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SP EC IA L TAX PROVISIONS
CJ TAX PROVISIONS IN RESPECT OF FREE TRA DE ZON E
CJ TAX PROVISIONS IN RESPECT OF INFRA-STRUCTURE
DEVELOPMENT
CJ TAX PROVISIONS IN RESPECT OF BACKWA
RD ARE AS
CJ TAX PRO VISI ONS IN RESPECT OF TAX INC
ENTIVES TO
EXPORTERS
E
o PURCHASE AN ASSET ON INSTALLMENTS OR HIR

Tax incen tives to IFSC (w.e.f . 1.4.2 023)

Amendment of Sec. SOLA (w.e.f . 1.4.2 023)
Amendment of Sec. 80-IA C Dedu ction In Resp ect of Profi ts and Gain s
from Speci fied Busin ess
E
TAX PRO VISIO NS IN RESPECT OF FREE TRADE ZON
g In Free Trade Zone , etc.
I. Income from Newl y Established Industrial Undertakin (Sec. lOA)
2012- 13.
Exemption u/s lOA is not allow ed w.e.f Asse ssme nt Year
Banking Units or Inter natio nal
II. Deduction in respe ct of certain incomes of Offshore
(Sec. BOLA )
Financial Services Cent re
unde r the laws of a coun try
Where a sched uled bank or any bank incor porat ed by or
Econ omic Zone deriv es incom e :
outside India havin g an offsh ore bank ing unit in a Speci al
(a) from an offsh ore bank ing unit in a Speci al Econ
omic Zone; or
(b) from the busin ess refer red to in Sec. 6(1) of the Bank ing Regu lation Act, 1949 , with
other unde rtaki ng whic h
an unde rtaki ng locat ed in a Spec ial Economic Zone or any
and main tains a Spec ial
develops, devel ops and opera tes or develops, opera tes
Economic Zone · e fr~m its bus~ ess for whic h
(c) from any unit of the Inter natio nal Finan cial Services_ centr
:al Econ omic Zone .
it has been appro ved for settin g up in sue~ a centr~ m a Spe<
ft whi~ ~ was lease d by a unit
(d) arisin g from the trans fer of an asset , hem~ an aircra ition that the unit has
referr ed to in claus e (c) to a perso n, subJe ct to the cond
h, 2024 .
. comm enced opera tion on or befor e the 31st d~y of Marc
it shall be allow ed dedu ction from its gross
total income.
ass W.e:f. Asse ssme nt Year 2023-24, in_ addit ion to the incom e arisin g from _the tr~f er of an
an asset , bem g a ship , whic h
w et being an aircra ft, the incom e arisin g f~om tl_ie trans fer ofCen_tre to ~y perso n shall also
beas ~e~sed by a unit of the Inter natio nal Finan cial Servic~s
th ~ligible for dedu ction unde r section 80LA (1A) of th e said sectio n, subJe ct to the cond ition
1 3 -2024•
a the unit has comm enced opera tion on or before 3 -
 22Sr~~~~\ ,:--~_"'!--~~--~- fo<~CORPORATETI\XPLANNiNG'ANDMANAGEMENT ,
Quantum of deduction · (a) 100% of such income for five conse
cutive ass -.
begin ning with the assessm~nt year relevant t~ p~evious
ye?-I'tint~hich pdermissi:~~;nt ~e 1
of the Bank ing Regulation Act, 1949, or permission or regis
Exch ange Board of India Act, 1992 or any other relev ~t ra ion un ~r the Sec~~ 23(l&ta
law was obtained. llritie8 )(q)
(b) Thereafter, 50% of such income for 5 consecubv? asses
smen t years. <llld
The Finance Act 2023 has been inserted a new proviso after
clause (b) to Se t.
to increase the amount of deduction available to the eligib
le assessees under Se ct~n, 801 •(
1or the subsequent 5 years from 50% to 1oon1. w. . . c ion, sot': ii
Conditioru; for deduction: T h e ~ mu st~ along with ~e ~(l)
return ofincome el .
(1) A repor t of the Chartered Accountant in t~e presc
nbe~ . form certifyin ~lli~ .
deduction has been correctly claimed in accordance with
the pro':s ions of this sect- that th~
(2) A copy of the permission obtained u/s 23(1)(a) of the B~
copy of permission or registration obtained under the Inter g ~gul ation Ac~0~·
natio nal Financial Servic' 949, or
Auth ority Act, 2019.
es Centre
Deduction in respect of certain Inter-corporate Dividends
(S
Eligible Companies : Where the Gross Total Income
of a Domestic Company~· 80Ml
previous year includes any income by way of Dividends
from any other Domestic Coin any
or a foreign company or a business trust.
. [Sec. :tany
Deduction : Amount equal to so much of the amount
of income by way of <livid (l)]
received from such other domestic company or a foreign comp
any or a business trust as : nds
not exceed the amount of dividend distributed by it on or
before the due date, shall be allo::
as deduction in computing the total income of the domestic
company.
No Double Deduction : Where any deduction, in respe
ct of the amount of Dividend
distri buted by the Domestic Company, has been allowed as
above u/s SOM(l) in any previous
year, no deduction shall be allowed in respect of such amou
nt in any other
1 Notes : 1. "Due date" means the date one month prior t.o the date
previous year.
[Sec. 80M(2)]
for furnish
2. If a company opts t.o be taxed under section 115BAAor it is eligible ing the return of income u/s 139(1).
for
under section SOJJAA and section SOM shall still be allowed althougbenefit of section 115BAB, the deduction
under chapter VIA h it is not allowed any other deduction
•
TAX PROVISIONS IN RESPECT OF INFRASTRUCTURE DEVE
LOPMENT
Where any deduction is admissible under sections 80-IA to
SORRB, no such deduction
shall be allowed to the assessee unless he furnishes a retur
n of his income for the relevant
assessment year on or before the due date specified in Sec.
139(1). (Sec. SOAC)
I. Deduction in respect of Profits and Gains from Undertakin
g or Enterprise engaged in
Infrastructure Development
(Sec. soIA)
A deduction will be allowed from gross total income to an
assessee in respect of profits
and gains derived from the business specified below :
(1) Infrastructure facility : The enterprise is carrying on .
the business of (i) developmg,
(ii) operating and maintaining or (iii) developing, opera
ting and maintaining any infrastruc·
ture facility which fulfils the following conditions :
(a) It is owned by a company or consortium of companies . an
registered in India; or ~y ted
autho rity or a board or a corporation or any other body
established or constitu
unde r any Central or State Act;
(b) It enter s into an agreement with the Central or State Gove ritJ
rnment or a lo~ a~~one\\'
or any other statutory body for development, maintenance
and operation °
infra struc ture facility;
(c) It starts operating and m.~ ~g the infrastructure facilit . 1995,
y on or after l~t Ap~clt baB
Wher e an infrastructure facility is transferred after 31.3.1
developed it to anoth er enterprise for operating and maintainin999 by an enterp~se whirdatlce
g it on its behalf, 111 acco
 ;~ """'• •:-.,.·-·~,..~~;.y-f,'"~7..-,.... . . . . ,•y,:~--,,.,.,,ri,

. , ;_, ·~- r~ SPe'c1$JJ7f~PROVisTdt(s

/ elllent wit h per son men tion ed :
• t}le tlgretbe une x~i :e~ per iod .
;~ tioll for cture fac1hty me ans : in (b), the tran sfer ee will et the benefit
of·
g
1
~i1 of!tlstrud incl udi ng toll roa d,
brid ge or .
