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In-house CAPITAL expenditure on scientific research related to the assessee's business (other than land) qualifies under section 35 for deduction of:
A100 per cent in the year the expenditure is incurred
B20 per cent annually over a period of five years
C125 per cent in the year the expenditure is incurred
DNil, with depreciation claimable on the asset instead
Answer & Solution
Correct answer: A. 100 per cent in the year the expenditure is incurred
1. Section 35(1)(iv) read with section 35(2) allows 100% of capital expenditure on in-house scientific research in the year it is incurred.
2. Expenditure on acquiring LAND is excluded from this deduction.
3. No depreciation is ever allowed on an asset for which the section 35 deduction has been claimed [section 35(2)(iv)] — option D reverses the actual scheme.
4. This deduction is available under both the default and optional regimes, unlike contributions to outside institutions which need the assessee to shift out of the default regime.
_Source: ICAI CA Inter P3(A) Income-tax SM (May 2026), Ch 3 Unit 3 PGBP, PDF p. 46_
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