Amortisation of expenditure for development of Certain Minerals - Section 35E

Amortisation of mining development expenditure: equal annual deductions over ten years, subject to income linked and carryforward limits.

Section 35E allows an assessee engaged in prospecting, development or extraction of specified minerals to amortise qualifying development and prospecting expenditure in equal annual installments over ten years from the year commercial production commences, subject to an annual deduction limit equal to income from commercial exploitation of any mine. Unpaid portions of installments are carried forward but not beyond the tenth year. Eligible expenditure must be incurred in the year of commercial production or the four preceding years; certain items such as depreciable assets and site acquisitions are excluded. Audit and return filing with the accountant's audit report are required. On amalgamation/demerger, the resulting company may continue deductions for the remaining period while the transferor forfeits deduction in the year of transfer.