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Non-deductible nature of upfront lump-sum payments for assignment of 2G and 4G radio spectrum for 12-year and 15-year periods upheld by Court
Whether a payment or expenditure is capital or revenue in nature is a matter of law. A recent court case1 however reaffirms that the final outcome of any analysis may not depend on a strict legal classification of the item involved. A practical business and common-sense approach to applying the underlying case-law principles to the factual situation of a case is also required.
The application of the capital-versus-revenue indicia as established by the case-law authorities will depend on the factual context of a particular scenario and can in many instances be very complicated. Where necessary, clients should seek professional tax advice.