Section 35E of the Income Tax Act

Income-tax Act, 2025: s.51

Section 35E of the Income-tax Act, 1961 corresponds to section 51 (Amortisation of expenditure for prospecting certain minerals) of the Income-tax Act, 2025.

Read section 51 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 35E is CIT v. Sri Mangayarkarasi Mills (P) Ltd. (315 ITR 114), cited in 48 of the 69 judgments on BharatTax that turn on this section.

Leading authorities on Section 35E

CIT v. Sri Mangayarkarasi Mills (P) Ltd.
315 ITR 114 · 2009 · Supreme Court
48
citing judgments

Expenditure qualifies as 'current repairs' if it maintains existing machinery without replacement, creates no new asset, restores functional efficiency without increasing capacity, and is not an independent unit. Conversely, the cost of replacing machinery, especially independent units, constitutes capital expenditure.

CIT v. Delhi Cloth & General Mills Co. Ltd.
115 ITR 659 · 1978 · High Court
46
citing judgments

Sponsorship expenditure, when akin to advertisement expenses, constitutes revenue expenditure and is allowable as a business deduction under the Income-tax Act.

Bikaner Gypsums Ltd. v. CIT
187 ITR 39 · 1991 · Supreme Court
34
citing judgments

Expenditure incurred to remove a restriction, obstruction, or disability preventing the carrying on of an existing business is revenue expenditure, provided no capital asset is acquired. The nature of the lease, purpose of expenditure, and its relation to profitable business operations are key considerations in mining cases.

Ltd. v. JCIT
32 Taxmann.com 197 · Reported
28
citing judgments

Where the exact quantification of a liability is to be determined in the future, but the liability itself is certain, it can be accounted for. This principle is applied when a wage agreement is being finalized.

CIT v. Ramaraji Surgical Cotton Mills
294 ITR 328 · 2007 · Supreme Court
24
citing judgments

The High Court's direction to the CIT(Appeals) to consider specific Supreme Court judgments implies that cases may be decided on merits by appellate authorities based on relevant precedents without necessarily remanding them to the Assessing Officer.

Northern Coalfields Ltd. v. ACIT, Circle 2(1), Jabalpur
59 Taxmann.com 394 · ITAT
21
citing judgments

Section 35E allows deduction for capital expenditure that is otherwise not deductible. However, if expenditure is admissible under Section 37(1), Section 35E should not be invoked to force amortization over 10 years instead of allowing it in the year of incurrence.

103 ITR 66 (SC)/CIT v. Amalgamated Jam
117 ITR 698 · 1979 · High Court
8
citing judgments
Laskhmiji Sugar Mills Co. P. Ltd. v. CIT
77 ITR 530 · 1970 · Supreme Court
8
citing judgments
Udaipur Distillery Co. Ltd. v. CIT
314 ITR 188 · 2009 · Supreme Court
5
citing judgments

Judgments on Section 35E