29 June 2015
The question of capital gains on sale of telecommunication license arises only if the license is sold above its cost price. If it is sold above its WDV but not above its cost then the 'profit' is taxable as business income. If it is sold above its cost then the 'profit' above its WDV up to its cost is business income. Separate computation is to be made for capital gain depending on whether the license was held for up to 36 month or less in which case it will be short-term gain. More than that it will be long-term and indexation will be available.
HOWEVER, the income-tax act is silent on the matter of sale above cost price. However, the license being a 'right' is a capital asset and the rules of capital gain should apply if the sale is above cost. If selling price is below cost the provisions of Profits & Gains of Business or Profession will apply.
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