Capital Expenditure - Income Tax

Aditya (Student) (129 Points)

21 January 2008  
I have a question related to Research and Development Expenditure U/S 35 of Income Tax Act. Please read the Question carefully coz i may not be able to explain clearly.

My Question is related to CAPITAL EXPENDITURE

One Company is engaged in the field of Agriculture which will do R&D of feasable crops and seeds and later on it will test the output on the agricultural land taken by that company

As per Section 35(1)(iv) read with Sec 35(2)of Income Tax Act any capital incurred EXCEPT LAND for the purpose of R&D related to business is allowed as deduction in the year in which they are incurred.

1) if all assets like P&M, F&F, Building are incurred for the purpose of R&D of the business, then agricultural land acquired is also for R&D then why it has been disallowed?

2) If disallosed what is the ruling given by CBDT other than Section 35.

3) As the land is acquired for the purpose of R&D then under what provisions it will be allowed for claiming it as expenditure?

Please provide me the information and if any one of you have notes on these topics please provide it to me

Thank You
Himakar Srikanth