Deduction For Telecommunication Services of ' Vodafone' Is Available For "Profits Of Eligible Business": ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), while allowing deduction to Vodafone, held that deduction for telecommunication services is available in respect of "profits of eligible businesses" and is not restricted to "profits derived from eligible businesses."

The two-member bench of Vikas Awasthy (Judicial Member) and M. Balaganesh (Accountant Member) has directed the Assessing Officer to allow the benefit of deduction under section 80IA of the Income Tax Act in respect of interest income as well as miscellaneous income.

The assessee/appellant has challenged the findings of CIT(A) regarding the disallowance of deductions for other income under Section 80IA of the Income Tax Act.

The assessee submitted that the assessee had earned an interest income of Rs. 6.09 crore and a miscellaneous income of Rs. 4.98 crores. The assessee claimed deductions in respect of the income. It was disallowed by the Assessing Officer and the CIT (A).

The assessee submitted that the Delhi Bench of the Tribunal in the case of Bharat Sanchar Nigam Ltd. (BSNL) has held that deduction for telecommunication services is allowable in respect of "profits of eligible businesses and not restricted to profits derived from eligible businesses as mentioned in Section 80IA of the Act."

The provisions of sub-section (2A) of Section 80IA are much broader in scope as compared to the provisions of section 80IA (1). The deduction in computing the total income of an undertaking that provides telecommunication services shall be in accordance with the provisions of sub-section (2A) of Section 80IA.

The issue raised was whether interest income and miscellaneous income earned by the assessee would be eligible for deduction under Section 80IA.

The ITAT has allowed the appeal of the assessee and has held that, in terms of the non-obstante clause used in Section 80IA(2A), the deduction for telecommunication services is available in respect of "profits of eligible businesses" and is not restricted to "profits derived from eligible businesses" as mentioned in Section 80IA(1).

Case Title: Dy. Commissioner of Income Tax Versus M/s. Vodafone India Ltd.

Citation: ITA NO.5598/MUM/2017(A.Y.2005-06)

Date: 28/11/2022

Counsel For Appellant: Anand Mohan and Ajay K.R.Kesari

Counsel For Respondent: Salil Kapoor, Ketan Ved, and Soumya Singh

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