Amortisation of certain Preliminary Expenses - (New) Section 44 / (Old) Section 35D

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....ecified expenses on section 44(2). Then deduction is allowed in 5 equal instalments for each of the five successive tax years beginning with- • (i) the tax year in which the business commences, or • (ii) the tax year in which the extension of the undertaking is completed or the new unit commences production or operation. Eligible Expenses [ Sub-section (2) ] Only certain types of expenses qualify: • (a) the expenditure in connection with- • (i) preparation of feasibility report; • (ii) preparation of project report; • (iii) conducting market survey or any other survey necessary for the business; • (iv) engineering services relating ....

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....le deduction of aggregate of expenditure referred to in sub-section (2) shall be restricted to 5%- • (a) of the cost of the project; or • (b) of the capital employed in the business of the company, where the assessee is an Indian company, at its option. • "cost of the project" means the actual cost of the fixed assets, being land, buildings, leaseholds, plant, machinery, furniture, fittings and railway sidings (including expenditure on development of land and buildings) and • (i) for cases under sub-section (1)(a), the actual cost as shown in the books of the assessee as on the last day of the tax year in which the business commences;  • (ii) for cases under sub-section (....

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.... • (ii) any moneys borrowed or debt incurred by it in a foreign country in respect of the purchase outside India of capital plant and machinery, where the tenure of moneys borrowed or debt is not less than seven years. Sub-section (6): Audit Requirement (Non-Companies) If assessee is: • Not a company • Not a co-operative society Then deduction allowed only if: • (a) Accounts must be audited for the year or years in which the expenditure is incurred and • (b) the assessee furnishes for the first year in which the deduction under this section is claimed, • the report of such audit by such date in Form No. 6 duly signed and verified by such....

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....penditure for each of the 10 successive years beginning with the previous year of commencement or extension of business or the new unit commences production or operation as the case may be. [ Section 35D(5) ] Qualifying expenditure: • From 01.04.1998 • For an Indian Company - 5% of cost of project or 5% of capital employed whichever is higher • For all other assessee - 5% of cost of project • The excess shall be ignored for the purpose of computing deduction allowable u/s 35D. • Upto 31.03.1998 • For an Indian Company - 2.5% of cost of project or 2.5% of capital employed whichever is higher • For all other assessee - 2.5% of cost of project ....

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....ing, typing, printing and advertisement of the prospectus. [ Section 35(2) ] • w.e.f. 01.04.2024 The assessee shall furnish a statement in Form No. 3AF for expenditure specified in this clause (a) of Section 35D(2) (i.e. above i, ii, iii ),  such form shall be furnished one month prior to the due date for furnishing the return of income as specified under section 139(1). [ Proviso of section 35(2) read with Rule 6ABBA] • If deduction is claimed under this section, then deduction is not allowed for such expenditure under any other provision of this Act for the same or any other assessment year. [ Section 35D(6) ] Compulsory Audit of accounts:- Where the assessee is a person othe....