Hi Shashank,

Here is some IOS Licensing info that answers thes questions. Keep in mind that the License is "per device" based so it really can't be purchased before the equipment;

Licensing

Customers license the right to use Cisco intellectual property (software) from Cisco. When you purchase hardware, you also purchase the software and the license to use it. Hardware arrives with licensed software. When you need a different feature set, you need to purchase the license for it. Upgrade features may be licensed separately, and special Cisco IOS features are licensed separately, either on a flat usage or per-seat basis, depending on the features.

Licensing Best Practices

Pay an additional fee to upgrade to a new feature set?upgrades require new license. No additional fee is due when the feature set stays the same?updates require no new license.

Resell software (and license to use) that runs on the Cisco hardware when they resell the hardware.

Charge customers for upgrade or special feature licenses.

Tell customers to purchase licenses for software running on their equipment.

Make one archival copy of software at no charge.

Do not operate unlicensed software in customer networks

Do not transfer to customers of Cisco IOS software that is deployed on a Partner?s own network

Do not transfer Cisco IOS software licenses from one company to another except in special circumstances, such as company mergers

SMARTnet Licensing

Customers who have an active SMARTnet contract, and who have paid for a specific feature license (per device), are entitled to access and download the images for which they have paid.

A customer who has an active SMARTnet contract is entitled to unlimited maintenance releases from multiple Cisco IOS trains as long as a service contract has been purchased for the target equipment and the customer downloads only the licensed feature set.

An individual feature license must be purchased for the specific Cisco IOS Software image for each router on which the image will be used. For example, customers who have purchased a Cisco IOS Software IP image along with their Cisco equipment, and subsequently wish to use Cisco IOS Software IP Plus, must purchase a feature license for Cisco IOS Software IP Plus. The additional feature license will entitle them to use the Cisco IOS Software IP Plus image.

From this good doc;

Ordering Cisco IOS Software and Managing Licenses

http://www.cisco.com/warp/public/732/licensing.shtml

Hope this helps!

Rob