Introduction
Section 35E of the Income Tax Act pertains to the provision of a deduction for expenditure incurred on certain specified businesses. The section deals with the costs that are incurred in carrying out scientific research or in any other research undertaken by a company engaged in the business of bio-technology or in the business of manufacture or production of any article or thing, other than a small-scale industrial unit or a cottage industry.
This section provides a deduction for expenditure that is incurred on scientific research or in any other research undertaken by a company. The deduction can be claimed by a company that is engaged in the business of bio-technology or in the business of manufacture or production of any article or thing.
The deduction is allowed for expenses that are incurred on scientific research or on any other research undertaken by a company. These expenses can include expenses on salaries, wages, or other payments made to employees engaged in research, expenses on the purchase of materials, expenses on the use of machinery or equipment, expenses on the use of a building or other property, and expenses on the use of the intellectual property.
The amount of the deduction that can be claimed under Section 35E is limited to 150% of the actual expenditure incurred on scientific research or on any other research undertaken by a company. This means that if a company spends Rs. 1 lakh on scientific research or any other research, it can claim a deduction of Rs. 1.5 lakh under Section 35E.
The deduction under Section 35E is available only to companies that are engaged in the business of bio-technology or in the business of manufacture or production of any article or thing. The deduction is not available to small-scale industrial units or cottage industries.
The provision of deduction under Section 35E is aimed at encouraging companies to engage in scientific research and development activities. By providing a deduction for the expenditure incurred on such activities, the government hopes to promote innovation and growth in the economy.
In conclusion
Section 35E of the Income Tax Act is a provision that provides a deduction for expenditure incurred on scientific research or any other research undertaken by a company engaged in the business of bio-technology or in the business of manufacture or production of any article or thing. The provision is aimed at promoting innovation and growth in the economy by encouraging companies to engage in research and development activities.
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Frequently Asked Questions (FAQs)
Q.1 What is Section 35E of Income Tax Act?
Section 35E of Income Tax Act is a provision that provides a deduction for expenditure incurred on scientific research or any other research undertaken by a company engaged in the business of bio-technology or in the business of manufacture or production of any article or thing.
Q.2 Who can claim deduction under Section 35E?
The deduction under Section 35E is available only to companies that are engaged in the business of bio-technology or in the business of manufacture or production of any article or thing.
Q.3 What expenses are eligible for deduction under Section 35E?
Expenses that are incurred on scientific research or on any other research undertaken by a company are eligible for deduction under Section 35E. These expenses can include expenses on salaries, wages, or other payments made to employees engaged in research, expenses on the purchase of materials, expenses on the use of machinery or equipment, expenses on the use of a building or other property, and expenses on the use of intellectual property.
Q.4 What is the limit of deduction under Section 35E?
The amount of the deduction that can be claimed under Section 35E is limited to 150% of the actual expenditure incurred on scientific research or on any other research undertaken by a company.
Q.5 Is the deduction available for small-scale industrial units or cottage industries?
No, the deduction under Section 35E is not available to small-scale industrial units or cottage industries. It is available only to companies that are engaged in the business of bio-technology or in the business of manufacture or production of any article or thing.
Q.6 What is the objective of providing deduction under Section 35E?
The provision of deduction under Section 35E is aimed at encouraging companies to engage in scientific research and development activities. By providing a deduction for the expenditure incurred on such activities, the government hopes to promote innovation and growth in the economy.
Q.7 Is there any specific documentation required to claim deduction under Section 35E?
Yes, the company claiming deduction under Section 35E needs to maintain proper documentation to support the expenditure incurred on scientific research or any other research undertaken by them. This can include invoices, bills, vouchers, and other relevant documents.
