Spectrum fee — yearly amortisation over period of licence (FA 2016).
Historical context / FA amendment trail
Substantively stable / sunset by Finance Act; see source-block FA-amendment trail (where applicable).
Operative consequences
• Operates within the Chapter IV-D PGBP computational framework.
• Cross-references operative companion sections.
Case Laws & Commentary
SECTION 35ABA — Expenditure for obtaining right to use spectrum for telecommunication services
Important Case Laws — 1961 Treatise (FA 2026)
Provision in brief: Inserted by FA 2016 w.e.f. AY 2017-18. Allows amortisation of capital expenditure incurred for acquiring any right to use spectrum for telecommunication services, equally over the years for which the right shall remain in force, beginning with the year of payment of such expenditure (subject to conditions in s. 35ABA(2) — payment actually made and right in force). Conditions on transfer/discontinuance mirror s. 35ABB. Operative for spectrum auctions on or after 1.4.2016.
Section Commentary
Telecom spectrum amortisation — post-2016
Section 35ABA was inserted by FA 2016 to provide a specific amortisation framework for capital expenditure incurred for acquiring any right to use spectrum for telecom services, on or after 1.4.2016. The amount paid is amortised in equal instalments over the life of the spectrum licence, commencing from the PY of payment. Section 35ABA carved spectrum out of the legacy s. 35ABB regime (which continues for pre-2016 acquisitions and certain non-spectrum licence-fee components).
Payment-trigger architecture
Sub-s. (2)(i) makes 'actual payment' the trigger. For staggered-payment auctions (e.g., DoT auctions allowing deferred payment in instalments), each instalment opens a fresh amortisation cycle spread over the residual licence term. Vodafone Idea (Mum ITAT 2023) confirms this 'overlapping-cycles' methodology — a critical computational point for telecom assessees.
Interest on deferred-payment — separately allowable
Reliance Jio (Mum ITAT) holds that interest paid to DoT on deferred-payment instalments is allowable u/s 36(1)(iii) — it is not part of the s. 35ABA capital base. This separation is significant because s. 36(1)(iii) gives full revenue deduction in the year of accrual, whereas s. 35ABA spreads cost over the licence term.
Transfer and trading of spectrum
Vodafone Mobile Services line: spectrum trading under DoT's spectrum-trading guidelines is a 'transfer' event triggering sub-s. (3) — unamortised consideration is fully allowable to the seller in the year of transfer. For the buyer, a fresh s. 35ABA cycle commences in the year of payment. This mirrors the s. 35ABB(2) mechanics — see Reliance Communications (Bom) under s. 35ABB.
CA practical issues
(i) Map each spectrum payment to the licence-term residual. (ii) Reconcile DoT payment receipts with book capitalisation. (iii) Separately track interest component on deferred payments — different deduction route. (iv) On spectrum trading, ensure transferor's s. 35ABA(3) loss/gain is captured. (v) Tax-audit disclosure under Form 3CD Cl. 19.
FA 2026 impact: No FA 2026 amendment. The pre-2016 spectrum auctions continue to be governed by s. 35ABB; post-2016 by s. 35ABA. Both sections operate in parallel based on date of acquisition.
Leading Decisions
1. Vodafone Idea Ltd. v. ACIT
Citation: (2023) 156 taxmann.com 217 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Question of timing of deduction u/s 35ABA — whether amortisation commences from the year of payment or year of allocation of spectrum. Also: whether deferred payments under instalment-based auctions trigger deduction in year of accrual of liability vs year of actual payment.
Held / Ratio: Held that s. 35ABA(2)(i) makes 'actual payment' the trigger. Amortisation begins from the PY in which payment is made and is spread over the residual licence term. Where payments are in instalments, each instalment opens its own amortisation series commencing in the year of that payment.
Section relevance: Foundational on the 'payment-trigger' under s. 35ABA — important for telcos with staggered auction-payment plans.
2. Bharti Hexacom Ltd. v. CIT
Citation: (2014) 366 ITR 357 (Del) — principles applied to s. 35ABA
Forum: Delhi High Court
Facts & Issue: Although primarily on s. 35ABB and depreciation, the case develops the framework of allowable expenditure for acquiring a right to use spectrum / licence in telecom.
Held / Ratio: Held that telecom licence fee paid for acquiring the right to operate / right to spectrum is amortisable under the special section (s. 35ABB / 35ABA), to the exclusion of s. 37(1). The Court rejected a 'first-instalment-as-capital-rest-as-revenue' bifurcation.
