At a time when it is lagging behind its private counterparts, Mahanagar Telephone Nigam [Get Quote] Limited on Tuesday got a Rs 1,395 crore (Rs 13.95 billion) bonanza from the Income Tax department as refund for license fee for the last six years.

The refund also includes interest payment of Rs 166.19 crore (Rs 1.66 billion), which would increase the net profit of MTNL for the last financial year.

"The interest component will have an impact on our net profitability. We are expecting it to go up by about Rs 120 crore (Rs 1.2 billion)," MTNL Director (Finance) Anita Soni told PTI. 

The company has lined up huge investments to ramp its GSM capacity both in Delhi and Mumbai and also broadband network.

The company is planning to invest over Rs 1,500 crore (Rs 15 billion) during the current financial year and the refunds would be utilised for the purpose.

MTNL had been pursuing a fierce battle against I-T department before the appellate tribunal on allowing licence fee as an expense for running business and getting income tax rebate accordingly.

The company had posted a net profit of Rs 940 crore (Rs 9.4 billion) during the last financial year and the figure for the first nine months in the 2007-08 stood at Rs 480 crore (Rs 4.8 billion). Refund of Rs 1,395 crore (Rs 13.95 billion) would give the company a major boost.

MTNL has been offering various telecom services, including landline, mobile, broadband and had recently launched Internet Protocol on TV like cable services both in Delhi and Mumbai and has planned major expansion in all the segments.