want to know the nature of expenses covered in preliminary exp which is allowed under sec 35d. There is some provision in clause 3 (a) of Sec 35D that cost of project contains only cost of fixed assets. what i understand is only cost of fixed asset will be allowed as prelimianry exp (1/5) or suggest me.
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Preliminary Exp covered in sec 35D
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(a) of the cost of the project, or
(b) where the assessee is an Indian company, at the option of the
company, of the capital employed in the business of the company,
5% shall b allow as prelimenry expenses of which 20% shall b allowed 2 b amortize....
section 35D specifies the expenses which will be allowed as preliminary expenses. these expenses are following:-
preparation of feasibility report
preparation of project report
conduting of market survey or any other survey in connection of the business
engineering service
all these four of work should be done by assessee himself or it should be done by an approved concern.
charges for drafting an agreement for conducting the business
in case of corporate assessee following are also specified under preliminary expenses
charges for drafting MOA, AOA
printing charges of MOA, AOA
expenses on issue for public subscriptttion of shares in or debentures of the co. such as brokerage, underwriting commission, drafting and printing of prospectus, charges for refund of excess money received on subscriptttion etc.
However such preliminary expenses shall be restricted to 5% of cost of project in case of non corporate assessee and 5% of cost of project or capital employed of the enterprise
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