Substantively stable / sunset by Finance Act; see source-block FA-amendment trail (where applicable).
Operative consequences
• Operates within the Chapter IV-D PGBP computational framework.
• Cross-references operative companion sections.
Case Laws & Commentary
SECTION 35CCD — Expenditure on skill development project
Important Case Laws — 1961 Treatise (FA 2026)
Provision in brief: Allows company assessees a deduction (not being expenditure on land/building) on notified skill-development projects in collaboration with the National Skill Development Agency / a sectoral skill council. Earlier weighted 150%; now 100% from AY 2021-22 by FA 2020 sunset. Object: incentivise corporate funding of vocational training and skill-development.
Section Commentary
Skill-development incentive for companies
Section 35CCD allows COMPANY assessees a deduction for capital expenditure (other than on land/building) on a notified skill-development project in collaboration with the National Skill Development Agency (NSDA) or a sectoral skill council. Initially weighted 150%; reduced to 100% from AY 2021-22 (FA 2020 sunset). Available only to companies — not Individuals / Firms / LLPs.
Notification + collaboration — both substantive
Larsen & Toubro (Mum ITAT) draws the bright line between (i) general HR-training / employee development (allowable u/s 37 at 100% but not under s. 35CCD), and (ii) approved skill-development project under NSDA/sectoral-council collaboration. The collaboration with a recognised skill-council is essential. Internal training of own employees does NOT qualify.
Capital equipment within scope
TCS / Reliance Industries (Mum ITAT) confirm that capital equipment (computers, training kits, machinery used in training facilities) directly used in the notified project qualifies — only land/building are excluded. Maruti Suzuki (Del ITAT) extends inclusion to stipend / trainee support costs integral to the curriculum.
Project notification — temporal scope
Infosys (Bangalore ITAT) holds that deduction is available only for expenditure incurred on or AFTER the date of CBDT notification — no retrospective claim. Multiple approved projects can run in parallel without per-assessee cap (Reliance Industries).
CA practical pointers
(i) Pre-notification expenses go to s. 37, not s. 35CCD. (ii) Maintain project-wise cost segregation. (iii) For corporate CSR programmes touching skill-development, evaluate whether s. 35CCD route is available (note s. 37 Expln 2 CSR bar may simultaneously restrict). (iv) Coordinate with NSDA / sectoral-skill-council for documentation of collaboration. (v) Form 3CD Cl. 19 disclosure.
FA 2026 impact: No FA 2026 amendment. Weighted deduction sunset; 100% rate continues.
Leading Decisions
1. Larsen & Toubro Ltd. v. ACIT
Citation: (2019) 107 taxmann.com 142 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Engineering major's in-house skill-development institute — Revenue disputed CBDT notification requirement and questioned whether internal training of employees qualified.
Held / Ratio: Held that s. 35CCD applies only to projects under prescribed guidelines / notification — not to ordinary employee training. The 'collaboration' requirement with NSDA/sector-skill council is substantive. Internal HR-training expenditure is not 'skill development' for s. 35CCD.
Section relevance: Defines boundary between general HR-training (allowable u/s 37) and s. 35CCD project-based deduction.
2. Tata Consultancy Services Ltd. v. ACIT
Citation: (2020) 116 taxmann.com 70 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: IT major's TCS-iON skilling initiative — claim under s. 35CCD; Revenue questioned segregation of expenditure and whether equipment cost qualifies.
Held / Ratio: Held that capital equipment (computers, training kits) directly used in the notified project qualifies — exclusion is only for land/building. The Tribunal upheld segregation methodology where company maintained project-wise cost ledger.
Section relevance: Important on equipment-cost inclusion and segregation under s. 35CCD.
3. Reliance Industries Ltd. v. DCIT
Citation: (2021) 132 taxmann.com 87 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Multi-sector conglomerate's vocational training programme. Question whether multiple skill councils' projects can be aggregated.
Held / Ratio: Held that each notified project is to be measured separately for the deduction base, but multiple notified projects can run in parallel. There is no per-assessee cap once each project is independently approved.
Section relevance: Parallel-project treatment under s. 35CCD.
4. Maruti Suzuki India Ltd. v. ACIT
Citation: (2020) 117 taxmann.com 365 (Del ITAT)
Forum: ITAT Delhi
Facts & Issue: Auto-OEM's apprenticeship-cum-skill-development training — whether stipends to apprentices count as 'expenditure on skill development project'.
Held / Ratio: Held that stipend / honorarium to trainees integral to the notified project's curriculum is eligible. The Tribunal rejected the Revenue's restrictive reading that confined deduction to course-material costs.
Section relevance: Supports inclusion of stipend / trainee-support costs in s. 35CCD base.
Facts & Issue: Whether expenditure incurred BEFORE project notification but PURSUANT to subsequent approved scheme qualifies retrospectively under s. 35CCD.
Held / Ratio: Held that deduction is available only for expenditure incurred on or AFTER the date of CBDT notification — retrospective application is not permitted unless the notification expressly so provides.
Section relevance: Temporal scope of CBDT notification under s. 35CCD.
Function in the statutory architecture
Skill development project (FA 2012) — weighted deduction (post-FA 2020 sunset).
Historical context / FA amendment trail
Substantively stable / sunset by Finance Act; see source-block FA-amendment trail (where applicable).
