THE TWENTY-SECOND SCHEDULE
[See section 37(5), 314(44)(a), (64)(a)]
Deferred revenue expenditure allowance
1. The deferred revenue expenditure allowance for a financial year, in respect of an expenditure of the nature specified in column (2) of the Table given below, shall be the amount equal to the appropriate fraction of the amount of such expenditure.
2. The appropriate fraction referred to in paragraph 1 shall be the fraction, the numerator of which is one and the denominator of which is the total number of the financial years specified in column (3) of the said Table against the relevant deferred revenue expenditure.
3. The deferred revenue expenditure allowance shall be allowable for such number of consecutive financial years as specified in column (3) of the said Table against the relevant deferred revenue expenditure, the first such financial year of allowability being—
(a) in case of expenditure at serial numbers 1, 2, 3 and 5, the year in which such amount is actually paid ;
(b) in case of expenditure at serial number 4, the year in which business reorganisation takes place ;
(c) in case of expenditure at serial number 6, the year in which the loss referred to therein has been incurred ;
(d) in case of expenditure at serial number 7, the year of commencement of the business or extension of the business or setting up of new business, as the case may be.
4. The total amount of deferred revenue expenditure allowable under clause (e) of sub-section (1) of section 37 shall be the aggregate of the amounts under this Schedule.
|
Sl. No. |
Nautre of deferred revenue expenditure |
Number of financial years for which expenditure is allowable |
|
(1) |
(2) |
(3) |
|
1. |
Non-compete fee |
6 |
|
2. |
Premium for obtaining any asset on lease or rent |
6 |
|
3. |
Amount paid to an employee in connection with his voluntary retirement in accordance with any scheme of voluntary retirement. |
6 |
|
4. |
Expenditure incurred by an Indian company wholly and exclusively for the purposes of business reorganisation |
6 |
|
5. |
Expenditure incurred by a person resident in India wholly and exclusively on any operations relating to prospecting for any mineral or the development of a mine or other natural deposit of any mineral, to such extent, as may be prescribed. |
10 |
|
6. |
Any loss on account of forfeiture of any agreement entered in the course of the business. |
6 |
|
7. |
Any preliminary expenditure incurred |
6 |
|
(a) before the commencement of the business ; or |
|
|
(b) in connection with the extension of the business ; or |
|
|
(c) in connection with the setting up of new business, |
|
|
shall be such as may be prescribed having regard to the capital employed in the business and the cost of the project. |
|
Clause 37 of this Code, inter alia, provides that one of the items of capital allowances, viz., deferred revenue expenditure allowance shall be computed in accordance with the Twenty-second Schedule. Accordingly, the Twenty-second Schedule seeks to provide the items of deferred revenue expenditure on which deferred revenue expenditure allowance would be available for a financial year. The items provided, inter alia, are non-compete fee, premium for obtaining any asset on lease or rent, amount paid to an employee in connection with his voluntary retirement, expenditure incurred by an Indian company, any loss on account of forfeiture in respect of any agreement entered in the course of the business and prescribed preliminary expenditure incurred before the commencement of the business, or in connection with the extension of the business, or in connection with the setting up of new business.
|
Case Look ups
