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Before: SHRI R. S. SYAL & SMT SUCHITRA KAMBLE
ORDER PER SUCHITRA KAMBLE, JM
These appeals are filed by the Assessee against the orders dated 26/12/2012 passed by CIT (A)-V, New Delhi for A.Ys. 2004- 05 and 2005-06.
The assessee was carrying out the business of cellular phone and land line service and its associated value added service for the relevant Assessment Years 2004-05 and 2005-06. Original assessment for A.Y. 2004-05 was completed on 27/12/2006 at ‘Nil’ income after setting off of brought forward losses and unobserved depreciation of Rs. 48,38,52,447/- under normal provisions of the Income-tax Act and at Rs.38,05,69,000/- in term of Section 115JB of the Income-tax Act. Proceedings u/s 147 initiated after recording reasons thereto. The A.O. completed the assessment on 9/11/2011 at an income of Rs.9,24,50,000/- after making disallowance u/s 40 (a) (ia) of the Act amounting to Rs.9,24,50,000/-. The A.O disallowed similar expenses to the extent of Rs.67,9500/- for free airtime to distributors u/s 40(a)(ia) & Rs. 82,02,000/- for roaming charges u/s 40(a) (ia). For the A.Y. 2005-06 Assessment was completed on 31/12/2007 at Nil income after approving the claim of deduction u/s 80IA of the Act amounting to Rs.14,34,76,918/- and at Rs.48,71,81,220/- in terms of Section 115JB of the Act. The Assessing Officer completed the Assessment at an income of Rs.14,34,76,918/- after making disallowance under Section 40(a)(ia) amounting to Rs. 1,49,97,000/-.
Being aggrieved with the said actions of the Assessing Officer, the assessee filed appeals before the CIT(A) for both the Assessment Years. The CIT (A) dismissed the appeals of the assessee. Therefore, the assessee filed present appeals.
The Ld. AR submitted that as relates to order passed u/s 201 (1) of the Act, the ITAT Jaipur Bench [ITA No. 251/JP 2013 (A.Y 2004-05) & (A. Y 2005-06)] decided the issue in favour of the assessee for the Assessment Years i.e. 2004-05 & 2005-06. The department has not filed any appeals against the said order before the Hon’ble High Court. Thus, the ITAT order setting aside the order u/s 201(1) of the Act attains finality. It is submitted by the Ld. AR that related to order u/s 201(1) of the Act has been set aside. Thus the issue of TDS does not survive and hence applicability of Section 40(a) (ia) of the Act does not sustain. The Ld. AR further submitted that proceedings under Section 147 of the Act was beyond limitation & hence the Assessment Orders itself are not sustainable under law as time barred.
The Ld. DR could not submit any argument contrary to these facts and the legal position.
We have heard both the sides and gone through the order passed by the ITAT Jaipur Bench. Once the order u/s 201(1) of the Act is set aside then the issue related to Section 40(a) (ia) of the Act does not sustain. Thus the disallowance under Section 40(a)(ia) of the Act in respect of free airtime to distributors and roaming charges by the Assessing Officer does not sustain in light of the order passed by the ITAT, Jaipur Bench in assessee’s own case.
In result, both the appeals are allowed.
The order is pronounced in the open court 26th of July 2016.