816/CBDT. - Income Tax - 816/CBDT

INSTRUCTION NO. 816/CBDT Dated : December 20, 1974 Section(s) Referred: 35A Statute: Income - Tax Act, 1961 Section 35A of the Income-tax Act, 1961 provides for deduction in the computation of profits of the business in respect of capital expenditure incurred by and assessee on the acquisition of patent rights or copy rights used for the purpose of business. The deduction for such expenditure is allowed by way of spread over equally over a period of 14 years or over a period of the unexpired life of the patent rights or copy rights, whichever is earlier. 2. It has been represented to the Board that the ITOs should not disallow the claim of amortisation in the succeeding year without first taking action for withdrawing the deduction allowed u/s 35A for the first year. 3. The Board have considered the above suggestion and decided that in cases where deduction u/s 35A are believed to have been erroneously allowed in the first year, disallowance of the claim u/s 35A in the succeeding year should not be made till action is initiated to modify the first year's assessment allowing deduction u/s 35A by taking resort to action under section 154/253/147 as the case may be. However, in cases where it is not possible to modify the first year's assessment steps may be taken to modify the assessment of subsequent years. 4. Necessary instructions may please be issued to all the Income-tax Officers working in the charge for their guidance and compliance.