DCIT, NEW DELHI vs. M/S. SISTEMA SHYAM TELESERVICES LTD., NEW DELHI

(A) This appeal by Revenue is filed against the impugned appellate order of Learned Commissioner of Income Tax (Appeals)-17, New Delhi [“Ld. CIT(A)”, for short], dated 01.09.2016 for Assessment Year 2011-12. Grounds taken in this appeal of Revenue are as under:

“1. Whether the revenue recognition in respect of unutilized talk of prepaid cards, realized and available without encumbrance, can be postponed to the period when same would be rendered.

ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. 2. Whether the income did not accrue to the respondent u/s 2(24) of the Act, qua the prepaid cards during the relevant year when it received the advance charges from subscriber through the appointed dealers.

(B) The Assessing Officer (“AO”, for short), in Assessment Order dated 27.03.2015 passed under Section 143(3) read with Section 144C of the Income Tax Act, 1961 (“I.T. Act”, for short), made an addition of Rs. 64,50,92,443/-. This amount was shown by the assessee in books of account as unaccrued revenue on account of sale of prepaid paper, RCV, electronic RCV; which, however, was treated by the AO as income of the assessee on the ground that assessee was maintaining mercantile system of accounting. The relevant portion of the Assessment Order is reproduced as under:

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ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. (B.1) The Ld. CIT(A), vide his impugned appellate order dated 01.09.2016 deleted the aforesaid addition amounting to Rs. 64,50,92,443/-; following the order of Income Tax Appellate Tribunal (“ITAT”, for short) in assessee’s own case, in earlier years in identical facts and circumstances. The relevant portion of the order of the Ld. CIT(A) is reproduced as under:

“2. There is only one issue involved in all the grounds of appeal which relates to addition of Rs.64,50,92,443/- made by the AO towards unaccrued revenue on account of sale of prepaid paper, RGV, electronic RCV etc. on the ground that the appellant was following mercantile system of accounting, therefore, the income accrued during the year was assessed to tax. However, the AO himself has mentioned in the assessment order that the Hon’ble ITAT had decided this issue in favour of the appellant in the earlier year; and since the department has contested order of the ITAT before the Hon’ble Delhi High Court, therefore, the addition was made. The appellant furnished the copy of the ITAT' order by which the matter was decided in favour of the appellant. On perusal of the same, I find that since on identical facts in the appellant's own case, appeal was decided by the ITAT in favour of the appellant, therefore, the order of the ITAT is followed.”

(B.2) During appellate proceedings in ITAT, the copies of the following orders were filed from the assessee’s side:

(i) Consolidated order dated 15.11.2018 of Hon’ble Delhi High Court in assessee’s own case in ITA Numbers 70/2013 (CIT vs. Shyam Telelink Ltd.),

73/2013 (CIT vs. Shyam Telelink Ltd.) and 1069/2017 (Pr. CIT vs. Sistema Shyam Teleservices Ltd.) (ii) Supreme Court’s order – Special Leave Petition (Civil) Dairy No(s). 18936/2019 in assessee’s own case [Pr. CIT vs. Sistena Shyam Teleservices Ltd., digitally signed dated 18.07.2019] Page 3 of 24

ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. (iii) Assessment Order dated 30.03.2016 for AY 2012-13 in assessee’s own case, passed u/s 143(3) of Income Tax Act by the Assessing Officer.

(C) At the time of hearing before us, the Ld. Authorized Representative (“AR”, for short) of the assessee brought to our notice at the outset that the order of Hon’ble Delhi High court in the case of the assessee for earlier years in identical facts and circumstances has already been passed on the identical issue in dispute, vide order dated 15.11.2018 in (CIT vs. Shyam Telelink Ltd.), 73/2013 (CIT vs. Shyam Telelink Ltd.) and 1069/2017 (Pr. CIT vs. Sistema Shyam Teleservices Ltd.). [This order is already referred to in foregoing paragraph (B.2)(i) of this order.] He further submitted that the Special Leave Petition of Revenue against the aforesaid order dated 15.11.2018 of Hon’ble Delhi High Court has already been dismissed by Hon’ble Supreme Court vide Special Leave Petition (Civil) Diary No (s).