(jl) e. r~ahwaY pro ject inc lud ing hou sing a rail system;
h1g
(b) a. ghwaY proJ•ect ; or oth er a t· ·t· •
. c IVI 1es being an inte gra l par
}11 ater sup ply proJect, wa ter
trea tme nt t of the
(c) e. w rage sys tem or so1·d
sewe 1 was te man
age sys t tem' llTl
• •gati•on
rt airp ort, 1·n1and wa ter way s or inlmend syste . project sanitation and
,
(d) a poefit of ded uct ion to hou sin g and m,
oth er~ ~ort or navigation channel in the
sea
'f}le :hw ay project sha ll be allowed if
the foll.:e ?Pment ~~ivities which are an inte ..
; of a h profits are tran sfe rred to a spe gral
cial wm.g conditions are satisfied :
(a) sueh profits are util ised for hig
hwa y pro~:s:rve acc~unt.
(b) :;lore the exp iry of thr ee yea rs
followin~ ~heexclud!-llg h~using and oth er
ed to the res erv e acc oun t. activities,
ferr t . . year m which the amo unt was trans-
u·
Th amoun rem airu ng unu t ised sha ll b h .
•
whi~ch 1·t was tran sfe rred to the res erve acc e c argeable to tax as income of the yea r
in
eduction shal l be allowed to any ount.
ente rpris e which 8 tarts th
:::!rrastructure facility on or afte r 1.4.2 017. . . , . e development or operation _and main
tenance _of
(2) Jndustria_l par k : An y und erta kin
g which develops, develops and operates or
and operates an md ustnal par k afte r 31 -3.1 ma inta ins
[notified by the Cen tral ?°v ern men t)_, afte r 997 but befo re 1.4. 201 1 or Spe cial Eco nomic Zone
~1.3.1997 but before 1.4.2006.
Where an und erta kin g dev elop s m~ ust nal
after 31.3.20?1 and tran sfe rs the operat~ par ~ afte r 31.~.1999 or Special Economic
on and Zone
transferee will get the ben efit of ded ucti on of maintenance of it to ano the r und erta kin g, the
the unexpired period.
(3) Generation and dist ribu tion of pow er
: An industrial und erta kin g which :
(a) is set-up in any par t of Ind ia
for generation or generation and dist ribu
ifit begins to gen era te pow er afte r 31.3.199 tion of power
(b) starts tran smi ssio n or dist ribu tion
3 but before 1.4.2017;
by laying
tion lines afte r 31.3 .199 9 but before 1.4.201 a network of new tran smi ssio n or dist ribu -
7;
(c) undertakes sub stan tial ren ova
tion and modernisation of the existing
transmission or dis trib utio n line s afte r 31.3 net wor k of
.2004 but before 1.4.2017.
Explanation : "Su bst ant ial ren ova
tion and
plant and ma chi ner y in the net wor k of tranmodernisation" mea ns an incr eas e in the
smission or distribution line s by at lea st
50% of the boo k-v alue of suc h pla nt and
machinery on 1.4.2004.
(4) Reconstruction or Rev iva l of a
Pow er Gen era ting Pla nt : Income of an
IIWned by an Indian Com pan y is deducti undertaking
ble if :
The Ind ian com pan y is setu p for reco
nstruction or re~ val of_a J?ower g~ne~a
(u) The Ind ian .com pan y is form ed
before ~0.11.2005 wit ~ maJonty eq~ t~ part~~ pl~ t.
by public sec tor com pan ies for the purpos tici pat ion
es of e~o rcm g the sec unt y mte res t of the
... lenders to the com pan y own ing the pow
(lU) Such Ind ian er generating plant.
(') •
com pan y is no tifie d by the Cen tral Government before 31.12.2005.
QuaThe und erta kin g beg ins to gen era te or tran smi t or dist . .
nbu te power before 31.3.2011.
100;tum and per iod of ded uct ion : •
Optioo of suc
~- n. to l h ·profits for ten consecutive ass ess men t years.
. .~ecuth,e c aim ded uct ion : The asse ssee , t bi option can claun . d d cti . te
°Iierati.0 assessment yea rs out of fifteen a b s. . 'from the yeaer in u on m any n
whi ch it begins
ns. yea rs egm mn g
Ir the as .
\lction ,in sessee is eng age d in infr astr uct ure ilit ' ntioned in (a), (b) or (c) it can claim
'the ded any ten con sec utiv e ass ess me nt yea
fac -r:t
20 yea rs inst ead of 15 years.
rs o;11 wing conditions are satisfied :
(i) It is uction und er (3) sha ll be allo
not formed by the spli ttin g up, orwed if th0 :U~ ion , of a business already in existenc
the recons e.
 • - . ,.,_, ,• • - NNING AND MANAGEMENT
230" '.'f,~ ~~~, COR~RATE T~ : industrial undertak ing carried on in In~·
Exception : Where the business o f extensive damage to, or destruction f la. is
discontinued in any previous ye~ by reasond the assessee and used for such busino, cltly
building, plant, machinery or furniture owne y eas, as
a direct result of : arthquake or other convulsion of nature•
(a) flood, typhoon, hurricane, cyclone, e • ' or
• (b) riot or civil disturbance; or
(c) accidental fire or explosio?; orak . ombating an enemy (whethe r with or Without .
(d) action by an enemy or action t en inc
declaration of war); . f three years from the end of previ
and there~ r at any_ time before ~hedexb1r yt~e assessee, it will not be deernZ~stoYear,
the business 1s re-establ ished or reVIve , Y be
reconstruction of a business already in existence. .
(ii) It is not formed by the transfer to a new business of machine ry or plant (exceeding
. 20%) previously used for any purpose. £ Of I
However the aforesaid condition s will not apply in case of trans er P ant or machinery
previously us~d by a State Electricity Board. . .
1nd1 a by any person other
Exception : Any machinery or plant which was used outside_
than the assessee shall not be regarded as machinery or plant previously used for any purpose,
if the following conditions are fulfilled : . .
(a) such machine ry or plant was not used in India before mstallat ion by the assessee;
(b) ~tis imported into India from outside India; and . . .
(c) no depreciation has been allowed or allowable under this Act for any penod pnor to
the installation of the P & M by the assessee.
Computation of Income for Deduction : For the purpose of comp~ting th~ ~e~uction at
the specified percentage for the assessment year immediately succeeding the rmtial assess-
ment year and any subsequent assessment year, the profits and gains will be computed as if
such business were the only source of income of the assessee in all the assessment years for
which the deduction at the specified percentage under this section is available.
It means if the loss or any allowance (e.g., depreciation allowance) of such business is
set-off against any other income in an earlier assessment year to find out the income of the
current year for deduction under this section the loss so set-off shall be deducted from the
current year's income and on the balance so arrived the deduction shall be computed.
Interest on investment of amounts in contingencies reserve in securities specified by
Electricity (Supply) Act shall form part of business profits of the undertak ing for deduction
u/s 80-I (80-IA). _Mllore Electric Corporations Ltd. vs. CIT (1997) 227 ITR 557 (SC)]
Where the goods or services held for the purposes of eligible business are transferred to any
other business carried on by the assessee or where any goods or services held for the purposes of
any other business carried on by the assessee are transferred to the eligible business and, in either
case, the oonsideration for such transfer does not correspond to the market value of such goods
or services as on the date of transfer, then the profits and gains of the eligible business will be
computed as if the transfer of goods or services had taken place at the market value on the date
of the transfer. ~e ~sessing Offic~r has been empowered to oompute such profits and g~ on
a reasonable basIS, if the computation of profits on the aforesaid basis presents any exceptional
difficulty. .,
. . The ~ess~ s~aJ! dete~e the reasonable profits that could be attributed to ~e
eligible ~~mess, m his oprmon, owmg to the close connection between the assessee carzyuig
on the eligible busmess and any other person, an arrangement has been 80 made that it produces
t.o the ~essee more than the ordin~ profits which might be expected to arise in the business.
