The determination of arm's length price at Nil for royalty payments and AMP expenses without applying prescribed methods is unjustified.

ORDER

PER ANIKESH BANERJEE:

Instant appeal of the assessee was filed against the order of the Learned Dispute Resolution Panel-II, New Delhi-02 *for brevity, ‘Ld.DRP’) passed under section 144C(5) of the Income-tax Act, 1961 (for brevity, ‘the Act’), dated21/11/2013 for A.Y. 2009-10. The impugned order was emanated from the draft assessment order U/s 144C(1) r.w.s. 143(3) of the Actdated 28/03/2013 of the Ld.DCIT, Circle-17(1), New Delhi (for brevity the Ld. AO).

2. The assessee has raised the following grounds of appeal: -

“The Appellant respectfully submits that:

On the facts and circumstances of the case and in law, the learned Dispute Resolution Panel -11. New Delhi (DRP") has erred in passing the order under section 144C(5) of the Income Tax Act, 1961 (Act"), partly confirming the adjustments proposed by the Deputy Commissioner of Income Tax, Circle 17(1) New Delhi ("AO’) in the draft assessment order and the learned AO has accordingly erred in passing the assessment order under section 143(3) read with section 144C of the Act.

Each of the ground is referred to separately, which may kindly be considered independent of each other.

1. On Amortization Of Revenue Based License Fee u/s 35ABB Of The Act

1.1. On the facts and circumstances of the case and in law, the learned AO/DRP has erred in treating the annual revenue share based license fee of Rs 2,05,38,20,412, payable by the Appellant to Department of Telecom (DoT), as a ’capital" expenditure being consideration for obtaining the telecom license and hence, amortisable u/s 35ABB of the Act

2. Disallowance of depreciation claimed on the addition to fixed assets on account of Asset Restoration Cost (ARC) obligation.

2.1. On the facts and circumstances of the case and in law, the learned AG DRP has erred in disallowing the depreciation amounting to Rs 5,10,79,752 claimed on fixed assets on account of ARC obligation.

2.2. On the facts and circumstances of the case and in law, the learned AO/DRP has erred in not including the amount of ARC as a part of the cost of the telecom towers under section 43(1) of the Act.

2.3. In the alternative to ground 2.1 and 2.2 above, on the facts and circumstances of the case and in law, the learned AO/DRP has erred in not allowing deduction for ARC as a revenue expense under section 37(1) of the Act.

2.4. In the alternative to ground 2.1 to 2.3 above, on the facts and circumstances of the case and in law, the learned AO/DRP has erred in not allowing deduction for ARC on a proportionate basis over the period of lease.

3. Disallowance of interest on capital work-in-progress (’CWIP")

3.1. On the facts and circumstances of the case and in law, the learned AO/DRP has erred in disallowing interest expenses of Rs 26,45,28,627 on capital work-in-progress under section 36(1)(m) of the Act.

32. Without prejudice to Ground 3.1 above, on the facts and circumstances of the case and in law the learned AO/DRP has erred in not allowing depreciation on such capitalized interest expenses

4. Disallowance of roaming charges under section 40(a)(ia) of the Act

4.1. On the facts and circumstances of the case and in law, the learned AO/DRP has erred in making an addition under section 40(a)(ia) of the Act on account of non-deduction of taxes on the roaming charges of Rs 70,86,29,294, paid/payable by the Appellant to other telecom operators for the financial year relevant to the subject AY.

4.2. On the facts and in the circumstances of the case and in law, the learned AO/DRP has erred in not holding that roaming charges do not qualify as Fee for Technical Services (FTS") under the Act since roaming services are standard automated service requiring no human intervention.

4.3. On the facts and in the circumstances of the case and in law, the learned AO/DRP has erred in not appreciating that the examination of technical experts by the TDS officer subsequent to the judgment of the Hon’ble Supreme Court in the case of the Vodafone Mobile Services Limited (’VMSL), a sister concern of the Appell