Section 52 — Amortisation of expenditure for telecommunications services, amalgamation, demerger, scheme of voluntary retirement, etc. Successor to s.35ABA, s.35ABB, s.35DD, s.35DDA of the 1961 Act.
Section 52 is in Chapter IV — Computation of Total Income, which runs from section 13 to section 95.
Sub-section (1) carries a four-entry Table: expenditure of a nature in column B is allowed in equal instalments over the number of tax years in column D, beginning from the initial tax year in column C. Entry 1 is expenditure incurred by an Indian company wholly and exclusively for an amalgamation or demerger of an undertaking — five tax years from the year it takes place. Entry 2 is an amount paid to an employee in connection with his voluntary retirement under a scheme of voluntary retirement — five tax years from the year of payment. Entries 3 and 4 are capital expenditure incurred and actually paid for the right to use spectrum for telecommunication services (spectrum fee) and for the right to operate telecommunication services (licence fee); for each, the initial tax year is the later of the year the telecom business is commenced and the year the fee is actually paid, and the deduction runs to the year up to which the spectrum or licence remains in force.
Sub-section (2) governs a transfer of the licence or spectrum. Where the capital proceeds fall short of the expenditure remaining unallowed, clause (a) allows the shortfall in the year of transfer. Where they exceed it, clause (b) charges the excess as profits and gains of the business, but only so much as does not exceed the difference between the expenditure incurred and the amount remaining unallowed, and clause (c) applies that charge even where the business is no longer in existence. Clause (d) ends further deduction where the proceeds equal or exceed the unallowed expenditure. Clause (e) takes an amalgamation or demerger out of clauses (a) to (d) and carries the section over to the amalgamated or resulting company, being an Indian company, as if the transfer had not taken place.
Sub-section (3) deals with a part transfer to which clause (2)(b) and (c) do not apply: subtract the capital proceeds from the expenditure remaining unallowed and divide by the number of relevant tax years not expired at the beginning of the year of transfer. Sub-section (4) bars depreciation under section 33(1) to (10) on spectrum and licence expenditure for which this deduction is claimed and allowed, and bars any other provision for entries 1 and 2.
Sub-section (5) applies where a spectrum fee deduction under entry 3 has been granted and the assessee then fails to comply with the section: the deduction is deemed wrongly allowed, the Assessing Officer may recompute total income by rectification irrespective of any other provision, section 287 applies, and the four-year period in section 287(8) runs from the end of the tax year of the failure. Sub-section (6) carries the voluntary retirement deduction to a successor entity where a specified business reorganisation occurs before the five years expire, and denies the predecessor a deduction for that year. Sub-section (7) defines "actually paid", "equal instalments" (numerator 1, denominator the years in column D) and "specified business reorganisation", the last covering amalgamation of an Indian company with another Indian company, demerger to another company, succession of a firm or proprietorship concern to a company satisfying section 70(1)(zd), and conversion of a private or unlisted public company to a limited liability partnership satisfying section 70(1)(ze).
Each item in the Table is a lump-sum outlay whose benefit is not confined to the year it is paid, so the section spreads it instead of allowing it at once or capitalising it. For spectrum and licence fees the spread is tied to the life of the right, and sub-sections (2) and (3) settle what happens when that right is sold before the spread is exhausted. Sub-sections (5) and (6) stop the spread being taken and then abandoned.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Amortisation period for amalgamation or demerger expenditure of an Indian company | Five tax years | In equal instalments, beginning with the tax year in which the amalgamation or demerger takes place | Sub-section (1), Table Sl. No. 1, columns C and D |
| Amortisation period for voluntary retirement payments | Five tax years | In equal instalments, beginning with the tax year in which the payment is made | Sub-section (1), Table Sl. No. 2, columns C and D |
| Amortisation period for spectrum fee | From the initial tax year to the tax year up to which the spectrum remains in force | Initial tax year is the later of the year the telecom business is commenced and the year the spectrum fee is actually paid | Sub-section (1), Table Sl. No. 3, columns C and D |
| Amortisation period for licence fee | From the initial tax year to the tax year up to which the licence remains in force | Initial tax year is the later of the year the telecom business is commenced and the year the licence fee is actually paid | Sub-section (1), Table Sl. No. 4, columns C and D |
| Size of each instalment | One divided by the number of tax years in column D | "Equal instalments" as defined, taking numerator as 1 and denominator as the tax years in column D of the Table | Sub-section (7)(b) |
| Period for rectification after a failure to comply | Four years | The section 287(8) period, counted from the end of the tax year in which the failure to comply takes place, not from the year the deduction was allowed; applies to spectrum fee under Table Sl. No. 3 | Sub-section (5)(d) |
For spectrum and licence fees two conditions must both be met before the clock starts — the expenditure must be actually paid, as defined in sub-section (7)(a) without regard to the method of accounting, and the telecom business must have commenced; the initial year is whichever is later. The deduction and depreciation are alternatives, not cumulative. On a transfer everything turns on how the proceeds compare with the unallowed balance: a shortfall is deductible in full that year, an excess is business income capped at the difference between original cost and the unallowed amount, and equality or excess ends the instalments. An amalgamation or demerger is not treated as a transfer at all.
A company pays a spectrum fee of Rs. 500 crore in one tax year and commences telecom services in the next; the initial tax year is the later one, and if the spectrum runs for ten years from then the deduction is Rs. 50 crore a year. If it transfers the spectrum in the sixth year for Rs. 200 crore when Rs. 250 crore remains unallowed, sub-section (2)(a) allows the shortfall of Rs. 50 crore that year. Had it sold for Rs. 300 crore, sub-section (2)(b) would charge Rs. 50 crore as business profits and sub-section (2)(d) would end the instalments.
You meet this section as an amortisation claim in the computation attached to the return, and again in an assessment order disputing the initial tax year or treating the deduction as wrongly allowed and rectifying an earlier year under sub-section (5) read with section 287.
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
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
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