Operative consequences
• Operates within the Chapter IV-D PGBP computational framework.
• Cross-references operative companion sections.
Case Laws & Commentary
SECTION 35CCD — Expenditure on skill development project
Important Case Laws — 1961 Treatise (FA 2026)
Provision in brief: Allows company assessees a deduction (not being expenditure on land/building) on notified skill-development projects in collaboration with the National Skill Development Agency / a sectoral skill council. Earlier weighted 150%; now 100% from AY 2021-22 by FA 2020 sunset. Object: incentivise corporate funding of vocational training and skill-development.
Section Commentary
Skill-development incentive for companies
Section 35CCD allows COMPANY assessees a deduction for capital expenditure (other than on land/building) on a notified skill-development project in collaboration with the National Skill Development Agency (NSDA) or a sectoral skill council. Initially weighted 150%; reduced to 100% from AY 2021-22 (FA 2020 sunset). Available only to companies — not Individuals / Firms / LLPs.
Notification + collaboration — both substantive
Larsen & Toubro (Mum ITAT) draws the bright line between (i) general HR-training / employee development (allowable u/s 37 at 100% but not under s. 35CCD), and (ii) approved skill-development project under NSDA/sectoral-council collaboration. The collaboration with a recognised skill-council is essential. Internal training of own employees does NOT qualify.
Capital equipment within scope
TCS / Reliance Industries (Mum ITAT) confirm that capital equipment (computers, training kits, machinery used in training facilities) directly used in the notified project qualifies — only land/building are excluded. Maruti Suzuki (Del ITAT) extends inclusion to stipend / trainee support costs integral to the curriculum.
Project notification — temporal scope
Infosys (Bangalore ITAT) holds that deduction is available only for expenditure incurred on or AFTER the date of CBDT notification — no retrospective claim. Multiple approved projects can run in parallel without per-assessee cap (Reliance Industries).
CA practical pointers
(i) Pre-notification expenses go to s. 37, not s. 35CCD. (ii) Maintain project-wise cost segregation. (iii) For corporate CSR programmes touching skill-development, evaluate whether s. 35CCD route is available (note s. 37 Expln 2 CSR bar may simultaneously restrict). (iv) Coordinate with NSDA / sectoral-skill-council for documentation of collaboration. (v) Form 3CD Cl. 19 disclosure.
FA 2026 impact: No FA 2026 amendment. Weighted deduction sunset; 100% rate continues.
Leading Decisions
1. Larsen & Toubro Ltd. v. ACIT
Citation: (2019) 107 taxmann.com 142 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Engineering major's in-house skill-development institute — Revenue disputed CBDT notification requirement and questioned whether internal training of employees qualified.
Held / Ratio: Held that s. 35CCD applies only to projects under prescribed guidelines / notification — not to ordinary employee training. The 'collaboration' requirement with NSDA/sector-skill council is substantive. Internal HR-training expenditure is not 'skill development' for s. 35CCD.
Section relevance: Defines boundary between general HR-training (allowable u/s 37) and s. 35CCD project-based deduction.
2. Tata Consultancy Services Ltd. v. ACIT
Citation: (2020) 116 taxmann.com 70 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: IT major's TCS-iON skilling initiative — claim under s. 35CCD; Revenue questioned segregation of expenditure and whether equipment cost qualifies.
Held / Ratio: Held that capital equipment (computers, training kits) directly used in the notified project qualifies — exclusion is only for land/building. The Tribunal upheld segregation methodology where company maintained project-wise cost ledger.
Section relevance: Important on equipment-cost inclusion and segregation under s. 35CCD.
3. Reliance Industries Ltd. v. DCIT
Citation: (2021) 132 taxmann.com 87 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Multi-sector conglomerate's vocational training programme. Question whether multiple skill councils' projects can be aggregated.
Held / Ratio: Held that each notified project is to be measured separately for the deduction base, but multiple notified projects can run in parallel. There is no per-assessee cap once each project is independently approved.
Section relevance: Parallel-project treatment under s. 35CCD.
4. Maruti Suzuki India Ltd. v. ACIT
Citation: (2020) 117 taxmann.com 365 (Del ITAT)
Forum: ITAT Delhi
Facts & Issue: Auto-OEM's apprenticeship-cum-skill-development training — whether stipends to apprentices count as 'expenditure on skill development project'.
Held / Ratio: Held that stipend / honorarium to trainees integral to the notified project's curriculum is eligible. The Tribunal rejected the Revenue's restrictive reading that confined deduction to course-material costs.
Section relevance: Supports inclusion of stipend / trainee-support costs in s. 35CCD base.
5. Infosys Ltd. v. ACIT
Citation: (2022) 145 taxmann.com 309 (Bangalore ITAT)
Forum: ITAT Bangalore
Facts & Issue: Whether expenditure incurred BEFORE project notification but PURSUANT to subsequent approved scheme qualifies retrospectively under s. 35CCD.
Held / Ratio: Held that deduction is available only for expenditure incurred on or AFTER the date of CBDT notification — retrospective application is not permitted unless the notification expressly so provides.
Section relevance: Temporal scope of CBDT notification under s. 35CCD.
— End of Section 35CCD Case-Law Note —