The Income Tax Appellate Tribunal has directed the Income Tax department to refund to MTNL, Rs 956 crore (Rs 9.56 billion) as tax and Rs 277 crore (rs 2.77 billion) as interest on it, Anita Soni, director (Finance), MTNL told PTI.
MTNL had been pursuing a fierce battle against the I-T department before the appellate tribunal on allowing licence fee as an expense for running the business, as MTNL cannot provide telecom services without paying fee for the licence. MTNL's net profit last year stood at Rs 940 crore (Rs 9.40 billion) and the figure for the first nine months in the current financial year was Rs 480 crore (Rs 4.8 billion).
Refund of Rs 1,233 crore would give the company a major boost, Soni said. Asked when the refund was expected and how it would be utilised, Soni said: "We expect to get the amount in the current financial year. "As far as utilisation is concerned, I am looking at various options... We have 16.3 lakh GSM subscribers and the segment is expanding very fast and requires lots of funds," Soni added.
Soni said the logic of treating license fee as a business expense has been accepted by Income Tax Authorities for all telecom operators as well as for BSNL, but the same was denied only to MTNL.
The tribunal while passing a consolidated order for four assessment years (1998-99, 1999-2000, 2000-01 and 2002-03) held License Fee as allowable business expenditure under section 37 of the IT Act.
"MTNL was the only telecom operator which was not allowed licence fee as an expense whereas all other private operators have been treating licence fee as an expense, which was allowed by IT Authorities," Soni said.
MTNL has been pursuing expansion of GSM operations and wireline broadband both in Delhi and Mumbai in a major way envisaging huge investments in the coming two-three years.