controlled comparables (Virgin Group), relying on earlier Vodafone group rulings. Depreciation of ₹12,471.74 crore on 3G spectrum was allowed as intangible asset u/s 32, not governed by s.35ABB/35ABA. DoT penalty of ₹21.39 crore was held contractual & deductible u/s 37(1).
Depreciation on Asset Restoration Cost & similar expenses was allowed per Delhi HC (Vodafone Mobile Services Ltd, 11-03-2025). Liabilities written back (₹2.5 crore) were taxed u/s 28(iv) as business benefit.
TDS disallowance on discounts to prepaid distributors (₹664.79 crore) & roaming charges (₹454.75 crore) was deleted following SC in Bharti Cellular Ltd & HC in Vodafone South Ltd. License fee (₹9317.85 crore) was held capital per SC in Bharti Hexacom, though amortization allowed.
IBM lease payments (₹96.71 crore) were treated as revenue since ownership remained with IBM; CBDT Circular 2/2001 & Minda Corporation followed. WPC Royalty ₹791.56 crore was allowed as revenue per Delhi HC in Vodafone West Ltd. MAT addition of ₹1879.70 crore for miscellaneous expenditure was deleted since AO cannot alter book profits beyond Explanation 1 to s.115JB (Apollo Tyres, HCL Comnet applied).