18936/2019. [This order of Hon’ble Supreme Court has already been referred to in foregoing paragraph (B.2)(ii) of this order]. In view of these orders of Hon’ble Delhi High Court and Hon’ble Supreme Court respectively, he contended; the identical issue in dispute for earlier years has already attained finality, in assessee’s own case. He submitted that the aforesaid order of Hon’ble Delhi High Court dated 15.11.2018 may be followed for deciding the issue in dispute in the present appeal in ITAT; facts and circumstances being identical, and the issue in dispute being identical too; and thus squarely covered by the aforesaid order dated 15.11.2018 of Hon’ble Delhi High Court in assessee’s own case. The Ld. AR of the assessee also drew our attention to Assessment Order dated 30.03.2016 [already referred to in foregoing

ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. paragraph (B.2)(iii) of this order] in the case of the assessee, passed under Section 143(3) of the I.T. Act, wherein the aforesaid amount of Rs. 64,50,92,443/- has already been taxed as the assessee’s income for Assessment Year 2012-13; and submitted that this amount should not be taxed in this year (Assessment Year 2011- 12) in view of the aforesaid order dated 15.11.2018 of Hon’ble Delhi High Court. The Ld. Senior Departmental Representative (“Sr. DR”, of short) for Revenue agreed that the issue in dispute is squarely covered by identical issue decided by Hon’ble Delhi High Court in assessee’s own case in identical facts and circumstances, vide aforesaid order dated 15.11.2018 of Hon’ble Delhi High Court. In view of the foregoing, and as neither side has brought any materials to our notice or for our consideration to distinguish either the facts and circumstances of this year or issue in dispute in this year, from these pertaining to aforesaid order dated 15.11.2018 of Hon’ble Delhi High Court in assessee’s own case; we conclude that the facts and circumstances as well as the issue in dispute are identical and further, that the issue in dispute in the present appeal is squarely covered by the aforesaid order dated 15.11.2018 of Hon’ble Delhi High Court. On perusal of the aforesaid order dated 15.11.2018 of Hon’ble Delhi High court, it is found at paragraphs 19 and 20 of the order, that the assessee has accepted that unutilized amount, when the prepaid cards lapse, has to be treated as income or receipt of the assessee on the date when the cards had lapsed. Hon’ble Delhi High Court has specifically given clarification in paragraph 20 of the aforesaid order dated 15.11.2018, in these words: “… we would clarify that the Assessing officer while passing the appeal effect order, would ensure that the unutilized talk time has been accounted for and included in the receipt of the year in Page 5 of 24

ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. which the amount had lapsed and was forgone…” The relevant portion of the aforesaid order dated 15.11.2018 of Hon’ble Delhi High Court, including the aforesaid paragraphs 19 and 20, is reproduced below for ease of reference, and for guidance:

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ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd.

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(D) In the course of the appellate proceedings in ITAT, the Ld. AR of the assessee did file copy of the aforesaid Assessment Order dated 30.03.2016 for Assessment Year 2012-13 to show that the aforesaid amount of Rs. 64,50,92,443/- has been taxed as assessee’s income in Assessment Year 2012-13 and it was submitted on behalf of the assessee, that this amount should not be added in assessee’s income for Assessment Year 2011-12; consistent with the aforesaid paragraphs 19 and 20 of the order dated 15.11.2018 of Hon’ble Delhi High Court. However, for full compliance of the aforesaid direction contained in paragraphs 19 and 20 of Hon’ble Delhi High Court it is also necessary to have information regarding unutilized amount in respect of prepaid cards which, though issued in earlier years, lapsed in the previous year relevant to Assessment Year

ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. 2011-12. This information is neither available in appeal folder pertaining to this appeal before us, nor was provided by either of the two sides in the course of appellate proceedings of this appeal in Income Tax Appellate Tribunal. In this situation, when information regarding unutilized amount of prepaid cards issued by the assessee in earlier years, which lapsed in the previous year relevant to Assessment Year 2011-12 is not available readily; we are constrained to remand the matter back to the file of the Assessing officer to determine the income of the assessee in accordance with the aforesaid order dated 15.11.2018 of Hon’ble Delhi High Court; after ascertaining the information relevant for giving effect to aforesaid paragraphs 19 and 20 of the aforesaid order dated 15.11.2018 of Hon’ble Delhi High Court. Accordingly, we set aside the orders of the lower authorities [aforesaid Assessment Order dated 30.03.2016 and aforesaid impugned appellate order dated 01.09.2016 of the Ld. CIT(A)] and restore the issue in dispute to the file of the AO with the direction to pass fresh order as per law in accordance with aforesaid order dated 15.11.2018 of Hon’ble Delhi High Court and after ascertaining the information necessary for giving effect to the aforesaid paragraphs 19 and 20 of aforesaid order dated 15.11.2018 of Hon’ble Delhi High Court. Needless to say, the Assessing Officer will provide reasonable opportunity to the assessee before passing fresh order. We also direct the assessee to co- operate fully and expeditiously with the Assessing Officer for in ascertaining information necessary for giving effect to the aforesaid paragraphs 19 and 20 of aforesaid order dated 15.11.2018 of Hon’ble Delhi High Court. This appeal is disposed off with the aforesaid directions to the two sides. For statistical Page 22 of 24

ITA No.-5890/Del/2016. M/s Sistema Shyam Teleservices Ltd. purposes, appeal is partly allowed.

Order is pronounced in Open Court on 28/02/2020.