Expenditure for obtaining Licence to operate Telecommunication Services - (New) Section 52 / (old) Section 35ABB

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.... Initial tax year Number of tax years over which deduction of expenditure is allowable in equal instalments A B C D 4. Capital expenditure incurred and actually paid for acquiring any right to operate telecommunication services (herein referred to as licence fee). Tax year in which,- (a) the business to operate telecom services is commenced; or (b) licence fee is actually paid, whichever is later. Number of years commencing from the initial tax year and ending in the tax year up to which the licence for which the fee is paid remains in force. Sub-section (2): Tax treatment on transfer, whether in whole or in part, of licence (a) Transfer at a LOSS • is transferred, and th....

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....of Amalgamation or Demerger, being an Indian company,- • (i) the provisions of clauses (a), (b), (c) and (d) of section 52(2) shall not apply to the amalgamating or demerged company; and • (ii) all the provisions of this section shall continue to apply to the amalgamated or resulting company as it would have applied to the amalgamating or demerged company, as if the transfer had not taken place. Sub-section (3): Partial transfer of licence • Where a part of licence is transferred in a tax year and sub-section (2)(b) and (c) does not apply, • the deduction to be allowed under sub-section (1) for the expenditure though incurred but remaining unallowed • New deduction per....

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....fession Profits and Gains" Different Situations Tax Treatment • Entire telecom licence is transferred i. When sale consideration is less than WDV WDV minus sale consideration is allowed as deduction under section 35ABB in the year of sale. ii. When sale consideration is more than WDV The excess of sale consideration over WDV is taxable as business income in the year of sale. When a part of telecom licence is transferred i. When sale consideration is less than WDV WDV minus sale consideration will be allowed as deduction over the unexpired period. ii. When sale consideration is more than WDV The excess of sale consideration over WDV is taxable as business income in the year of sale. Taxabl....