Section 35E: Deduct Mineral Development Costs Over 10 Years, Limits Apply to Income from Mineral Exploitation

Section 35E of the Income Tax Act addresses amortization of expenses for developing certain minerals. It applies to entities involved in prospecting, extraction, or production of specified minerals, allowing them to deduct related expenditures over ten years from the start of commercial production. The deductible amount is capped at the income from mineral exploitation, excluding costs like buildings or machinery. Expenses must be audited, and tax returns filed with the audit report. In cases of amalgamation or demerger, deductions transfer to the new entity for the remaining period, with no deduction for the original company during the transition year.