Sec. 28(i) & 35ABB(2) of Income-tax Act, 1961— Business income—Assessee engaged in business of providing telecom services and losses incurred on account of surrender of NLD license would be in the normal course of business, thus, same would be an allowable deduction to assessee as normal business losses.

Facts: Ground raised by Revenue is that CIT(A) erred in deleting the addition made by AO on account of disallowance of deduction under s. 35ABB(2) claimed in respect of NLD license to the tune of Rs. 2,50,00,000 without appreciating the fact that neither provisions of s. 35ABB(2) nor the CBDT Circular No. 783 dt. 18th Feb., 1998 are applicable to NLD license, as it does not confer right to operate telecommunication services.

Held, that the undisputed position is that assessee has surrendered NLD license to DOT during the year and accordingly, wrote-off the amount of Rs. 2.50 crores in its books of accounts, being license fees paid to acquire the NLD license. The allegation of AO was that NLD was an intangible asset which would be eligible for depreciation under s. 32. However, as per assessee’s submissions, assessee has never claimed depreciation against the same and the said fact remains unrebutted also. The perusal of financial statements for the year as placed corroborate the said fact which is further fortified by the fact that assessee has not claimed any depreciation on intangible assets in its IT return. This being the case, the assessee was clearly eligible to claim the write-off of Rs. 2.50 crores as normal business loss as well as in terms of provisions of s. 35ABB(2) read with CBDT Circular No. 763, dt. 18th Feb., 1998. It is noteworthy that assessee was engaged in the business of providing telecom services and the losses incurred on account of surrender of NLD license would be in the normal course of business and therefore, the same would be an allowable deduction to the assessee as normal business losses also. Therefore, by confirming the same, Revenue’s appeal was dismissed. - ASSTT. CIT V/s LOOP TELECOM LTD. - [2020] 205 TTJ 027 (ITAT-MUMBAI)