Amortisation of expenditure for development of Certain Minerals - Section 35E - Income Tax - Ready Reckoner - Income Tax

Amortisation of expenditure for development of Certain Minerals - Section 35E This section applies to an assessee who is engaged in the operation of Prospecting, Extraction or Production of specified mineral like coal, limestone, iron, zinc, gold etc. or on the development of a mine or other natural deposit of any such minerals or group of associated minerals specified in the Seventh Schedule. Expenditure incurred wholly and exclusively on: Any operations relating to prospecting for any mineral or On the development of a mine or other natural deposit of any mineral, Shall be allowed deduction in equal installments over a period of 10 years from the year in which the commercial production has been commenced. The amount of such installment of any PY that remained unallowed, shall be carried forward and added to the next installment and deemed to be part of that installment. However, no part of any installment shall be carried forward beyond the 10th PY. Such expenditure should be incurred during the year of commercial production and 4 years immediately preceding that year. The amount deductible for each year is limited to Income (before deduction u/s 35E ) of the previous year arising from commercial exploitation of any mine Following expenditures do not qualify for deduction under this section: i. Building, Machinery, Plant, Furniture, Intangibles on which depreciation is admissible. ii. Expenditure on acquisition of site of source of minerals/ deposits of such minerals. Note:- There shall be excluded from such expenditure any portion thereof which is met directly or indirectly by any other person or authority and any sale, salvage, compensation or insurance moneys realised by the assessee in respect of any property or rights brought into existence as a result of the expenditure. Requirement of Audit and filing of return: Accounts of the assessee for the years in which expenditure is incurred must be audited by an accountant. Income tax returns must be filed. Along with Income Tax return he must furnish a copy of Audit report duly signed by the accountant. Amalgamation/Demerger:- Where an Indian Company entitled to deduction under this section, is transferred before the expiry of the period of 10 years to another Indian Company in a scheme of amalgamation/demerger, No deduction shall be admissible in case of the amalgamating/demerged company for the year in which amalgamation/demerger takes place Deduction will be available to the amalgamated/resulting company in the same way as it would have been available to amalgamating company if amalgamation/demerger had not taken place. (For the remaining period).