SC rejects telcos’ plea of licence fee be treated as revenue expenditure

SC upholds tax department plea against telcos

The Supreme Court on October 16 held that the licence fee paid by telecommunication companies such as Bharti Airtel, Vodafone Idea post July 1999 to be treated as capital expenditure and not revenue expenditure.

The apex court accepted Income Tax Department's contention that since the annual payment based on Adjusted Gross Revenue is again only towards License fees and merely because it is paid based on the annual gross revenue  the payment cannot be construed as revenue expenditure.

The SC has put an end to a decade-old litigation between the income tax department and the telecommunication companies with this litigation. Earlier Delhi High Court had held that the expenditure cannot be construed as capital expenditure since  license fee is paid as a part of the revenue as per the AGR scheme.

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