Section 35D(3)

Section 35D(3) — the law in short

What the courts have decided on section 35D(3), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Berger Paints India Ltd v CIT Supreme CourtHelps department
  My s.35D claim is capped at 5% of capital employed. Does the share premium I collected count as capital employed?
  No. Capital employed in the business of the company for s.35D(3)(b) is the aggregate of three things only — issued share capital, debentures and long-term borrowings. Share premium is none of them, and the Supreme Court held that if Parliament had meant to include it, it would have said so in the Explanation. The ceiling is therefore computed on the face value subscribed, not on what the subscribers actually paid.
• CIT v Majestic Auto Ltd High CourtHelps taxpayerValidity unconfirmed
  The Assessing Officer wants to push my consultancy fee into s.35D and spread it over five years instead of allowing it as revenue expenditure. Can he, just by calling it a survey?
  Not without showing the expenditure actually falls within one of the categories in s.35D(2). The Punjab and Haryana High Court rejected the Revenue's attempt to bring a management consultant's fee for a study on reorganisation of the assessee's core business within s.35D(2)(a)(iii), 'conducting market survey or any other survey necessary for the business of the assessee', because nothing in the pleadings or the orders below showed the engagement was aimed at conducting any survey. The Tribunal's finding that the expenditure was revenue was upheld and the appeal dismissed.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.