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DEPRECIATION ON LICENCE FEE

Income Tax - Direct Tax Code - DTC - By: - Mr. M. GOVINDARAJAN - Dated:- 3-5-2016 - In Commissioner of Income Tax V. Radio Today Broadcasting Limited - 2015 (12) TMI 633 - DELHI HIGH COURT the assessee is engaged in the FM radio broadcasting. The assessee was granted permission on 08.12.2006 for operating FM radio broadcasting channels at Delhi, Kolkata, Mumbai, Jodhpur, Patiala, Amritsar and Shimla against payment of prescribed one time entry fees. Out of 7 stations, the assessee went on air in .....

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mritsar in the assessment year 2008 - 09. The assessee filed its return claiming depreciation in the sum of ₹ 47,25,000 on the one time entry fee (licence fee) paid for the FM channels. The return of the assessee was selected for scrutiny by the Department. A notice was sent to the assessee as to why the depreciation should not be disallowed. The assessee filed reply to the Department. The assessee submitted in the reply the following: According to the terms and conditions of grant of perm .....

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be made operation because of Ministry s inability to provide basic infrastructure; The amount of one time entry for six channels upon getting operational or upon expiry of one year from the date of grant of permission agreement has now been considered as licence fee paid for the licensing period and has suitably been capitalized as an intangible asset as per AS-26; The amount of licence fee capitalized as intangible asset would be written off over the period of the permission of 10 years; The o .....

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the asset is actually used for the business. The assessee filed appeal before Commissioner of Income Tax (Appeals). He held that that the assessee had claimed depreciation only on the licence fee but not on the other tangible assets. If the claim of the appellant is valid then the appellant s claim should have been restricted to claim of depreciation only on licence fee. Since the assessee had not claimed that the programs were actually aired but had clarified that the airing was postponed, its .....

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