35E. Deduction for expenditure on prospecting, etc., for certain
minerals.- (1) Where an assessee, being an Indian
company or a person (other than a company) who is resident
in India, is engaged in any operations relating to prospecting
for, or extraction or production of, any mineral and incurs,
after the 31st day of March, 1970, any expenditure specified
in sub-section (2), the assessee shall, in accordance with
and subject to the provisions of this section, be allowed
for each one of the relevant previous years a deduction of
an amount equal to one-tenth of the amount of such expenditure.
(2) The expenditure referred to in sub-section (1) is that
incurred by the assessee after the date specified in that
sub-section at any time during the year of commercial production
and any one or more of the four years immediately preceding
that year, wholly and exclusively on any operations relating
to prospecting for any mineral or group of associated minerals
specified in Part A or Part B, respectively, of the Seventh
Schedule or on the development of a mine or other natural
deposit of any such mineral or group of associated minerals
:
Provided that there shall be excluded from such expenditure
any portion thereof which is met directly or indirectly by
any other person or authority and any sale, salvage, compensation
or insurance moneys realised by the assessee in respect of
any property or rights brought into existence as a result
of the expenditure.
(3) Any expenditure—
(i) on the acquisition of the site of the source of any
mineral or group of associated minerals referred to in sub-section
(2) or of any rights in or over such site;
(ii) on the acquisition of the deposits of such mineral
or group of associated minerals or of any rights in or over
such deposits; or
(iii) of a capital nature in respect of any building, machinery,
plant or furniture for which allowance by way of depreciation
is admissible under section 32,
shall not be deemed to be expenditure incurred by the assessee
for any of the purposes specified in sub-section (2).
(4) The deduction to be allowed under sub-section (1) for
any relevant previous year shall be—
(a) an amount equal to one-tenth of the expenditure specified
in sub-section (2) (such one-tenth being hereafter in this
sub-section referred to as the instalment); or
(b) such amount as is sufficient to reduce to nil the income
(as computed before making the deduction under this section)
of that previous year arising from the commercial exploitation
[whether or not such commercial exploitation is as a result
of the operations or development referred to in sub-section
(2)] of any mine or other natural deposit of the mineral or
any one or more of the minerals in a group of associated minerals
as aforesaid in respect of which the expenditure was incurred,
whichever amount is less :
Provided that the amount of the instalment relating to any
relevant previous year, to the extent to which it remains
unallowed, shall be carried forward and added to the instalment
relating to the previous year next following and deemed to
be part of that instalment, and so on, for succeeding previous
years, so, however, that no part of any instalment shall be
carried forward beyond the tenth previous year as reckoned
from the year of commercial production.
(5) For the purposes of this section,—
(a) “operation relating to prospecting” means
any operation undertaken for the purposes of exploring, locating
or proving deposits of any mineral, and includes any such
operation which proves to be infructuous or abortive;
(b) “year of commercial production” means the
previous year in which as a result of any operation relating
to prospecting, commercial production of any mineral or any
one or more of the minerals in a group of associated minerals
specified in Part A or Part B, respectively, of the Seventh
Schedule, commences;
(c) “relevant previous years” means the ten
previous years beginning with the year of commercial production.
(6) Where the assessee is a person other than a company or
a co-operative society, no deduction shall be admissible under
sub-section (1) unless the accounts of the assessee for the
year or years in which the expenditure specified in sub-section
(2) is incurred have been audited by an accountant as defined
in the Explanation below sub-section (2) of section 288, and
the assessee furnishes, along with his return of income for
the first year in which the deduction under this section is
claimed, the report of such audit in the prescribed form duly
signed and verified by such accountant and setting forth such
particulars as may be prescribed.
(7) Where the undertaking of an Indian company which is entitled
to the deduction under sub-section (1) is transferred, before
the expiry of the period of ten years specified in sub-section
(1), to another Indian company in a scheme of amalgamation—
(i) no deduction shall be admissible under sub-section (1)
in the case of the amalgamating company for the previous year
in which the amalgamation takes place; and
(ii) the provisions of this section shall, as far as may
be, apply to the amalgamated company as they would have applied
to the amalgamating company if the amalgamation had not taken
place.
(7A) Where the undertaking of an Indian company which is
entitled to the deduction under sub-section (1) is transferred,
before the expiry of the period of ten years specified in
sub-section (1), to another Indian company in a scheme of
demerger,—
(i) no deduction shall be admissible under sub-section (1)
in the case of the demerged company for the previous year
in which the demerger takes place; and
(ii) the provisions of this section shall, as far as may
be, apply to the resulting company as they would have applied
to the demerged company, if the demerger had not taken place.
(8) Where a deduction under this section is claimed and allowed
for any assessment year in respect of any expenditure specified
in sub-section (2), the expenditure in respect of which deduction
is so allowed shall not qualify for deduction under any other
provision of this Act for the same or any other assessment
year.
|