Audit of&counts : The deduction _at the specified percentage will not be available ~ess
the accounts of such assessee are audited by a Chartered Accountant or any other qualified
acco~ta nt and th~ assess~e furnishes, along with the return of income the report of such
audit in the prescnbed form (Form No. lOCCB) electronically. '
r, - - ~--- .-.. ,- -:·
- • ,1,.a111al
SPECI/\LfiocPROVISioN~ .
~f D~duction : ~e Central Govt , , •• - ',..~;::-:;
tfilh notifications m the Offic1a~ Gazette that themay, ~er making necessary inquiri~s,
,:~t bY to anY class of_ und~rtakings or ente rise e~emption conferred by this section will
oir ~pplY eduction under this section shall not be allowrped ~th effect from a specified date.
~ot ,rbe d to Special Economic tified afte 005
tole: ductlon In respect of Profits and Gains of ne no r 31.3.2 •
• II, :,opment of Special Economic Zone an undertaking or enterprise engaged In
oe is entitled to deduction : A developer who d . (Sec. SOIAB)
WhO . g a Special Economic Zone notifi d ftenves profits and gains from any business
fdeve1°P1~005. ' e a er 31.3.2005 under the Special Economic

:[eS: r:::: :O~s!:i':;

o es ~ct, d d t• d .
'/flll Quahntbum ~srsedeductiton : 100% of the profits and gains derived
Jll sue u9 . ssmen years.
ftO 11 ~ever at the option of the assessee the ded t· b . d te
r.iO" ' t t Of fi , uc 10n can e c1aime 1or any n
cutive assessmen year~ ou fteen years beginning from the ear in which a S cial
conse nu·c zone has been notified by the Central Government Y pe
tcono 1 . . .
Where the De~e oper _has claimed deduction u/s 801A, he shall be entitled to deduction
onlY for the unexpired penod of ten cons~cutive assessment years.
Where a Dev~loper develops a Special Economic Zone after 31.3.2005 and transfers the
operation and mamtenance of it t? ~other Developer, the deduction shall be allowed to the
transferee Devel?per for the remammg period of ten consecutive assessment years.
Amalgamation IDemerger : Where any undertaking of an Indian company is transferred,
before the expiry of the period specified in this section, to another Indian company in a scheme
of amalgamation or demerger, then
(a) no deduction shall be allowed to the amalgamating or demerged company in the year
in which amalgamation or demerger takes place; and
(b) the deduction for the remaining period shall be allowed to the amalgamated or
resulting company as it would have been allowed if the amalgamation or demerger
had not taken place. _ -
Other provisions : The provisions relating to the following aspects are the same as
discussed u/s 80-IA :
(1) Computation of profits for deduction..
(2) Audit of accounts.
(3) Withdrawal of deduction. , . .
Note: No deduction shall be allowed if a developer begins the development of Special Econonuc Zone on or after 1.4.2017.

TAX PROVISIONS IN RESPECT OF BACKWARD AREAS

. .
I. Deduction 1n respec o
f
t - Profits and Gains other than Infrastructure Development
· (Sec. SO-IB)
Undertakings etc. . .
The deduction u/s 80-IB ·will be aHowed the followmgdcartakingses: b . . -
. Of mineral oil : Where an un e egms .
1. Production and refin~ng . al oil in any part of India after 31.3.1997 but before
(a) Commercial production of nuner
1.4.2017; or . f tural gas in any part of India after 31.3.2009 but before
(b) Commercial production° na
1.4.2017. . . ll d and rate of deduction :
Period for which deduction is a ;~~O% of such profits.
Seven initial assessment year~al duction of mineral oil shall not be allowed in respect
Deduction regarding commerci proarded after 31.3.2011 under the New· Exploration
0
~ blocks licensed under a contrac~awrnment of India (vide Resolution No. O-19018/22/95-
Licensing Policy announced by the . ve suance· of any law for the time being in force or by
ONG. DO. VL. dated 10.2.1999) or 1~':°rnment in any other manner. -
the Central Government or a_State

"(
 2. Integrated buainess of handling, storage an~ transporlati~n of food-grains 1.,,
•
N

: \V}i ••. .
undertaking derives profit ~om the integrate~ busm~ss of.hand~ing, storag
e and
tion of foodgrains shall be entitled to deduction provided it begins to operate tr ere~
such~rta .
after 31.3.2001. • llleas
Period for which deduction is allowed and rate of deduction :
(i) 5 initial assessment years . @ 100% of such profits
(ii) Next 5 assessment years :
(a) In case of companies @ 30% of such profits
(b) In case of other assessees @ 25% of such profits
The aforesaid deduction shall also be allowed w~ere an ~dert aking derive
the business of processing, preservation and packaging of fn11ts or vegetables. s profits
(w.e.f.
ment Year 2005-06)
The aforesaid deduction shall also be allowed where an undertaking derive
the business of processing, preservation and packaging of meat, meat produ s profits fro
marine or dairy products provided it commences business after 31.3.2009. cts or poultry in
or
Amalgamation/Demerger: Where any undertaking of an Indian company is
before the expiry of the period specified in this section, to another Indian compa transferred,
of amalgamation or demerger, t];len : ny in a scheme
(a) no deduction shall be allo~ed to the amalgamating or demerged company
in the year in
which amalgamation or demerger takes place; and
(b) the deduction for the remaining period shall be allowed
to the amalgamated
resulting company as it would have been allowed if the amalgamation or demergeor
had not taken place. r
- Other provisions : The provisions relating to the following aspects are
discussed u/s 80-IA : the same as
(1) Computation of profits for deduction.
(2) Audit of accounts.
(3) Withdrawal of deduction.
TAX HOLIDAY U/S 80-IB-AT A GLANCE

Ownership Location Date of Com- Tax eumption

mencement Period Quantum _
1. Commercial Any Assessee Anywhere in
production of mineral oil
Aft.er 7 Initial A.Ys. 100% of profits
India 31.3.1997 but
before 1.4.2017
2. Commercial
production of natural gas
Any assessee - After 31.3.2009
but before
-D<r- -Do-
'
under NELP VIII etc.
1.4.2017
.
3. Integrated busineBS of -Do- 18
. handling, storage ·and
-Do- After (i) 5 Initial A.Ys. (i) 100% of ~
transportation 31.3.2001 (ii) Next 5 A.Ys. (ii) 3()% for.
of companies
foodgrains and25%for
others
. 4. ProceBSing, preservation -Do-
and packaging of fruits or
-Do- w.e.f. A.Y. -D<r- -Do-
vegetables 2005-06
5. ProceBBing, preservation -Do- -Do-
and packaging of meat, After -Do- -Do-
meat products or poultry or 31.3.200 9
marine or dairv nroducts
. . assessment year
Note .. Initial means .,
The assessmen~ year relevant to the previous year in which the busines
s commences.
