28/01/2019
Expenditure for obtaining right to use spectrum for telecommunication services [Sec 35ABA, applicable from the assessment year 2017-18] :- Section 35ABA provides tax treatment of spectrum fees on the following lines.
1. Any capital expenditure incurred and actually paid by an assessee on the acquisition of any right to Use spectrum for telecommunication services by paying spectrum fee will be allowed as a deduction in equal instalments over the period for which the right to use spectrum remains in force. Deduction will be available starting from the year in which actual payment is made (or the year of commencement of business, whichever is later) and ending with the year when spectrum comes to an end, 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 or payable in such manner as may be prescribed.
2. Where the spectrum is transferred and proceeds of the transfer are less than the expenditure remaining unallowed, a deduction equal to the expenditure remaining unallowed as reduced by the proceeds of transfer, shall be allowed in the previous year in which the spectrum has been transferred.
3. If the spectrum is transferred and proceeds of the transfer exceed the amount of expenditure remaining unallowed, the excess amount shall be chargeable to tax as profits and gains of business in the previous year in which the spectrum has been transferred.
4. Unallowed expenses in a case where a part of the spectrum is transferred would be amortised.
5. Where any deduction has been claimed and granted to the assessee in accordance with the above provisions and, subsequently, there is failure to comply with any of the provisions of this section, then the deduction shall be deemed to have been wrongly allowed. In such a case, the Assessing Officer can recompute the total income of the assessee for the previous year (in which deduction was claimed) and make the necessary rectification. Such rectification can be done within 4 years from the end of the previous year in which the failure takes place.
6. Under the scheme of amalgamation, if the amalgamating company sells or transfer the spectrum to an amalgamated company, being an Indian company, then the provisions of this section will apply to amalgamated company as they would have applied to amalgamating company if later has not transferred the spectrum. Similar rules will be applicable in the case of demerger.
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