Skip to content

CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Corporate Tax Planning

Under section 46 of the Income-tax Act, 2025, a company incurs capital expenditure before commencing a specified business and capitalises it in the books as on the date of commencement of operations. In which tax year is the deduction allowed?

The deduction is allowed in the tax year in which the specified business commences operations, provided the pre-commencement capital expenditure is capitalised in the books as on the commencement date, as section 46(2) states.

  1. AThe tax year in which each item of expenditure was incurred
  2. BThe tax year in which the business commences operationsCorrect
  3. CSpread equally over the first five tax years after commencement
  4. DThe tax year in which the asset is first sold

Explanation

Section 46(2) provides that pre-commencement capital expenditure, if capitalised in the books as on the date of commencement of operations, is allowed in the tax year in which the business commences. It is not spread over years or allowed on each date of incurrence.

Did you get it right without looking?

One question tells you little. A timed set on Corporate Tax Planning shows your real accuracy, how long you take and where you lose marks.

Practise Corporate Tax PlanningFree diagnostic mock

More Corporate Tax Planning questions