 l
_____,.,.~--~-•,..,:,,..,-...~ . .• ~-~~,en.
e ' '
u-,~",/~~~q~-~N""l
~~~m-ri. '
.I,m,-)~'',?A"ff~\\'ri
'11~:;ntllil¢,M ,!'ftA·~~{fe~ '.·
MN, ~- JYI, ' , ., ••
r. -~ .- ""'·~..:.,I('-',,;,,,
p, ~-").- ,_,·.:r ··--' ;..-,..,c,,,
·s:'.'<V(,''.ii"
'
•,'
;It
·., -~'-,,.~. '"! '~'''·' ,,,., • -~. ·' , • ., ,· ,,
232 '·: : ~- \, - t..':,'"':i-·~' : '"; • .t...;·--~~t.'_;\ -, '

2. Integrated b~i",,ess of 1,andUng, storage an~ transportati'?n ofstofood-gra,uu, :

undertaking derives profit from the integrate_d busm~s s of_ hand~m g, rage and trWhere
tion of foodgrains shall be elltitled to deduction provide d it begms to operate such~ ~
after 31.3.2001. • • . Us~
Period for which deducfion is allowed and rate of deduction •
(i) 5 initial assessm ent years . @ lOO% of such profits

(ii) Next 5 assessment years :

(a) In case of companies @ 30% of such profits
(b) In case of other assessees @ 25% of such profits •

The aforesaid deduction shall also be allowed w~ere an ~derta king derives pr fi
the business of processing, preserv ation and packag mg of fnuts or vegetables. (w.e.{. frooi
• • • • • 8eaa.
t
ment Year 2005-06)
The aforesaid deduction shall also be allowed wh~re underta king derives profi an
the business of processing, preserv ation and packag ing of meat, meat products or po! frooi
marine or dairy products provided it comme nces busines s after 31.3.20 09. • trro,
Amalgamation I Demerger : Where any underta king of an Indian company is trans£
before the expiry of the period specified in this section, to anothe r Indian company in a ehrre~
of amalgamation or demerger, then : • •• sc l!IJle
(a) no deduction shall be allo~ed to the amalgamating or demerged company in th •
which amalgamation or demerger takes place; and • e )'earm
(b) the deduction for the remain ing period shall be allowed to the amalgam ted
resulting company as it would have been allowed if the amalga mation or d:n or
had not taken place. _ , erger
. Other provisions : The provisions relating to the following aspects are the
discusse d u/s 80-IA : _ _ same 31
(1) Computation of profits for deduction. ·: •
(2) Audit of accounts. • •
(3) Withdrawal of deduction.
TAX HOLIDAY u,s so ~AT A oLANCE -
Date of Com- 7b.x eumption
Ownership Location mencement Quantum_
Period :
Any Assessee Anywhere in After 7 Initial AYs. 100% of profits
1. Commercial
production of mineral oil India -. 31.3.1997 but •.

before 1.4.2017
• -Do-
2. Commercial Any assessee ' -- After 31.3.2009 -Do-
production of natural gas . but before
'
under NELP VIll etc. 1.4.2017
3• Integrated business of -Do- -D~ After- (i) 5 Initial A Ys. (i) 100%ot'~
handling, storage and (ii) Next 5 AYs. (ii) 30f,
for.
- 31.3.2001
transportation of coJJ1J>Blu.es
foodgrains and25ifor
. others
. 4. Processing, preservation -D<>-
-Do- -Do- w.e.f. -Do- AY.
and packaging of fruits or 2005-06
vegetables
5. Processing, preservation -Do-
- -D<>-
-Do- After -Do-
and packagin g of meat 31.3.2009
- meat products orpoultr y~
marine or dairv oroduct.s 1-...

Note : Initial assessment year means :

. the b •
• which
• year m
The assessme . · tiO the previous
. .nt. year relevant usmess commences.

1
 -
,,.,,,,
tioR 1 . :. ,• - •
fl tastra
·-~
th follow•ing luJ.orma 10n comp ute total •
t·
see :
r ftOOl pr~fit from an unde rtaki ng entit led to d:.: :~ of the asses f
1, u/s soIB @ 100% of profi t • n
20,00 ,000
r
2. 1oss tfromVIAanother unde rtaki ng not entit led to deduction unde
chap er • • 9,00, 000
Inter est incom e 10,00 ,000
3,
Co~ puta tion of Total Inco me
50l&ltiot1
profit from an unde rtaki ng entit led to
deduction u/s 801B 20,00 ,000
Interest Incom e ·10,0 0,000
Less : Loss from anot her unde rtaki ng • 9,00, 000 1,00, 000
Gros s Tota l Incom e 21,00 ,000
Less: Dedu ction u/s 80-IB 20,00 ,000
. 'Ibta l Incom e 1,00, 000
. . eligib le busin ess
Note: For the purpo ses of de~rm ,n,ng the quant um of deduc
tion u/s 801B, it is compu ted as if such
other indus trial under taking has been set-of fagain st
were the.only source ofincom e ofthe assess ee. Hence , loss of (Del.)]
interest mcome. [CIT vs. Dewa n Kraft System (P.) ltd. (2007) 160 Taxm ann 343
rtaking or enterprise In Spec ial
11. Deduction In resp ect of Profits and Gains from unde (Sec. SOIC )
Category States
an asses see in respe ct of profi ts
A deduction will be allow ed from gross total incom e to·_
•
and gains deriv ed from busin ess speci fied below :
The unde rtaki ng or enter prise : ce· any artic le or thing (not bein g any
(a) has begu n or begi ns to manu factu re or produ
whic h manu factu res or prod uces
article or thing speci fied in the Thirt eenth Sche dule) , or
fied in the Thir teent h Sche dule)
any articl e or thing (not being any articl e or thing speci
Proc essin g Zone or Integ rated
and unde rtake s subs tanti al expa nsion in any Expo rt
Cent re or Indu stria l Esta te or
Infra struc ture Deve lopm ent Cent re or Indu stria l Grow th
stria l Area or Them e Park , as
Indus trial Park or Softw are Tech nolog y Park or Indu
notified by the Boar d, durin g the perio d:
rakh and (Utt ranc hal)- after
In the State of Hi.m achal Prad esh or the State of Utta
6.1.2003 but befor e 1.4.2 012.
(b) has begu n or begin s to manu factu re or produ
ce any.a rticle or thing or comm ence s any
manu factu res or prod uces any
operation speci fied in the Four teent h Sch~ dule, or_w hic?
article or thing or comm ences any o~ra t1on sp~ci fied m the Four teent h Sche dule and
th •
unde rtake s subs tanti al expa nsion dunn g e peno d :k.han d _(Ut tranc hal)- after 6. 1 .2003
In the State of Hima chal Prad esh or the State of Uttra
hut befor e 1.4.2 012.
Quan tum of dedu ction : 100% of such profi ts
(i) Five initia l asses smen t ye~s
(ii) Next 5 asses smen t y~ars • 30% of such profi ts
(a) In case of comp anies
i to th 25% of such profi ts
(b) In case of othaller a:e: :~:~ sectio ns BOC to BOU in relat on e profi ts and gain s
No dedu ction shall be ow s~.u -~-Fi ed above
0f the d rtaki ng or enterp. rise. The dedu •
- ction shall be all ed. if th .
un e ctton • ow e follo wmg cond ition s are
. Cond itions for d,edu
satisfied :
 (i) It is not formed by the splitting up, or the reconS t ruction, of a business air
-~·14
·A

.
existence. • •ed on in Indi 18• ·
Exception • Where the business of an undertaking c~ t t • 0 f a discontinu
any previous y~ar by reason of extensive damage to, or es rue ion . ' any building ed
d by the assessee and used for such busmess, as a direct, re Plant,
machinery or furniture owne
~= .
earthquake or other convulsion of nature,.•or • .
(a ) fl ood, typhoon, h urn•cane, cyclone ,
(b) riot or civil disturbance; or
- (c) accidental fire or explosion; or . .
