BENEFITS TO TELECOMMUNICATIONS AND INFORMATION TECHNOLOGY

Rationalisation of the provisions relating to allowance for telecommunication licence fees.

In computation of the profits and grains of business or profession, a deduction is allowable under section 35ABB, in respect of any capital expenditure incurred for acquiring any right to operate telecommunication services and for which the payment has actually been made to obtain a licence. This deduction is allowable in equal instalments during the relevant previous years. Under the existing provisions, the expression "relevant previous year" means 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.

With a view to clarifying the he deduction is allowable in respect of the entire capital expenditure incurred and actually paid by the assessee, whether before the commencement of the business or thereafter, the Bill proposes to provide that in a case where the licence fee is actually paid before the commencement of the business, the relevant previous years would mean the previous years beginning with the previous year in which such business commenced and the subsequent previous years would mean the previous year beginning with the previous year in which such business commenced and the subsequent previous year or years during which the licence is in force. It is also proposed that no deduction under sub-section (1) of section 32 shall be available for such expenditure for the same year or any subsequent previous year.

The proposed amendment will take effect retrospectively from the 1st April, 1996 and will, accordingly, apply in relation to the assessment year 1996-97 and subsequent years