Income Tax Act, 2025
Section 7: Ins. by Act 21 of 1998, s. 14 (w.e.f. 11999).
7. Ins. by Act 21 of 1998, s. 14 (w.e.f. 11999).
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(iii) conducting market survey or any other survey necessary for the business of the assessee;
(iv) engineering services relating to the business of the assessee:
Provided that the work in connection with the preparation of the feasibility report or the
project report or the conducting of market survey or of any other survey or the engineering
services referred to in this clause is carried out by the assessee himself or by a concern which is
for the time being approved in this behalf by the Board;
(b) legal charges for drafting any agreement between the assessee and any other person for any
purpose relating to the setting up or conduct of the business of the assessee;
(c) where the assessee is a company, also expenditure—
(i) by way of legal charges for drafting the Memorandum and Articles of Association of the
company;
(ii) on printing of the Memorandum and Articles of Association;
(iii) by way of fees for registering the company under the provisions of the Companies
Act, 1956 (1 of 1956);
(iv) in connection with the issue, for public subscription, of shares in or debentures of the
company, being underwriting commission, brokerage and charges for drafting, typing, printing
and advertisement of the prospectus;
(d) such other items of expenditure (not being expenditure eligible for any allowance or
deduction under any other provision of this Act) as may be prescribed.
(3) Where the aggregate amount of the expenditure referred to in sub-section (2) exceeds an amount
calculated at two and one-half per cent—
(a) of the cost of the project, or
(b) where the assessee is an Indian company, at the option of the company, of the capital
employed in the business of the company,
the excess shall be ignored for the purpose of computing the deduction allowable under sub-section (1):
1[Provided that where the aggregate amount of expenditure referred to in sub-section (2) is
incurred after the 31st day of March, 1998, the provisions of this sub-section shall have effect as if for
the words “two and one-half per cent”, the words “five per cent” had been substituted.]
Explanation.—In this sub-section—
(a) “cost of the project” means—
(i) in a case referred to in clause (i) of sub-section (1), the actual cost of the fixed assets,
being land, buildings, leaseholds, plant, machinery, furniture, fittings and railway sidings
(including expenditure on development of land and buildings), which are shown in the books of
the assessee as on the last day of the previous year in which the business of the assessee
commences;
(ii) in a case referred to in clause (ii) of sub-section (1), the actual cost of the fixed assets,
being land, buildings, leaseholds, plant, machinery, furniture, fittings and railway sidings
(including expenditure on development of land and buildings), which are shown in the books of
the assessee as on the last day of the previous year in which the extension of the 2[undertaking] is
conducting market survey or any other survey necessary for the business of the assessee;
engineering services relating to the business of the assessee:
Provided that the work in connection with the preparation of the feasibility report or the
project report or the conducting of market survey or of any other survey or the engineering
services referred to in this clause is carried out by the assessee himself or by a concern which is
for the time being approved in this behalf by the Board;
legal charges for drafting any agreement between the assessee and any other person for any
purpose relating to the setting up or conduct of the business of the assessee;
where the assessee is a company, also expenditure—
by way of legal charges for drafting the Memorandum and Articles of Association of the
company;
on printing of the Memorandum and Articles of Association;
by way of fees for registering the company under the provisions of the Companies
Act, 1956 (1 of 1956);
in connection with the issue, for public subscription, of shares in or debentures of the
company, being underwriting commission, brokerage and charges for drafting, typing, printing
and advertisement of the prospectus;
such other items of expenditure (not being expenditure eligible for any allowance or
deduction under any other provision of this Act) as may be prescribed.
Where the aggregate amount of the expenditure referred to in sub-section
exceeds an amount
calculated at two and one-half per cent—
of the cost of the project, or
where the assessee is an Indian company, at the option of the company, of the capital
employed in the business of the company,
the excess shall be ignored for the purpose of computing the deduction allowable under sub-section
is
incurred after the 31st day of March, 1998, the provisions of this sub-section shall have effect as if for
the words “two and one-half per cent”, the words “five per cent” had been substituted.]
Explanation.—In this sub-section—
“cost of the project” means—
in a case referred to in clause
of sub-section
in a case referred to in clause
of sub-section