(d) action by an enemy or action taken in combating an enemy (whether with or v.ith
0
declaration of war) 11t
and thereafter at any time before the expiry of three years !ro~ the end of previous e
the business is re-established or r~vive?, by the assessee, it will not he deemed
reconstruction of a business already m existence.
(ii) It is not formed by the transfer to a new business of machinery or plant (exceeding
20%) previously used for any purpose. . .
Exception : Any machinery or plant which was used outside_ India by any person other
than the assessee shall not be regarded as machinery or plant previously used for any PUl'pose
if the following conditions are fulfilled : '
. (a) such machinery or plant was not used in India before installation by the assessee•
(b) it is imported into India from outside India; and '
(c) no depreciation has ~een allowed or allowable under this Act for any period prior to
the installation of the P & M by the assessee.
Amalgamation I Demerger : Where any undertaking of an Indian company is transferred,
before the expiry of the period specified in this section, to another Indian company in a scheme
of amalgamation or demerger, then
(a) no· deduction shall be allowed to the amalgamating or demerged company in the year in
which amalgamation or demerger takes place; and
(b) the deduction for the remaining period shall be allowed to the amalgamated or
resulting company as it would have been allowed if the amalgamation or demerger
had not taken place.
Other provisions : The provisions relating to the following aspects are the same as
discussed u/s 801A :
(1) Computation of profits for deduction.
(2) Audit of accounts.
(3) Withdrawal of. deduction. .
"Substantial expansion" means increase in the investment in the plant and machinery by
at least 50% of the book value of plant and machinery (before taking depreciation in any year),
as on ~e first day of previous year in which the substantial expansion is undertaken.
Ill. Deduction In respect of Profits and Gains In respect of certain undertakings In
North-Eastern States . . . . . (Sec. soIE)

The deduction shall be allowed to an undertaking which has during the p~riod be~
on the 1st day of April, 2007 and ending before the 1st day of April, 2017, begun or begillS,
any of the North-eastern States :
to manufacture or produce any eligible article or thing; . or
18
(n) to _undertake substantial expansion to manufacture or produce any eligible artic
thing;
(iii) to carry on any eligible business. • • . • for
Quantu'!'- and period for deduction·: 100% of the profits derived from such business
. ten consecutive assessment years commencing with the initial assessment year.
 ------~-... • . . . .,.. . . . ' " " , , -f

• ··· SPECIAtt.
'.YWY1."J'~lll!:.
- H· ~- ~:
1
~,:~~-235
nd,itions for deduction: The deduction hall b . .. 4 •••• ··, •
8
Cod . e allowed if the following conditions are
• fie • db
98t1S(') It is not forme Y the splitting up or th
1 ' • e reconstruction, of a business already in
. tence.
~s " ception : Where the business of an ind .
p%·nued in any previous year by reason ustnal.
t
undertaking carried on in India is
~sc0?t plant machinery or furniture own d etxhtensive damage to, or destruction of, any
1

boiJdillg, ult 'of: e Y e assessee and used for such business, as

direct res
8
° 0
(a) flood, t~~ di~' thubnicane, cyclone, earthquake or other convulsion of nature· or
(b) riot or civi1 s ur ance; or ,
(c) accidental fire or explosion; or
(d) action b~ an efnemy) or action taken in combating an enemy (whether with or without
declaration o war
and thereafter at ~y time bef?re the expiry of 3 years from the end of previous year, the
business is re-estabhs~ed 0 ~ revived, by the assessee, it will not be deemed to be reconstruction
of a business already m existence. .
(ii) It.is not formed by the transfer to a new business of machinery or plant (exceeding
o%)
2 previously used for any purpose.
Exception : Any machinery or plant which was used outside India by any person other
than the ass~ssee sh~~ not be regarded as machinery or plant previously used for any purpose,
if the following conditions are fulfilled :
(a) such machinery or plant was not used in India before installation by the assessee;
(b) it is imported into India from outside India· and
(c) no depreciation has been allowed or allowable under this Act for any period prior to
the installation of the P & M by the assessee.
Some other deductions not allowed : In computing the total income of the assessee, the
deduction u/s lOAA or u/ss SOC to SOU shall not be allowed in relation to the profits and gains
of the undertaking.
Amalgamation I De merger : Where any undertaking of an Indian company is transferred,
before the expiry of the period specified in this section, to another Indian company in a scheme
of amalgamation or demerger, then : •
(a) no deduction shall be allowed to the amalgamating or demerged company in the year in
which amalgamation or demerger takes place; and
(b) the deduction for the remaining period shall be allowed to the amalgamated or
resulting company as it would have been allowed if the .amalgamation or demerger
had not taken place. . .,
Other provisions : The provisions relating to the following aspects are the same as
discussed u/s SOIA :
(1) Computation of profits for deduction.
(2) Audit of accounts.
(3) Withdrawal of deduction.
'North-eastern State' : State of Arunachal Pradesh, Assam, Manipur, Meghalaya,
Mizoram, Nagaland, Sikkim and Tripura. . . . .
'Substantial expansion' means increase m t~e mvestment the plant_ ~d ~achinery by
at least 25% of the book value of plant and machinery (befo;e talcing ~epr~1ation m any year),
as on the first day of previous year in which the substantial expansion 1s undertaken.
'Eligible business' means the business of : • •
(a) hotel (not below two star category);
(b) adventure and leisure sports including ropeways; . . ..
(c) providing medical and health servi~es in the nature ofnursmg home with a mrmmum
. capacity of twenty-five beds;

/, l
 236-w--~ :·~· •·~''":'~T:-~~-r~~"OORPORATETA)fif[ANNTNG~AND MANAGEMENT:~.; ,,-'7.·:, r~

=~~~t=
' "
h ~ institute for hotel management, catenng
entr~prene1:11"5~P deve~opmen~, nur~~ and para-medical, civil aviation r:d fOod Chit
fashion desigrung and mdustrial traunng; . . ted traini:~
(f) running information technology related trairung centre; ·--,,
(g) manufacturing of information technology hardware; and
(h) bio-technology.
TAX PROVISIONS IN RESPECT OF TAX INCENTIVES TO EXPORTER
Income from newly establlshed Units In Special Economic Zones (SS
1
Who is entitled to deducnon : An undertaking~ the l!nit, which~ the foll<>wmg ec•. ~AAJ
(i) It begins to manufacture or produce articles or things or provide any services~~:
computer software) after 31.3.2005 but before 1.4.2020 in any Special Economic Zo:1cluding
(ii) It is not formed by splitting up or the reconstruction of a bus~ess already in ee:
However, this condition will not apply in respect of any undertaking which is fonn,llce.
result of the reestablishment, reconstruction or revival by the assessee under the circums~
ces and within the period specified (three years) u/s 33B.
(iii) It is not formed by the transfer to a new business of machinery or plant previous!
used for any purpose. 1
For the purposes of this section reconditioned imported machinery or plant will
regarded as new. Further, where the total value of the machinery or plant transferred to the
new business does not exceed 20% of the total value of the machinery or plant used in that
business, the benefit of exemption will not be denied to it.
Quantum of Deduction : (i) 100% of profits and gains derived from the export of~
articles or things or from services for 5 initial assessment years.
(ii) 50% of such profits and gains for further 5 assessment years.
(iii) For the next 5 consecutive assessment years, 50% of such profits and gains or the
amount debited to P & L Ale and credited to the 'Special Economic Zone Re-investment
Allowance Reserve Account', whichever is less.
Explanation: It is clarified that the amount of deduction u/s l0AA shall be allowed from
the total income of the assessee before giving effect to the provisions of Sec. lOAA and~
deduction u/s l0AA in no case exceed the total income.
