Amendment of section 35D.
19. In section 35D of the Income-tax Act, in sub-section (4), for the words “and the assessee furnishes, along with his return of income for the first year in which the deduction under this section is claimed, the report of such audit”, the words, figures and letters “before the specified date referred to in section 44AB and the assessee furnishes for the first year in which the deduction under this section is claimed, the report of such audit by that date” shall be substituted.
Notes on Clauses:
Clause 19 of the Bill seeks to amend section 35D of the Income-tax Act relating to amortisation of certain preliminary expenses.
Sub-section (1) of the said section provides that an assessee, being an Indian company or a person other than a company who is a resident in India shall be allowed deduction in relation to certain specified expenditure incurred before the commencement of his business or in connection with the extension of undertaking or setting up of new unit of an existing business over a period of ten successive previous years beginning with the previous year in which the business commences or as the case may be, such extension of undertaking or setup of new unit has been carried out.
Sub-section (2) of the said section specifies certain expenditures which are allowed as deduction under sub-section (1).
Sub-section (4) of the said section provides that deduction under sub-section (1) shall not be admissible to the assessee unless the accounts of the business or profession of the assessee for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant for the first year of deduction.
It is proposed to amend sub-section (4) of the said section to provide that deduction under sub-section (1) shall not be admissible to the assessee unless the accounts of the business or profession of the assessee for the previous year relevant to the assessment year for which deduction are claimed have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 before the specified date referred to section 44AB (i.e., one month prior to the due date for filing of return under sub-section (1) of section 139) and the assessee furnishes the report of such audit by that date for the first year of deduction.
This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-2021 and subsequent assessment years.
