Supreme Court holds telecom annual licence fee and entry fee be regarded as capital expenditure

The Supreme Court has held that the variable annual licence fee and entry fee under the New Telecom Policy, 1999 is to be regarded as capital ex­penditure and amortised in accordance with Section 35ABB of the Income Tax Act. The move implies that telcos will need to deduct a portion of the total fee each year for tax purposes, instead of deducting the entire expenditure all at once.