Vinita Bio-medicals Ltd. is engaged in the business of manufacture of biomedical items. The following expenses were incurred in respect of activities connected with Scientific Research : Year Ended Particulars Amount (₹)

Answer 6A(i) Computation of Deduction permissible u/s 35 Nature of Expenditure Actual Expenses % of Deduction Deductible Amount Land - Land is not entitled for deduction. 16,00,000 - - Building acquired in the preceding 3 years before date of commencement business is only eligible as deduction in FYs. As building has been acquired on 30.04.2021 i.e. before the preceding 3 years from the date of commencement of business i.e. 01.09.2024 and therefore not eligible for deduction. 25,00,000 0% Nil Plant and Machinery 100% deduction of Current year Revenue or Capital Expenditure on Scientific Research is allowed under section 35(1)(iv) 5,00,000 100% 5,00,000 Raw Materials acquired in the preceding year Prior Period Revenue Expenditure incurred for Raw Materials or Salary during 3 years immediately preceding the date of commencement of business, will be allowed as deduction in the previous year in which the assessee commenced the business 2,20,000 100% 2,20,000 Current Year exp. on Raw Materials & Salaries 100% deduction of Current year Revenue or Capital Expenditure on Scientific Research is allowed under section 35(2AB) 1,80,000 100% 1,80,000 Total Deduction for the Previous Year 2024-25 9,00,000 Consequence of Sale of Capital Asset: As per the provision of sections 41(3) of the Income tax Act, 1961, where a Capital Asset used for Scientific Research is sold without introducing the same into the business, the Sale Proceeds of the asset, up to the amount of deduction claimed shall be treated as Business Income of the Previous Year in which such transfer took place. Any excess amount shall be taxed under the head Capital Gains. In this case, Amount of Short-Term Capital Gains u/s 45 = Total Sale Consideration Less Deduction Allowed = ₹16,00,000 - ₹5,00,000 = ₹11,00,000. Business Income u/s 41(3) = ₹5,00,000