The Bengaluru bench of the Income Tax Appellate Tribunal (ITAT) held that the recurring charges paid to telephone lines are revenue in nature and deletes the addition to regard to telecommunication.
The assessee, M/s. Altisource Business Solutions Private Limited is engaged in the business of providing contract software development and support services and information Technology (IT) enabled services including data analysis, compilation and transmission of customized software to overseas group affiliates (AEs).
The assessee filed the return of income on 23.11.2017, declaring a total income of Rs.1,32,81,87,980/- under normal provisions of the Act and a book profit of Rs. 1,12,46,32,841/- u/s. 115JB of the Act and the Transfer Pricing Officer (TPO) made a TP adjustment of Rs.68,55,27,641/.
The assessee had submitted the invoices of Tata Docomo charges towards telephone lines the numbers of, the Aircel invoices are raised towards port charges which was a fixed payment every month and the invoices of Verizon has the description as âinternet recurringâ charges.
It was clear that the charges paid by the assessee are towards telephone lines, monthly port charges and recurring internet charges.From the sample invoices, it was clear that the assessee incurs monthly recurring charges, towards internet, telephone lines, port charges, etc. which are of a revenue nature and these expenditures do not bring any benefit to the assessee incurred in the normal course of business.
Shri George George K, Judicial Member and Ms Padmavathy s, Accountant Member viewed that the expenditure incurred by the assessee under the head âtelecommunication linesâ was of a revenue nature.
The Tribunal while allowing the appeal, deleted the addition made about âtelecommunication lines. âShri Nitin G. Inamdar appeared for the assessee/ appellant and Shri Srinivas appeared for the respondent.
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