Income Tax Appellate Tribunal Delhi Bharat Sanchar Nigam Ltd., New Delhi vs Department Of Income Tax on 23 December, 2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.J.S.REDDY, ACCOUNTANT MEMBER I.T.A .No.3304/Del/2010 (ASSESSMENT YEAR200405) Bharat Sanchar Nigam Ltd., vs DCIT, Corporate Office, Taxation Section, Circle2(1), Room No.398, First Floor, Bharat Sanchar Bhawan, C.R.Building, I.P.Estate, Janpath, New Delhi1110001. New Delhi PANAABCB5576G (APPELLANT) (RESPONDENT) I.T.A .No.3386/Del/2010 (ASSESSMENT YEAR200405) DCIT, vs Bharat Sanchar Nigam Ltd., Circle2(1), Room No.398, Sanchar Bhawan, Janpath, C.R.Building, I.P.Estate, New Delhi. New Delhi PANAABCB5576G (APPELLANT) (RESPONDENT) Appellant by Sh. P. Pardiwala, Sr. Adv. & Sh.Anupam Pal Das, Adv. Respondent by Smt. Anuradha Misra, CIT DR Date of Hearing 12.10.2015 Date of Pronouncement 23 .12.2015 ORDER PER DIVA SINGH, JM The correctness of the order dated 30.04.2010 of CIT(A), New Delhi pertaining to 200405 assessment year is assailed both by the assessee and the Revenue in their respective appeals on the following grounds: ITA 3304/Del/2010 1. "That on the facts and circumstances of the case and in law, the ld. CIT(A) has erred in holding Rs. 2300 crores received by the appellant, on account of reimbursement of License fee etc. as ancillary income and not allowable for deduction u/s 80IA of the I.T. Act, 1961. I.T.A .No.3304 & 3386/Del/2010 2. That on the facts and circumstances of the case and in law, the ld. CIT(A) has erred in holding that the refund received by the appellant from Universal Service Fund of Rs. 310.25 crores, is not eligible for deduction u/s 80IA of the I.T. Act, for the same reasons as have been applied, while denying deduction u/s 80IA to reimbursement of License fee. 3. That on the facts and the circumstances of the case and in law, the ld. CIT(A) has erred in holding that the "interest from others" amounting to Rs. 11.79 crores (which includes interest on advances given to employees/suppliers) is not eligible for deduction u/s 80IA of the I.T. Act, 1961. 4. That the other passed by the CIT(A) is bad in law and contrary to the facts and circumstances of the case." ITA No. 3386/Del/2010 1. "The ld. CIT(A) has erred in law and on facts in holding that receipts amounting to Rs. 76,71,90,000/ on account of liquidated damages are entitled for deduction u/s 80IA of the I.T. Act ignoring the fact that it is necessary to prove that the receipt generated should be of first degree source of special activity, but not of ancillary and incidental activity of the undertaking. 2. The ld. CIT(A) has erred in law and on facts in holding that receipts amounting to Rs. 16,86,63,72,000/ on account of excess provision written back are entitled for deduction u/s 80IA of the I.T. Act ignoring the fact that write back of provision pertaining to earlier years which is no longer required is not an income derived from the business operations of the undertaking for the year under consideration. 3. The ld. CIT(A) has erred in law and on facts in holding that other receipts amounting to Rs. 1,42,90,32,000/ on account of sale of directories, publications, forms, waste paper, etc. are entitled for deduction u/s 80IA of the I.T. Act, ignoring that these receipts are on account of income connected with the business and cannot be termed to be explicitly derived from the principal business of the undertaking. 4. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any grounds of appeal at any time before or during the hearing of this appeal." 2. The relevant facts of the case are that the assessee in the year under consideration [as per the assessment order dated 25.09.2009 u/s 263/143(3)] filed its return of income on 31.10.2004. The said return was processed u/s 143(1) and thereafter assessment was made by an order u/s 143(3) which was rectified u/s 154/14