M. G. Road, Fort, Mumbai400 001 PAN/GIR No. AAACV 2808 C (Appellant) : (Respondent) Appellant by : Shri J. D. Mistri Respondent by : Shri Ritesh Misra Date of Hearing : 25.09.2025 Date of Pronouncement : 22.10.2025 ORDER Per Saktijit Dey, Vice President: Captioned appeal by the assessee, arises out of order dated 21.02.2024, passed by National Faceless Appeal Centre ('NFAC' for short), pertaining to assessment year (A.Y.) 19992000. 2. The sole controversy in the present appeal relates to disallowance of deduction claimed u/s. 80IA of the Act for an amount of Rs.99,39,44,246/. Briefly stated, the relevant facts are that the assessee, erstwhile Videsh Sanchar Nigam Limited ('VSNL' for short) was a Public Sector Undertaking (PSU), wherein the Central Government held majority stake. As stated by the Assessing Officer (A.O. for short), the PSU was given monopolistic rights by the Government to provide overseas telecom services. For the assessment year under dispute, the assessee filed its return of income on 31.12.1999, declaring income of Rs.1439.82 crores. The return of income so filed by the assessee was selected for scrutiny. 2 ITA No. 1 978 /Mu m/ 202 4 ( A .Y .199 9 200 0) Tata Communications Limited vs. Dy. CIT In course of assessment proceeding, the A.O., while verifying the return of income filed by the assessee, noticed that the assessee had claimed deduction of an amount of Rs.412,37,88,812/ u/s. 80IA of the Act. He further noticed that such deduction has been claimed in respect of profits derived from new earth stations installed by the assessee for providing telecommunication services at various places. It was claimed by the assessee that since the new earth stations are industrial undertaking under sub section (4C) of section 80IA of the Act and has started providing services after 01.04.1995, but before 31.03.2000, it is entitled for deduction. While examining assessee's claim, the A.O. was of the view that new earth stations is not an industrial undertaking in terms with section 80IA of the Act, but is only one link in an integrated telecommunication system. Relying upon the decision of the coordinate bench in case of MTNL (in ITA No. 1088 & 1618/Del/2000 for A.Ys. 199596 & 199697 vide order dated 10.12.2001), A.O. ultimately disallowed assessee's claim of deduction u/s. 80IA of the Act. 3. Being aggrieved with such disallowance, the assessee preferred an appeal before ld. first appellate authority. However, the assessee was unsuccessful. Hence, went in further appeal before the ITAT. Before the ITAT, the assessee specifically pleaded that the disallowance made by the A.O. is unwarranted as it was under factual misconception that the entire deduction claimed u/s. 80IA of the Act is in respect of new earth stations. Whereas, a part of the deduction claimed u/s. 80IA of the Act is with regard to internet services, which qualifies as an undertaking u/s. 80IA(4C) of the Act. Since the departmental authorities had not examined this aspect, the Tribunal remitted the issue back to ld. first appellate authority for deciding afresh keeping in view the amended provisions of section 80IA of the Act. As a result of such restoration, ld. first appellate authority took 3 ITA No. 1 978 /Mu m/ 202 4 ( A .Y .199 9 200 0) Tata Communications Limited vs. Dy. CIT up the proceedings again and called upon the assessee to make its submissions. In response, the assessee made detailed submissions in support of its claim of deduction in respect of internet services. After considering the submissions of the assessee, in the context of the facts and materials on record and relying upon certain judicial precedents, ld. first appellate authority ultimately rejected assessee's claim. 4. Being aggrieved the assessee is in appeal before us. 5. ld. Counsel app