35ABB. Expenditure for obtaining licence to operate telecommunication
services.- (1) In respect of any expenditure, being
in the nature of capital expenditure, incurred for acquiring
any right to operate telecommunication services either before
the commencement of the business to operate telecommunication
services or thereafter at any time during any previous year
and for which payment has actually been made to obtain a licence,
there shall, subject to and in accordance with the provisions
of this section, be allowed for each of the relevant previous
years, a deduction equal to the appropriate fraction of the
amount of such expenditure.
Explanation.—For the purposes of this section,—
(i) “relevant previous years” means,—
(A) in a case where the licence fee is actually paid before
the commencement of the business to operate telecommunication
services, the previous years beginning with the previous year
in which such business commenced;
(B) in any other case, the previous years beginning with
the previous year in which the licence fee is actually paid,
and the subsequent previous year or years during which the
licence, for which the fee is paid, shall be in force;
(ii) “appropriate fraction” means the fraction
the numerator of which is one and the denominator of which
is the total number of the relevant previous years;
(iii) “payment has actually been made” means
the actual payment of expenditure irrespective of the previous
year in which the liability for the expenditure was incurred
according to the method of accounting regularly employed by
the assessee.
(2) Where the licence is transferred and the proceeds of
the transfer (so far as they consist of capital sums) are
less than the expenditure incurred remaining unallowed, a
deduction equal to such expenditure remaining unallowed, as
reduced by the proceeds of the transfer, shall be allowed
in respect of the previous year in which the licence is transferred.
(3) Where the whole or any part of the licence is transferred
and the proceeds of the transfer (so far as they consist of
capital sums) exceed the amount of the expenditure incurred
remaining unallowed, so much of the excess as does not exceed
the difference between the expenditure incurred to obtain
the licence and the amount of such expenditure remaining unallowed
shall be chargeable to income-tax as profits and gains of
the business in the previous year in which the licence has
been transferred.
Explanation.—Where the licence is transferred in a previous
year in which the business is no longer in existence, the
provisions of this sub-section shall apply as if the business
is in existence in that previous year.
(4) Where the whole or any part of the licence is transferred
and the proceeds of the transfer (so far as they consist of
capital sums) are not less than the amount of expenditure
incurred remaining unallowed, no deduction for such expenditure
shall be allowed under sub-section (1) in respect of the previous
year in which the licence is transferred or in respect of
any subsequent previous year or years.
(5) Where a part of the licence is transferred in a previous
year and sub-section (3) does not apply, the deduction to
be allowed under sub-section (1) for expenditure incurred
remaining unallowed shall be arrived at by—
(a) subtracting the proceeds of transfer (so far as they
consist of capital sums) from the expenditure remaining unallowed;
and
(b) dividing the remainder by the number of relevant previous
years which have not expired at the beginning of the previous
year during which the licence is transferred.
(6) Where, in a scheme of amalgamation, the amalgamating
company sells or otherwise transfers the licence to the amalgamated
company (being an Indian company),—
(i) the provisions of sub-sections (2), (3) and (4) shall
not apply in the case of the amalgamating company; and
(ii) the provisions of this section shall, as far as may
be, apply to the amalgamated company as they would have applied
to the amalga-mating company if the latter had not transferred
the licence.
(7) Where, in a scheme of demerger, the demerged company
sells or otherwise transfers the licence to the resulting
company (being an Indian company),—
(i) the provisions of sub-sections (2), (3) and (4) shall
not apply in the case of the demerged company; and
(ii) the provisions of this section shall, as far as may
be, apply to the resulting company as they would have applied
to the demerged company if the latter had not transferred
the licence.
(8) Where a deduction for any previous year under sub-section
(1) is claimed and allowed in respect of any expenditure referred
to in that sub-section, no deduction shall be allowed under
sub-section (1) of section 32 for the same previous year or
any subsequent previous year.
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