Chartered Accountant
1375 Points
Joined August 2012
Based on the wordings in your qn, I assume you are intending to claim dedn only for AY 2018-19.
A summary of all conditions u/s 35AD for AY 2018-19 are as given below:
New conditions (from AY 2018-19 onwards):-
1. For AY 2018-19 onwards, in the case of capital expenditure, the aggregate of all payments to a person in a day exceeding Rs.10,000 should be made only via A/c payee cheque/ bank draft or ECS. Else, such expenditure paid in cash shall be ineligible for 35AD deduction. (Note that unlike 40A(3) disallowance, here Rule 6DD exemptions not available)
2. For AY 2018-19 onwards, any eligible capital expenditure INCURRED on or after 01.04.2017, the weighted deduction shall be only 100% eventhouth its a "Warehouse for storing agriculture produce" (the clause for 150% dedn has been omitted w.e.f. AY 2018-19.)
Other conditions :-
3. The expenditure already claimed as dedn u/s 35AD shall not be allowed as dedn under any other section in any previous year or under this section in any other previous year.
4. Value of Second Hand Plant & Macinery (P&M) shall be allowed u/s 35AD if and only if its aggregate value does not exceed (20% of TOTAL VALUE OF P&M used in such 35AD business).
5. Any P&M Imported from OUTSIDE India, which has not been used in India at any time before installation by assessee shall not be treated as 2nd hand P&M. (Also depreciation should not have been claimed under income tax act in India...prior to installation)
6. Under section 35AD(7A) --- Any asset in respect of which a deduction is claimed and allowed under this section shall be used only for the specified business, for a period of eight years beginning with the previous year in which such asset is acquired or constructed.
7. Expenditure of nature of Acquisition of LAND, Goodwill, Financial instruments ---> NOT ELIGIBLE for 35AD exemption.
8. Both Revenue + Capital Expenditure is eligible for 100% dedn u/s 35AD, if incurred for such purpose. The allowance of revenue expenditure u/s 35AD shall also be disallowed u/s 40A(3) if aggregate payments made by non-specified modes exceed Rs. 10,000 per person per day. Here Rule 6DD exemptions are available. The Disallowance of cap.exp discussed in pt.1 above.