Weighted deduction should be available on expenditure incurred on internally developed intangible assets

Issue/Justification

The DSIR guidelines provide that eligible capital expenditure on R&D will include expenditure on plant, equipment or any other tangible item only. It also provide that capital expenditure of intangible nature is not eligible for weighted deduction.

Suggestion

It is recommended to provide weighted deduction for expenditure incurred on internally developed intangible assets under Section 35(2AB) of the Act.

It is also recommended that any initial cost paid for acquiring R&D related intangible assets, which are used in the R&D unit should also be allowed for weighted deduction under Section 35(2AB) of the Act.

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)
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