License fees paid to government whether allowable?
This query is : Resolved
16 February 2013
Can any one tell me case in support of this
License fees paid to government under an act by a fully owned government company is allowable as revenue expenditure.
License fees paid to government under an act by a fully owned government company is allowable as revenue expenditure.
16 February 2013
Dear Khilesh,
Its hard to argue your case as licence is a recognised depreciable asset. If the licence is for a period more than 1 year, it is not only a question of tax law but also of sheer accounting principle that the same should be subjected to depreciation.
To give you an idea how the ICAI also views it, below is a opinion by Expert Advisory Committee:
https://220.227.161.86/eac/eacfinal/vol16/1.htm
However, you may consider the judgment in the case of Supreme Court in CIT v. Bombay Dyeing and Manufacturing Co. Ltd. [1969] 219 ITR 521, and see whether the same applies to the factual matrix of your case or not.
Its hard to argue your case as licence is a recognised depreciable asset. If the licence is for a period more than 1 year, it is not only a question of tax law but also of sheer accounting principle that the same should be subjected to depreciation.
To give you an idea how the ICAI also views it, below is a opinion by Expert Advisory Committee:
https://220.227.161.86/eac/eacfinal/vol16/1.htm
However, you may consider the judgment in the case of Supreme Court in CIT v. Bombay Dyeing and Manufacturing Co. Ltd. [1969] 219 ITR 521, and see whether the same applies to the factual matrix of your case or not.
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18 February 2013
Thanks Nikhil, but I want to clarify 1 more thing is License fees is paid by the assessee every year to the government.
18 February 2013
in that case, Bombay dyeing judgment may be helpful.
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