Specified Business Section 35AD

Deduction in respect of expenditure on Specified Business

There are certain Business under which capital Expenditure is allowed as deduction under Profit and loss account and such type of business are called specified business and further amount allowed to be debited shall be equal to the capital expenditure incurred and such business are as given below:

  1. Cold chain facility
  2. Warehouse facility
  3. Hospitals with at least one hundred bed for patients
  4. Housing project under a scheme for affordable housing.
  5. Production of fertilizer including increase in installed capacity of an existing plant.
  6. Pipeline network for distribution of natural gas or petroleum products.
  7. Pipeline network for the transportation of iron ore.
  8. Hotel of two star or above category.
  9. Housing project for slum development.
  10. Inland container depot or a container freight station.
  11. Bee- keeping and production of honey.
  12. Warehousing facilities for storage of sugar.
  13. Semi-conductor wafer fabrication manufacturing unit.
  14. Developing or maintaining or operating a new infrastructure facilities.

The capital expenditure incurred before commencement of business shall also be allowed to be debited in the year in which the business has commenced.

However there are some capital expenditure shall not be allowed like Acquisition of land, Goodwill, Financial Instrument

Any capital assets sold which was allowed as Expenditure on profit and loss account, the amount received on sale  shall be considered to be income under the head Business/Profession. However if such asset which was acquired for such business has been transferred to profit and loss account shall be allowed as expenditure ans should be used for at least 8 years, if sold before the said period it should be considered as Income of the assessee of the year in which the asset has been used for other purpose, However depreciation up-to the date shall be deducted and the remaining balance amount shall be considered to be income As per Section  73A. loss of specified business can be set off only from profit and gains of any other specified business and carried forward is allowed for unlimited period and in the subsequent years also, the loss can be set off only from income of specified business.

100% capital Expenditure shall be allowed only if Capital Expenditure shall not include any expenditure in respect of which payment should not be made other than account payee cheque drawn  on a bank or an account system through a bank account payee bank draft or use of electronic clearing exceeding Rs. 10,000

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