ITAT allows Vodafone Idea to claim depreciation on spectrum fee

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has allowed Vodafone Idea‘s claim for depreciation on the spectrum fee it paid for the monetary yr 2014-15, bringing some aid for the cash-strapped telecom firm in a Rs 408 crore tax claim.

Vodafone India, which merged with Idea Cellular in 2018 to kind Vodafone Idea, had in its tax return filed for the evaluation yr 2015-16 declared a complete revenue of greater than Rs 4,350 crore and claimed a depreciation of Rs 1,682.48 crore at 25% on the spectrum fee it had paid.

It handled spectrum as an ‘intangible asset’, which is allowed below Section 32 of the Income Tax Act.

The assessing officer allowed depreciation of Rs 408.01 crore that the corporate sought to amortise in the course of the yr on its 3G spectrum fee. But the principal commissioner of I-T issued a discover, disallowing depreciation citing Section 35ABB of the Act, stated spectrum fee claimed as depreciation mustn’t have been amortised on a pro-rata foundation over the interval wherein a telecom licence was in drive.

Section 35ABB covers expenditure incurred for buying a licence to function telecom companies, and the deduction below it’s out there on the precise cost.

The principal commissioner stated the evaluation order was faulty and prejudicial to the curiosity of the federal government.

However, the ITAT dominated that assessee’s claim for depreciation on spectrum fee is allowable below Section 32 of the Act. Pehal News