Where a deduction has been claimed and allowed in this section in respect of any
business (See Sec. 35AD) for any assessment year, no deduction shall be allowed under section
35AD in relation to such specified business for the same or any other assessment year.
Utilisation of the amount credited to reserve account
The amount credited to the Reserve Account should be utilised: . rwree
(i) for acquiring machinery or plant which is first put to use before the expll'Y
years next following the previous year in which the reserve was created;_ an 0f the
J
(ii) until the acquisition of plant or machinery for the purposes of the busmess
undertaking. . fi~ or fot
However, the amount cannot be distributed by way of dividends or ~ro dia.
I
remitt~ce outs~de India as profits o! for the creation of any asset outsid:JerY~
The prescnbed particulars must be furnished by the assessee in respect of Ill. us yest~
plant alongwith the return of income for the assessment year relevant to the pre'Vlo
which such plant or machinery was first put to use.
-l Taxabillty of the amount credited to the reserve account all10¢t~
(i) If the amount is utilised for any purpose other than specified abo~~' 1e
µtilised shall be taxable for the year in which the amount is so utilise •
 is not acq uir d d
the pla nt or ma chi ner y for the .e put to use as disc uss ed abo ve, the
(ii) 1f t sha ll be cha rge abl e owi ng the exp iry of the per iod
• hi h th yea r mu ned iate ly foll
ainoun oun t.
of thre e yea rs ~n w c_ of e am oun t ~as cre dite d to rese rve acc
tions reg ard ing per iod dded uct ion :
g~ep U ·t h 1 • • t·tle d to ded t· on1
the n~ as c 3:ime exe mp tion u/s l0A , it sha ll b e en i . Y
uc ion
(i') Where h une xpi red . pen od 0 f t en con sec utiv e ass ess me nt yea rs and the rea fter as
for t e ..
disc uss ed und er (n1) abo ve. Spe cial
, bef ore the com men cem ent of the
Wh ere !he Un it had alre ady ava iled ess me nt
ic Zon es Act , 2 0?5, the ded ucti ons u/s l0A for ten con sec utiv e ass
Eco no~ tion .
yea rs, 1t sha ~l ?e ent itle d to ded ucti on und er this sec e is
ere a Un it mi ti~ y loc ate~ in any free trad e zon e or exp ort pro ces sing zonfree
(ii) Wh suc h
nom ic Zon e (by rea son of con ver sion of
sub seq uen tly loc ated m a Sp~ cial Eco the per iod of 10
into a Spe cial Eco nom ic Zon e),
trad e zo~ e or exp ort pro ces smg zon e t
tiv~ ass ess m~ nt y~a rs sha ll be reck one d from the ass ess me nt yea r rele van
con secu arti cle s
beg an to man ufa ctu re or pro duc e suc h
to th~ pre vio us y~a r 1~ wh ich the uni t zon e or exp ort pro ces sing zon e.
e
. or thin gs or serv ices m suc h free trad yea rs,
afo resa id Un it has com plet ed the per iod of ten con sec utiv e ass ess me nt
Where the
er this sect ion.
it shall not be ent itle d to ded uct ion und
Computation of Pro fits
pro fits
der ive d from the afo resa id bus ines s sha ll be the am oun t whi ch bea rs to the the tota l
Pro fits tion as the 'exp ort turn ove r' bea rs to
ines s of the uni t, the sam e pro por
of the bus
the und erta kin g.
turnover of the bus ine ss car ried on by (inc lud ing
site dev elop men t of com put er sof twa re
The pro fits and gai ns der ive d from on- Ind ia sha ll be dee med to be the pro fits and gai ns
side
services for dev elo pm ent of soft war e) out war e out side Ind ia.
derived from the exp ort of com put er soft oth er
the goo ds hel d for the pur pos e of eligible bus ines s are tran sfe rred to any oth er
Where of any
whe re any goods hel d for the pur pos es
business car ried on by the ass ess ee ortran sfer red to the elig ible bus ine ss and , in eith er cas e,
business car ried on by the ass ess ee are s not corr esp ond to the ma rke t val ue of suc h goo ds as
the con side rati on for suc h tran sfe r doe and gain s of the eligible bus ine ss wil l be com put ed as
on the dat e of tran sfe r the n the pro fits at the mar ket val ue on the dat e of the tran sfe r. The
e
if the tran sfer of good~ had tak en plac to com pute suc h pro fits and gai ns on a rea son abl e
Assessing Off icer has bee n emp owe red the afor esai d bas is pre sen ts any exc epti ona l diff
icul ty.
basis, if the com put atio n of pro fits on
ine th~ reas ona ble pro ~ts tha t could be attr ibu ted to the
The Ass essi ng Officer sha ll det;ermng to the close connection betw een the asse ssee car ryin g
eligible bus ines s if in his opinion, owi m~ de ~a t it pro duc es
on, an ~e m en t has bee n so
on the eligible b~i nes s and any oth er pers its which rmg ht be exp ecte d t.o ans e m the bus ine ss.
t.o the asse ssee mo re tha n the ord inar y prof
Withdrawal of certain benefits van t to the
(i) In com put ing the tota l inco me
of the asse ssee of the pre vio us yea rt rele b-
C?f the relev!=1llt ass ess ~en yea r the una
the last
assessment yea r imm edia tely suc cee ding ?so rbe d ~ap1tal e~e ndi tur e on sC1entific rese arc h, the
atio n allo wan ce, the una nt yea rs
sorbed dep reci
cap ital exp end itur e on fam ily plan nin g rela tmg to the rele van t ass ess me
unabsorbed forw ard and set-off.
ending befo re 1.4. 200 6 wil l not be carr ied rela ting to the
loss under_ the hea d 'C~ pita l Gai ns'and
(ii) Una bso rbe d bus ines s loss es or 1.4. set-off.
200 6 will not be ear ned forw ard
relevant ass ess men t yea r end ing before to suc h pro fits .
IA or sect ion BOIB in rela tion
(iii) No ded ucti on sha ll be allowed u/s SO- me nt yea rs
w~ ce on any ass ets in the ass essed as if the
(iv) In com put ing the dep reci atio n allo com put
following the rele van t asse ssm ent yea rs, the wntt:en. dovyn val ue will be wit h the pro visi ons 0 f
reC 1ati on m acc ord anc e
assessee had clai med and bee n allowed the dep men t yea rs.
the rele van t ass ess
the Income Tax Act dur ing eac h one of
238~~ ~-~~7. -(0_:,r__"'.~~-":t''~OORPORAfelIDi:ANAiNG~ANDMANAGEMENT:'~~;;;;:~: ,:, .:::~~
~~fi;J1~.r:
/>,,
A/~/',,- '"f

Set-off of loss : Business loss or loss under the head 'Capital Gains' relating to the h •. ,-~ ,
of the Unit shall be allowed to be carried forward or set-off. usllleaa
Deduction In case of amalgamation or demerger
, Where a Unit which is entitled to deduction is transferred befo~e the expiry of ~h
specified in this section to another Unit in a scheme of amalgamation or demerger . e PeriOQ
(a) No deduction shall be allowed to the amalgamating _or the demerged Unit he·
company for the previous year in which the amalgamation or the demerger tak lilg a
(b) The deduction shall be allowed to the other Unit for the unexpired period. es Place;
Explanation 1 : For the purposes of this section :
(i) 'Export turnover' means the consideration in respect of export by the unit f
articles or things or services received in, or brought into, India by the assess: ihe
does not include : e ut
(a) freight, telecommunication charges or insurance attributable to the delivery of th
articles or things outside India; or e
(b) expenses, if any, incurred in foreign exchange in rendering of services (including
computer software) outside India.
