1. Applicability: The assessee should be an Indian Company or Non-corporate resident assessee.
Eligible Expenditure:
Expenditure incurred wholly for-
- Operation relating to prospecting of such mineral or group of minerals specified in schedule VII or
- On the developments of mine or other natural deposits of such mineral or group of minerals.
As reduced by-
- Expenditure met directly or indirectly by any other person or authority.
- Sale, salvage, compensation or insurance money realized by the assessee.
Ineligible Expenditure:
- Expenditure on acquisition of site of the source of any material or rights in or over such site.
- Expenditure on acquisition of deposits of such minerals or any rights in or over such deposits.
- Capital expenditure on any building, plant and machinery or furniture for which depreciation is admissible u/s 32.
2. Period of incurring expenditure: Expenditure should be incurred at any time during the year of commercial production and any one or more of the 4 years immediately preceding the year of commercial production.
3. Period of amortization: Deduction is available for a period of 10 years commencing with the previous year of commercial production.
4. Maximum amount of deduction in a previous year: Least of the following –
- Amount of installment (1/10th of the eligible expenditure)
- Income arising from commercial exploitation.
5. Benefit of carry forward: The un allowed amount of installment of a previous year can be carried forward to the succeeding previous years till the commencement of the 10th year of commercial production.
6. Audit Report: In case of assesses other than company or Co-operative society, Audit report in Form 3AE should be furnished along with the return of income.
7. Amalgamation / De-merger: In case of amalgamation or de-merger, the outstanding installments will be allowed to the amalgamated company or in the hands of the Resultant Company.
8. No deduction: No deduction will be available under any other section in respect of expenditure incurred under this section.
