ITAT : Deletes over Rs. 1500 cr. capital gains addition regarding Telenor India’s telecom license-fee set-off

Delhi ITAT deletes Rs. 1558.57 cr. capital gains addition on Telenor India for AY 2014-15, holds that set off of non-refundable entry fee paid by group co. (UW) to DoT in 2008, against the fresh spectrum fee payable by assessee towards allocation of telecom licenses cannot be regarded as 'transfer' u/s 2(47); Assessee and Unitech Wireless (Tamilnadu) Pvt. Ltd (UW) are both part of the Norwegian based Telenor group, assessee had acquired fresh telecom licenses for a spectrum fee of Rs. 4018 cr. in November, 2012, and had requested DoT to consider the set off of entry fee of Rs 1658.57 cr. already paid by UW in 2008 for grant of 22 unified access service licenses (‘UASL’), which were then quashed by SC; Subsequently in December 2012, assessee acquired UW’s business on going concern basis and entered into business transfer agreement (BTA) and Actionable Claim Agreement whereby UW transferred all the rights, claims, other rights against the DoT including the payment of license fee for consideration of Rs. 100 cr.; Rejects Revenue’s stand that the right acquired by assessee under the actionable claim agreement constituted a ‘capital asset’ u/s. 2(14) and that the said right was exercised by assessee in March, 2014, being the date on which the set off was allowed by DoT; Further rejects Revenue’s stand that consequent to the set off, capital asset acquired by assessee was extinguished and thus there was a ‘transfer’ u/s. 2(47) of a short term capital asset (being held for a period less than 36 months); ITAT holds that 'right' which is not enforceable by law, cannot be regarded as a 'capital asset', thus holds that assessee had not acquired any capital asset from UW under the Actionable Claim agreement since UW did not hold such asset at any point of time.:ITAT