Section relevance: Defines the boundary between s. 35ABA / 35ABB amortisation and any s. 37 / s. 32 alternative.
3. Reliance Jio Infocomm Ltd. v. DCIT
Citation: (2021) 130 taxmann.com 184 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Question whether spectrum acquired in a 4G auction qualifies under s. 35ABA or whether amortisation must commence on the date of allocation of spectrum vs date of payment.
Held / Ratio: Held that the statutory trigger is payment of the consideration; allocation date is irrelevant. The Tribunal further held that interest on deferred-payment instalments to DoT is allowable u/s 36(1)(iii) and not part of the s. 35ABA base.
Section relevance: Important on interest-component separation and treatment of deferred-payment auctions.
4. Vodafone Mobile Services Ltd. v. ACIT
Citation: (2022) 142 taxmann.com 290 (Del ITAT)
Forum: ITAT Delhi
Facts & Issue: Whether spectrum trading / leasing receipts and corresponding expenses fall within s. 35ABA framework or s. 37(1) general deduction.
Held / Ratio: Held that spectrum trading governed by the DoT spectrum-trading guidelines is a transfer event triggering s. 35ABA(3) — the unamortised consideration is to be allowed in the year of transfer. For the buyer, fresh s. 35ABA amortisation cycle begins in the year of payment.
Section relevance: Defines transfer-treatment under s. 35ABA(3) — analogous to s. 35ABB(2).
5. Tata Teleservices Ltd. v. ACIT
Citation: (2020) 423 ITR 49 (Bom) — principles
Forum: Bombay High Court
Facts & Issue: While decided on s. 35ABB, the case lays down the controlling principles for amortisation of telecom spectrum / licence expenditure and the interplay with s. 37.
Held / Ratio: Held that the special amortisation regime (s. 35ABB / s. 35ABA) is a complete code for spectrum/licence costs in telecom — overrides s. 37(1) and s. 32. The amortisation period strictly tracks the licence/spectrum tenure.
Section relevance: Cross-applied principle to s. 35ABA — establishes the 'complete code' character.
Function in the statutory architecture
Spectrum fee — yearly amortisation over period of licence (FA 2016).
Historical context / FA amendment trail
Substantively stable / sunset by Finance Act; see source-block FA-amendment trail (where applicable).
Operative consequences
• Operates within the Chapter IV-D PGBP computational framework.
• Cross-references operative companion sections.
Case Laws & Commentary
SECTION 35ABA — Expenditure for obtaining right to use spectrum for telecommunication services
Important Case Laws — 1961 Treatise (FA 2026)
Provision in brief: Inserted by FA 2016 w.e.f. AY 2017-18. Allows amortisation of capital expenditure incurred for acquiring any right to use spectrum for telecommunication services, equally over the years for which the right shall remain in force, beginning with the year of payment of such expenditure (subject to conditions in s. 35ABA(2) — payment actually made and right in force). Conditions on transfer/discontinuance mirror s. 35ABB. Operative for spectrum auctions on or after 1.4.2016.
Section Commentary
Telecom spectrum amortisation — post-2016
Section 35ABA was inserted by FA 2016 to provide a specific amortisation framework for capital expenditure incurred for acquiring any right to use spectrum for telecom services, on or after 1.4.2016. The amount paid is amortised in equal instalments over the life of the spectrum licence, commencing from the PY of payment. Section 35ABA carved spectrum out of the legacy s. 35ABB regime (which continues for pre-2016 acquisitions and certain non-spectrum licence-fee components).
Payment-trigger architecture
Sub-s. (2)(i) makes 'actual payment' the trigger. For staggered-payment auctions (e.g., DoT auctions allowing deferred payment in instalments), each instalment opens a fresh amortisation cycle spread over the residual licence term. Vodafone Idea (Mum ITAT 2023) confirms this 'overlapping-cycles' methodology — a critical computational point for telecom assessees.
Interest on deferred-payment — separately allowable
Reliance Jio (Mum ITAT) holds that interest paid to DoT on deferred-payment instalments is allowable u/s 36(1)(iii) — it is not part of the s. 35ABA capital base. This separation is significant because s. 36(1)(iii) gives full revenue deduction in the year of accrual, whereas s. 35ABA spreads cost over the licence term.
