Section 80-IA(2A) of ITA, 1961 – Telecommunication services – Deduction u/s. 80-IA(2A) – Scope – Payment by third parties for availing of telecommunication services of assessee – Late fees and reimbursement of cheque dishonour charges received from such third parties – Income eligible for deduction u/s. 80-IA(2A)
30Principal CIT vs. Vodafone Mobile Services Ltd.; 414 ITR 276 (Del) Date of order: 3rd
December, 2018 A.Y.: 2008-09
Section 80-IA(2A) of ITA, 1961 – Telecommunication
services – Deduction u/s. 80-IA(2A) – Scope – Payment by third parties for
availing of telecommunication services of assessee – Late fees and
reimbursement of cheque dishonour charges received from such third parties –
Income eligible for deduction u/s. 80-IA(2A)
assessee was engaged in the business of providing telecommunication services.
For the A.Y. 2008-09, the AO denied the benefit of section 80-IA(2A) of the
Income-tax Act, 1961 on the profits and gains earned by the assessee from
sharing of infrastructure facilities in the form of cell-sites and fibre cable
with other companies or undertakings engaged in “telecommunication services”.
This, he held, would amount to leasing of the assets to third parties and
income from the leasing would not be income derived from “telecommunication
services”. The assessee had also paid bank charges as cheques issued by some of
the customers had been dishonoured. These charges were also levied to the
customers but the entire amount could not be recovered. The AO held that late
payment charges or cheque dishonour charges were in the nature of penalty and
not income derived from telecommunication business and hence not eligible for
deduction u/s. 80-IA(2A).
Commissioner (Appeals) and the Tribunal allowed the claims.
appeal by the Revenue, the Delhi High Court upheld the decision of the Tribunal
and held as under:
“i)The finding of
the Assessing Officer that income from sharing fibre cables and cell-sites was
income by way of leasing and hence not includible in revenue earned for
computing profits from ‘telecommunication service’ was far-fetched and
misconceived. The assets, i.e., cell-sites and fibre cables, were not
transferred. Third parties wanting to avail of the spare capacity were only allowed
usage of the facilities for consideration. Payments so made by the third
parties were to avail of and use the telecommunication infrastructure. They
would qualify as payments received for availing of ‘telecommunication
services’. The income from sharing of fibre cables and cell-sites qualified for
deduction u/s. 80-IA(2A).
ii)The Tribunal was also justified in upholding
the reasoning and order of the Commissioner (Appeals) on cheque dishonour and
late payment charges.”