Section 52 — Amortisation of expenditure for telecommunications services, amalgamation, demerger, scheme of voluntary retirement, etc

(1) Where an expenditure of the nature specified in column B of the Table given
below is incurred during the tax year, a deduction or part thereof shall be
allowed in equal instalments in each of the successive tax years as mentioned in
column D of the said Table, beginning from the initial tax year specified in column
C thereof.
TABLE
Sl.
No.
Nature of expenditure Initial tax year Number of tax years
over which deduction of
expenditure is allowable
in equal instalments
A B C D
1. Expenditure incurred
by an Indian company,
wholly and exclusively
for the purposes of amal-
gamation or demerger of
an undertaking.
Tax year in which such
amalgamation or
demerger takes place.
Five tax years.
2. Amount paid to an
employee in connection
with his voluntary retire-
ment as per any scheme
of voluntary retirement.
Tax year in which such
payment is made.
Five tax years.
3. Capital expenditure
incurred and actually
paid for acquiring any
right to use spectrum
for telecommunication
services (spectrum fee).
Tax year in which,—
( a) the business to
operate telecom
services is com -
menced; or
( b) spectrum fee is
actually paid,
whichever is later.
Number of years com -
mencing from the initial
tax year and ending in
the tax year up to which
the spectrum for which
the fee is paid remains
in force.
4. Capital expenditure in -
curred and actually paid
for acquiring any right
to operate telecommu -
nication services (herein
referred to as licence
fee).
Tax year in which,—
( a) the business to
operate telecom
services is com -
menced; or
( b) licence fee is actu-
ally paid,
whichever is later.
Number of years com -
mencing from the initial
tax year and ending in the
tax year up to which the
licence for which the fee
is paid remains in force.
(2) Where the licence or spectrum referred to in sub-section (1) (Table: Sl. No.
3 or 4)—
( a) is transferred, and the proceeds of the transfer (so far as they consist of
capital sums) are less than the expenditure though incurred, but 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 tax year in which the licence or spectrum is transferred;
( b) is transferred, whether in whole or in part, and the proceeds of the
transfer (so far as they consist of capital sums) exceed the amount of the
expenditure though incurred, but remaining unallowed, so much of the
excess as does not exceed the difference between the expenditure incurred
to obtain the licence or spectrum and the amount of such expenditure
remaining unallowed, shall be chargeable to income-tax as profits and
gains of the business in the tax year in which the licence or spectrum
has been transferred;
( c) is transferred under clause (b) in a tax year in which the business is no
longer in existence, the provisions of said clause shall apply as if the
business is in existence in that tax year;
( d) is transferred, whether in whole or in part, and the proceeds of the trans-
fer (so far as they consist of capital sums) are equal or greater than the
amount of expenditure incurred remaining unallowed, no deduction for
such expenditure shall be allowed under sub-section (1) in respect of the
tax year in which the licence or spectrum is transferred or in respect of
any subsequent tax year or years;
( e) is sold or otherwise transferred by the amalgamating company or
demerged company, as the case may be, in a scheme of amalgamation
or demerger, to the amalgamated company or resulting company, being
an Indian company,—
( i) the provisions of clauses (a), (b), (c) and (d) shall not apply to the
amalgamating or demerged company; and
( ii) all the provisions of this section shall continue to apply to the
amalgamated or resulting company as it would have applied to
the amalgamating or demerged company, as if the transfer had not
taken place.
(3) Where a part of licence or spectrum referred to in sub-section (1) (Table: Sl. No.
3 or 4) is transferred in a tax year and sub-section (2)(b) and (c) does not apply, the
deduction to be allowed under sub-section (1) for the expenditure though incurred
but 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 tax years which have
not expired at the beginning of the tax year during which the licence or
spectrum is transferred.
(4) No deduction shall be allowed—
( a) for depreciation under section 33(1) to (10) in respect of expenditure
mentioned in sub-section (1) (Table: Sl. No. 3 or 4), where deduction
under this section is claimed and allowed for any tax year;
( b) under any other provision of this Act in respect of the expenditure men-
tioned in sub-section (1) (Table: Sl. No. 1 or 2).
(5) In case any deduction has been claimed and granted in respect of an expendi -
ture referred to in sub-section (1) (Table: Sl. No. 3) in a tax year and subsequently
there is failure on part of the assessee to comply with any of the provisions of this
section, then,—
( a) the deduction shall be deemed to have been wrongly allowed;
( b) the Assessing Officer may, irrespective of any other provisions of this
Act, recompute the total income of the assessee for the said tax year by
making necessary rectification;
( c) the provisions of section 287 shall, so far as may be, apply; and
( d) the period of four years specified in section 287(8) shall be counted from
the end of the tax year in which such failure takes place.
(6) Where a specified business reorganisation takes place before the expiry of the
period specified in sub-section (1) (Table: Sl. No. 2.D), in case of an expenditure
referred against serial number 2 thereof, then,—
( a) the provisions of this section, as far as may be, shall continue to apply to
the successor entity as they would have applied to the predecessor entity
if such reorganisation had not taken place; and
( b) no deduction shall be allowed to the predecessor entity under this section
for the tax year in which such reorganisation takes place.
(7) For the purposes of this section,—
( a) “actually paid” means the actual payment of expenditure irrespective
of the tax 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;
( b) “equal instalments” shall be calculated by taking numerator as 1 and
denominator as the tax years mentioned in column D of the Table in
sub-section (1);
( c) “specified business reorganisation” means—
( i) amalgamation of an Indian company and its undertaking with
another Indian company; or
( ii) demerger of an undertaking of an Indian company to another
company; or
( iii) succession of a firm or proprietorship concern to a company ful -
filling conditions as laid down in section 70(1)(zd); or
( iv) conversion of a private company or unlisted public company to
a limited liability partnership fulfilling conditions laid down in
section 70(1)(ze).