Sec 35D Income tax P&p Exp Query???

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Vijay Parmar (Querist)

16 July 2010 hello sir..

Pvt company share capital Rs.500,000
Fixed Assets Rs. 217220.00

P&p Exp total incurred Rs.: 79479.00

whats amount i claim as a P&P deduction u/s 35D ???? & as per company act

reply me

srinath

srinath (Expert)

16 July 2010 under companies act it should be written off in the year in which it is incurred. ie preliminary exp should not be carried forward as per AS 26
As per section 35D 1/5th of the cost of the project or capital employed at the option of the company will be allowed as deduction
ie in the given condition since 1/5th of the share capital is more than the exp incurred actual exp incurred wil be allowed as deduction. ie Rs.79,479/- in five equal installments. ie in the current year Rs 15,896/-. Since given at the option of the company, every company will choose the higher of the two ie capital employed or cost of project

Vijay Parmar

Vijay Parmar (Querist)

16 July 2010 im confuse.......

as per the i.tax act i read that 5% of cost of project or actual exp . w'e is less is allowable....

so here 500,000*5/100=25000 or 79479 so 25000/- i claim in 5 equal installment...right ????

as per company act i written off entire amount i.e. 79479...

and as per income tax i disallowed exp and allowable only 25000/5 for the current year ?????

srinath

srinath (Expert)

17 July 2010 Ya m sorry
it is 5% of the cost of the project or Capital employed at the option of assessee.
And so 25000 will be allowable in 5 years. ie 5000 each year

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