Rule 27 — Form of statement to be furnished regarding certain preliminary expenses eligible for deduction under section 44. Made under s.44, s.263 of the Income-tax Act, 2025.
Rule 27 gives effect to Section 44 and Section 263 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rule (1) prescribes the form: the statement containing particulars of expenditure required to be furnished under section 44(3) shall be in Form No. 5, for each tax year.
Sub-rule (2) prescribes to whom and by when: Form No. 5 is to be furnished to the Director General of Income-tax (Systems) or any person authorised by him, one month prior to the due date for furnishing the return of income as specified under section 263(1).
Section 44(3) requires a statement of the preliminary expenditure on which the deduction is claimed, but leaves the form, the recipient and the time to the rules. This rule fills all three gaps, and it ties the deadline to the section 263(1) return due date rather than to a fixed calendar date, so the statement always reaches the Department before the return that claims the deduction is filed.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time for furnishing Form No. 5 | One month prior to the due date for furnishing the return of income under section 263(1) | For each tax year for which the statement is required | Sub-rule (2) |
The deadline is not the return date; it is one month ahead of it, so the statement has to be settled before the return is prepared and not alongside it. The statement is filed for each tax year, which means a single filing does not carry forward across the years over which the section 44 deduction runs. It also goes to the Director General of Income-tax (Systems) or his authorised person, not to the Assessing Officer, so a filing made only with the assessment record does not answer the rule.
A company incurring qualifying preliminary expenditure and claiming the deduction under section 44 for a tax year whose section 263(1) return due date is 31 October must furnish Form No. 5 by 30 September of that year to the Director General of Income-tax (Systems) or his authorised person. Filing it with the return on 31 October is a month late, and the same exercise repeats for the next tax year.
A reader meets it when the deduction under section 44 is first claimed, in the preparation of Form No. 5 in the month before the return due date, and again if the Assessing Officer questions the claim and asks for proof that the statement was furnished on time.
The statement containing particulars of expenditure required to be furnished under section 44(3) shall be in Form No. 5 for each tax year.
one month prior to the due date for furnishing the return of income as specified under section 263(1)