ITAT: Tax Deduction for Telecommunication Services As Per Profits Of Eligible Business

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), permitting the deduction to Vodafone stated that the deduction for the telecommunication services would be available for “profits of eligible businesses” and is not limited to “profits derived from eligible businesses.”

The two-member bench of Vikas Awasthy (Judicial Member) and M. Balaganesh (Accountant Member) rendered that the assessing officer permits the advantage of the deduction under section 80IA of the Income Tax Act in respect of interest income and the various income.

The taxpayer has challenged the findings of CIT(A) for the disallowance of deductions for additional income under Section 80IA of the Income Tax Act.

The taxpayer said he had made an interest income of Rs. 6.09 crore and a various income of Rs. 4.98 crores. The taxpayer has claimed the deductions for the income. The same was not permitted via the assessing officer and the CIT(A).

The taxpayer, Delhi Bench of the Tribunal in the case of Bharat Sanchar Nigam Ltd. stated that the deduction for the telecommunication services would be permitted for the “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 have a huge scope as compared to the provisions of section 80IA (1). The deduction in calculating the total income of the implementation furnishes that the telecommunication services would be as per the provisions of sub-section (2A) of section 80IA.

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The problem asked was if the interest income along with the other income made via the taxpayer is qualified for the deduction under section 80IA.

The ITAT permitted the taxpayer’s appeal and stated that, for the non-obstante clause used in Section 80IA(2A), the deduction for telecommunication service would be available for the “profits of eligible businesses” and is not limited to “profits incurred via eligible businesses” as cited in Section 80IA(1).

Case Title	M/s. Vodafone India Ltd. Versus Dy. Commissioner of Income Tax
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
Mumbai ITAT	Read Order