In a significant setback for telecom companies, the Supreme Court of India has ruled that telecom licence fees are of a capital nature, rejecting the previous classification by the Delhi High Court that deemed such fees as both revenue and capital expenditure. This judgment disallows licence fees as an expense for tax calculations, potentially leading to higher taxable profits for telecom giants like Airtel and Vodafone, resulting in increased immediate tax outgo. The Supreme Court emphasized that payment methods are irrelevant in determining the nature of the payment, disapproving of artificial divisions based on timelines set by the Delhi High Court.
Supreme Court Ruling Deems Telecom Licence Fee as Capital, Affecting Tax Calculations
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