Question ID : 39340

35 AD deduction query

Hotel commenced in f.y 2016-2017 and 35 AD Claimed . Now hotel wants to add 8 more rooms whether 35 AD will be available on fresh capital expenditure done for 8 rooms in f.y 2018-2019 ?

Hi Mr. Abhishek, In my opinion, deduction for the capital expenditure incurred in the FY 2018-19 would be allowed for the purpose of computation of business income. This is due to the fact that section 35 AD(1) contemplates for allowability of deduction in the same year in which capital expenditure is incurred and is used wholly and exclusively for the purpose of specified business. The section does not restrict the allowance only in the year of commencement of business. For the above point, I assume that the capital expenditure is incurred wholly and exclusively for the purpose of hotel business and all other conditions laid down in section 35 AD are complied with.