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Icome tax - query - urgent

Ravi s (larsen & tubro ) (78 Points)

17 January 2013

company is into flavour business and is incurring reacerch and expenditure , what are the tax befits that can be avvalied and accounting treatment for claiming tax benifits , regular accounting extries

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Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 17 January 2013

All Revenue and Capital Expenditure(except cosy of land&building) incurred by corporate entities in relation to " In-house scientific research relating to its business" would be allowed as WEIGHTED deduction @ 200% OF THE REVENUE & CAPITAL EXPD. FROM ITS BUSINESS INCOME UNDER SECTION 35 OF IT ACT.

FOR DETAILED REFERENCE SEE

35(2AB)

Any expenditure incurred by a company, on scientific research (not being in nature of cost of land and building) on in-house scientific research and development facilities as approved by the prescribed authorities (Refer Rule 6).

Two times of such expenses incurred for A.Y. 2011-12

One and One-half time of such expenses upto A. Y. 2010-11.

Company, engaged in any business of manufacture and production of any article or thing, other than those specified in the list of Eleventh Schedule.

No other deduction in respect of such expenses would further be allowed, (No deduction is allowed under this section for companies mentioned in section 35(1)(iia)

Company should enter into an agreement with the prescribed authority for co-operation in such research and development and audit of accounts maintained for such facilities.

Expenses under this clause would be allowed only up to 31-3-2012.

Expenditure on scientific research in relation to Drug and Pharmaceuticals shall include expenses incurred on clinical trials, obtaining approvals from authorities and for filing an application for patent.

In case of amalgamation of the company the provisions of this section would apply to amalgamated company as they would have applied to amalgamating company