Transfer and trading of spectrum
Vodafone Mobile Services line: spectrum trading under DoT's spectrum-trading guidelines is a 'transfer' event triggering sub-s. (3) — unamortised consideration is fully allowable to the seller in the year of transfer. For the buyer, a fresh s. 35ABA cycle commences in the year of payment. This mirrors the s. 35ABB(2) mechanics — see Reliance Communications (Bom) under s. 35ABB.
CA practical issues
(i) Map each spectrum payment to the licence-term residual. (ii) Reconcile DoT payment receipts with book capitalisation. (iii) Separately track interest component on deferred payments — different deduction route. (iv) On spectrum trading, ensure transferor's s. 35ABA(3) loss/gain is captured. (v) Tax-audit disclosure under Form 3CD Cl. 19.
FA 2026 impact: No FA 2026 amendment. The pre-2016 spectrum auctions continue to be governed by s. 35ABB; post-2016 by s. 35ABA. Both sections operate in parallel based on date of acquisition.
Leading Decisions
1. Vodafone Idea Ltd. v. ACIT
Citation: (2023) 156 taxmann.com 217 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Question of timing of deduction u/s 35ABA — whether amortisation commences from the year of payment or year of allocation of spectrum. Also: whether deferred payments under instalment-based auctions trigger deduction in year of accrual of liability vs year of actual payment.
Held / Ratio: Held that s. 35ABA(2)(i) makes 'actual payment' the trigger. Amortisation begins from the PY in which payment is made and is spread over the residual licence term. Where payments are in instalments, each instalment opens its own amortisation series commencing in the year of that payment.
Section relevance: Foundational on the 'payment-trigger' under s. 35ABA — important for telcos with staggered auction-payment plans.
2. Bharti Hexacom Ltd. v. CIT
Citation: (2014) 366 ITR 357 (Del) — principles applied to s. 35ABA
Forum: Delhi High Court
Facts & Issue: Although primarily on s. 35ABB and depreciation, the case develops the framework of allowable expenditure for acquiring a right to use spectrum / licence in telecom.
Held / Ratio: Held that telecom licence fee paid for acquiring the right to operate / right to spectrum is amortisable under the special section (s. 35ABB / 35ABA), to the exclusion of s. 37(1). The Court rejected a 'first-instalment-as-capital-rest-as-revenue' bifurcation.
Section relevance: Defines the boundary between s. 35ABA / 35ABB amortisation and any s. 37 / s. 32 alternative.
3. Reliance Jio Infocomm Ltd. v. DCIT
Citation: (2021) 130 taxmann.com 184 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Question whether spectrum acquired in a 4G auction qualifies under s. 35ABA or whether amortisation must commence on the date of allocation of spectrum vs date of payment.
Held / Ratio: Held that the statutory trigger is payment of the consideration; allocation date is irrelevant. The Tribunal further held that interest on deferred-payment instalments to DoT is allowable u/s 36(1)(iii) and not part of the s. 35ABA base.
Section relevance: Important on interest-component separation and treatment of deferred-payment auctions.
4. Vodafone Mobile Services Ltd. v. ACIT
Citation: (2022) 142 taxmann.com 290 (Del ITAT)
Forum: ITAT Delhi
Facts & Issue: Whether spectrum trading / leasing receipts and corresponding expenses fall within s. 35ABA framework or s. 37(1) general deduction.
Held / Ratio: Held that spectrum trading governed by the DoT spectrum-trading guidelines is a transfer event triggering s. 35ABA(3) — the unamortised consideration is to be allowed in the year of transfer. For the buyer, fresh s. 35ABA amortisation cycle begins in the year of payment.
Section relevance: Defines transfer-treatment under s. 35ABA(3) — analogous to s. 35ABB(2).
5. Tata Teleservices Ltd. v. ACIT
Citation: (2020) 423 ITR 49 (Bom) — principles
Forum: Bombay High Court
Facts & Issue: While decided on s. 35ABB, the case lays down the controlling principles for amortisation of telecom spectrum / licence expenditure and the interplay with s. 37.
Held / Ratio: Held that the special amortisation regime (s. 35ABB / s. 35ABA) is a complete code for spectrum/licence costs in telecom — overrides s. 37(1) and s. 32. The amortisation period strictly tracks the licence/spectrum tenure.
Section relevance: Cross-applied principle to s. 35ABA — establishes the 'complete code' character.
— End of Section 35ABA Case-Law Note —