(ii) 'Export in relation to the Special Economic Zones' means taking goods or providing
services out of India from a Special Economic Zone by land, sea, air or by any othe
mode, whether physical or otherwise. r
(iii) 'Relevant assessment year' means any assessment year falling within a period of
fifteen assessment years referred to in this section.
Explanation 2 : The profits and gains derived from on-site development of computer
software (including services for development of software) outside India shall be deemed to be
the profits and gains derived from the export of computer software outside India.
nlustration 2
A company begins to manufacture articles in the Previous Year 2017-18 in a Special
Economic Zone. From the following information determine the amount deductible u/s lOAA of
the Income Tax Act, 1961 for the Assessment Year 2023-24: f (in crore)
1. Total sales of the company 15
2. Total profit of the company· • 3.5
3. Sales of the unit in S.E.Z. 6
4. Export sales of the unit in S.E.Z. 4
5. Profit of the unit in S.E.Z. 1.5
Solution
100% of profit derived from export of articles manufactured in a unit in SEZ is deductible
for 5 initial assessment year u/s l0AA.
Accordingly, deduction u/s 10 AA for the Assessment Year 2023-24 shall be profit of the
.
busmess f th ·t . SEZ Export sales of the unit in S.E.Z.
O
e um m x Total sales of the unit in S.E.Z.
1.5 crore x 4 crore + 6 crore = f 1 crore
ntustration 3
Statement of Profit and Loss of Sagar Industries Ltd. shows net profit f 1,54,09,650 for th~
Financial Year 2022-23. The following information is received from analysis of books of accounts·
1. Dividend amounting to f 25,00,000 has been declared for the Financi~ xe:
2021-22, out of this f 16,00,000 has been paid and such amount debite
Statement of Profit and Loss.
2. Aforesaid net profits are included profits of the following undertakings :
(a) Profit of Export unit f 48,00,000~
 , .•"'.';•,~W ••.. !· u7:zt1
, ••• •tl~~
~~ ~P,.E·-~-r.r~r.fl.,..,·
,\111\L tM·
.,..:r:, '<'~-.,
·r_.t-{~·:f '
it.t

h 2013.
•• .)"'··~~ of pac ~g of fruits 33,50,000 which is established in Marc
~)profit of an umt e~aged_ mecono export of computer software f 9,20,000 (this unit
(c) ~blished in 2017 m SJ)eCJ.al mic zone). .. .
es the Assessme1;1t Year 2023-24 advance Income Tax has been paid f 38,00,000
s. f ~ the Financial Year 2022- 23 and an additional provision has been made for
d 14 00 ooo. Both items are debited to Statement of Profit & Loss.
t & Loss f 17,70,000, when
f ~ati on h~ ~n. charged to Statement of Profi Income Tax Act.
0 ble depreciation 1s f 19,50,000 under sectio
4. ~pwa n 32 of
ContP0 te the total income and
tax liability for· the Assessment Year 2023-24.

go(lltiol' Computation of Total Income of Sagar Industries Ltd.

(for the Assessment Year 2023-24)
f

Net Profit 1,54,09,650

Add: Disallowed items:

• Dividend distributed • 16,00,000

Income tax 52,00,000

2,22,09,650
Less : Depreciation allowable f.
(f 19,50 ,000- 17,70 ,000) . 1,80,000

Exempt income u/s ·10A A • · .

9,20,000 11,00,000
(100% of Expo rt of Com pu~r
. .- , • Gross Total Income 2,11,09,650

· ) 10,05,000
Less : Deduction u/s 80IB f 33,50,000
k • Of fruits
(30% of Profit from pac agmg . . .· 'Total Income 2,01,04,650
• ' .

Comp • utatio . lity .

• n of Tu Liabi
(for the Assessment Year 2023-24) f
., 50,26,163
Tax@ 25% on t 2,01,04,650 .
.
3,51,831
Add : Surcharge @ 7% • but does ·
('lbta l Income exceeds f 1 cror~ . ., .
not exceed t 10 crore) .
53,77,994
2,15,120
Add : Health and Education Cess @ 4%
55,93,114
38,00,000
Less : Advance tax paid
Tax Liability 17,93,114
Rounded off? 17,93,110

fl~ -
 I,

•• • -~,,ti#

t;~ •. - - - -
-,,.,, X··; \t oeDUCTI
,,

ITS AND GAINS FROM

DEDUCTION IN RESPECT OF PROF (s
SPECIFIED BUSINESS of deduct·
ec.aot\ «I
r,tLl 11 •
ss tota l inco~.e to an_ asse ssee , being an eI· . C) OL.18 0 f the pro fits
A deduction will be allowed from gro ss. . igihle I -100 %. . +or ded :
ns derive~ fr?m eligible ?us~ne
-Q
I. .
star t-up , in respect of profits and gai
), -Att l,OI IIV

, developx ne CO ~e project 1S
s which is engaged m inn~vation el With an~i or
"Eligible bu.sine••" mea ns a busines mod (1) cen tra l Gov~n
es or services ~r a scalable bus ine ss
improvement of products or process . gh 'f}le pro jec t 1s
or wea lth creation: . .
pot ent ial of employment generation age d in eli . (2) V te of app roi
"Eligible start-up" means a compan
y or a lim ited liab1hty par tne rsh ip eng
ditions :
gible a:t e of appro~
bus ines s whi ch fulf ils the following con of i\.Pril, as {irs t app r
day
is inco rpo rate d on or afte r the 1st day of April, 2016 but before the 1st
(a) it . ;at e of comf!l'
2~ ~; re m the previous .s obt ain ed m
(b) th total turnover of its bus
el t to the asse ssm ent vea
ines s does not exc eed f 100 cro
r for which deductiInon u/s •80I
•
AC is claimed.
te "al B
Year
3
The car pet 13
< ) proJect doe s 1
•
re evan ., iness ~om the ter-mrms n oard of Certifica.
(c) it holds a certificate of eligible bus ette by the Cen tral Government. (4) Siz e of the pl
tion as notified in the Official Gaz tho usa nd sqt
for ded uct ion (b) In any otJ
Quantum of deduction and period tive nt The pro jec t i
from suc h busin~ss for thre e con secu asse ssme
100% of the profits and ~ains derived . , (5) Siz e of the rE
yea rs. for three (b) In cas e o:
ssee,the deduction can be claimed
any
However at the option of the asse rs beginning from the yea r in which the eligible (6) AJ,lotment o~
ten yea
consecutive ~se ssm ent yea rs out of hou sin g proJ
star t-up is incorporated. - • . ition s are of suc h indi,
ditio ns for ded ucti on : The ded ucti on sha ll be allowed if the following cond
Con • (7) Uti liza tion
satisfied : _ of a bus ines s alrea dy in (b) In cas e (
spli ttin g up, or the reconstructi on,
• (i) It is not form ed by the "Floor are a 1
existence. : car ried on in India is are a on all t
an ind ustr ial und erta kin g
Exception : Wh ere the bus ine ss of son of extensive damage to, or destruction of, any (8) Ma inte nar u
rea
discontinued in any previous yea r by owned by the assessee and use d for such_ business, as res pec t oft
building, plant, machinery or fur ni~ e
• • Wh ere the proj
a direct resu lt of : • vuls ion of natu re; or (3) and (5) sha ll no1
, ear thq uak e or oth er con
(a) flood, typhoon, hur rica ne, cyclone (1) The car pet
(b) riot or civil disturbance; or •· (a) Six ty sc
• .
