Amount of Deduction for Expenditure on Acquisition of Patent or Copyright [sec 35A]

For claiming deduction u/s sec 35A the following conditions should be fulfilled-

  1. The know-how, secret formula, design and specifications are either patient or copy right
  2. Expenditure is of capital nature and used for business and profession
  3. The expenditure is incurred on acquisition of the patents right / copyright:
  4. patents right / copyrights are used for business and profession of the taxpayer
  5. Expenditure is done prior to April 1 , 1998

If all the above conditions not fulfilled –

  1. In respect of capital expenditure incurred on or after April 1, 1998, can claim depreciation under section 32;
  2. In respect of any other capital other capital expenditure, no deduction is available;
  3. In respect of revenue expenditure, one can claim u/s 37(1)

Amount of deduction-

The expenditure incurred in acquiring patent or copy right used for the purpose of business is allowed in equal installment over a period of 14 years

EX- x purchase patient on Nov 1, 1997 for manufacturing art paper for Rs 140000. A sum of Rs 10000 is deductible under sec 35A over a period of 14 years form 1998-99 to 2011-12.

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