Delhi HC Allows Vodafone To Claim Rs 5.1 Crore Depreciation Over Estimated Costs To Restore Mobile Tower Sites: Contingent Liability Vs Laid Out Expense

The obligation to repair and restore forms the core of the contractual obligation which stood placed upon the assessee. It was entitled to provision for such an expense provided it was considered probable and could be quantified on the basis of a reasonable estimation.

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The Delhi High Court in the case Vodafone Mobile Services Ltd. v. Deputy Commissioner Of Income Tax observed and has allowed Vodafone Mobile, who is engaged in providing telecommunication services, in order to claim depreciation of ₹5.10 crores in respect of fixed assets over provisioned expenditure to discharge its contractual obligation of restoring mobile tower sites to their original condition at the end of the lease period.

The Asset reconstruction Cost, ARC was laid out by Vodafone, the Assessing Officer, AO had disallowed the claim, wherein it is stated that the same is not 'ascertained liability'.

The Division bench comprising of Justice Yashwant Varma and Justice Harish Vaidyanathan Shankar was hearing the present matter.