(c) accidental fire or explosion; or er wit h or witho ut (b) Nin ety
en in combating an ene my (wh eth
(d) action by an enemy or action tak (2) The sta mp
declaration of war) yea rs from the end of prev ious year, . Pro fits liab le t
expiry of thre e
and the rea fter at any tim e before the , by the assessee, it will not be deemed to be l1l (2), the tota l am,
ved
the business is re-established or revi in existence. • . . ·, · - . llnder the hea d "F
reconstruction of a bus ines s alre ady
or plan t ( exce erung tbe J>eriod for com·
(ii) It is not formed by the tran
sfer to a new busine~s of mac hin ery
e.
20%) previously use d for any purpos ° th: I
: Any mac hin ery or pla nt whi ch was use d outside Ind ia by any person OS
Exception use d for any purJ>
tha n the assessee sha ll not be reg arded as machinery or pla nt previously .
: • • Who Is ellglbl
if the following conditions are fulfilled ia befo re inst alla tion by the assessee,
use d in Ind
(a) suc h machinery or pla nt was not ia; and . r to the h~r odu cer co·
d into Ind ia from out side Ind v;n ove r of eli
(b) it is importe le und er this Act for any period prio
(c) no depreciatio n has bee n allo wed or allo wab eriod for df
ssee .
the inst alla tion of the P&M by the asse
11tun iof
~
lllc0 ll) If assess
nt Year 2023-24)
1 The Finance Act, 2023 (w.e.f. Assessme frolll!Xle of eligible
bal anc e of i
 -~.,, ..--., .~ . ,,, .. ~-- ·~-- - ,.

DEDUCTION IN RESPECT TAX'PROVI - • SPECIAL

OF p SIO ---· ,r,

• ~~ ·•" ':" "'.'.'~ . 24~

HOUSING PR i~: ~~ SA ND GAINS
of deduction FROM
eotu111
f the pro fits and .ns der ive d fro
(Sec. SOIBA)
t ou
1ooo/o .t ns for ded uct iongai
0
. . m sue ~ bus ine ss.
Co,,,di io t
'fhe projec 1s app rov e d b y the com
• .
(1) C ntral Go ver nm ent ) aft er pet ent a .
1.6 .20 16 bu t b u th0nty (au
; 0 project is com ple ted wit hin a per £

tho rity em pow ere d by the

iod ~ ~re 1.4.2022. -
(Z) ate of app rov al : Wh ere the 0
app rov al of the ye ~s fr~m the dat e
~ate of app rov al sha ll be the dat e on of approval.
first app rov ed. wh ich tI{ roJ e~ ~s obt ain ed mo re tha
e bui ldin g pla n of suc h hou sin n once, the
was l • Th
Date of comp etio n : e dat e on wh g pro jec t
. btained in wr itin g fro m the com ich a c t. fi
1s o f h pet ter 1 hcate of completion of projec
The car pet are o t e sho ps and othen aut orit~ t as a wh ole
(3) · ct does not aexc eed 3% of the :
proJe . . . er -commercial est abl ish me nt in the
Size of the plo t • (a) In c1t1 agg reg ate Ca rpe t are a. hou sin g
thousand squ are me tre s. es of Ch enn ai Delhi K lka t
)

b .
(
4

' ' o a or um a1 - rm mu m one

M

M "
.

(b) In any oth er pla ce- Mi nim

• • th 0 nl h um two tho usa nd sq
The proJeCt is . e . Y ~us ing •
pro jec t on the afores uar e met res .
(5) Size of the res ide nti al u'!'it aid plot.
: (a) _In cas e of (4)(a) ma xim um thi rty
(b) In case of (4)(b) ma xim um
six ty squ are me tres . squ are me tre s.
(6) AJ,lotment of a res ide nti al
uni t to an ind ivid ual : No oth er res
housing pro jec t sha ll be allo tted to ide nti al uni
of such ind ivi dua l. the individual or the spouse or the min t in the
or chi ldr en
(7) Utilization of the plo t: (a) In
cas e (4)(a) minimum 90% of the floor
(b) In cas e (4)(b) mi nim um 80% are a rat io permissible.
of the floor are a rati o.
«Floor are a ratio" me ans the quo tien
t obtain
on all the floors by the are a of the plo ed by dividing the total covered are a of pli nth
t of land.
a r e
a

(8) Maintenance of acc oun ts : Th

e ass ess ee sha ll ma int ain sep ara te
respect of the hou sin g pro jec t. books of acc oun t in
Where the pro jec t is app rov ed on or
aft er 1.9.2019 out of conditi
(3) and (5) shall not apply. In thi s
cas e new condition are as und er :on (1) to (8) the con diti on
(1) The car pet are a of a res ide
nti al un it does not exceed :
(a) Sixty squ are me tre s in me tro pol
itan cities;
(b) Ninety squ are me tre s in any oth
(2) The sta mp dut y val ue of a res
er place.
ide nti al u~ t does not excee~ fo;ty-f
. Profits liable to tax : If the hou sin g ive 1 ~ rupee_s.
111 2
( ), the total am oun t of
pro jec t 1s not com ple t~ wit hin the pen od me nti one d
ded uct ion allo
:der t~e head "Pr ofi ts and Ga ins of we d in one or more pre :io us yea rs, ~hall be ch~ gea ?le
Bu sin ess or Profession of the pre vio
eI>enod for completion exp ire s. us yea r m wh ich
• .
DE DU CT ION IN RESPECT OF CE
RTAIN INCOME OF
PR OD UC ER COMPANIES
(Sec. SOPA)
Who Is eligible for deduction
AProducer company hav ing a tot al tur
nov er ?f less tha n one hun dre d crore
tuiio~er of eli "bl b • ) d rup ees (including
PeriOd fo gi e usm ess • the pre vio us yea r.
u.n ng 2019-20 to As ses sm ent Year 2024-2
QUa,a. r ded uct ion : Fr<?m As ses sm ent Yi 5.
. (ii) }ftum, of ded uct ion : (1) 100 ear . "ble bus ine ss.
% pro fit fro ~ ehg i t" on SOC to SOU
~Ille of e~s.ebssee is elig ible for
ded uct firs t ded uct ion fro m
tu bai gi le bus ine ss sha ll be allo ion und er set~1:ns SOC to SOU (except sec. 80PA) and
wed un er sec
ance of income u/s SOPA.
 - ... ,. - ,....... ..,... - ._.. --- - ---- .., CORPORATE TAX PLANNING AND MANAGEMENT ;,

Ezplanation : "Eligible Business" means :

(a) The marketing of agricultural produce grown by the members; or
(b) The purchase of agricultural implements, seeds, livestock or other articl .
for agriculture for the purpose of supplying them to the members; or es 1lltended
(c) The processing of the agricultural produce of the members.
PURCHASE AN ASSET ON INSTALLMENTS OR HIRE
Purchase by installment. When an asset is purchased by installments, the ass
claim depreciation on the entire purchase price as per agreement. essee can
It is to be noted that whe!1 depreciation_ is ~owed on t~e entire purchase Price
asset interest payable on unpaid purchase pnce 1s not deductible. of the
Purchase by Hire : When an asset is purchased on hire-purchase, the depreci t'
allowable on cash down price of the asset and the interest is allowable as an expens a 10n is
When an asset is obtained on hire, hire charges can be claimed as deduction. e.
Now, the question is whether an asset should be purchased by installments or tak
hire? We can answer this question by comparing the present value of cash outflows ine~ on
the situations. 0th

nlustration 4
From the following information determine whether the assessee (X Ltd.) should purchase
the machine by installment or hire it.
1. Cost 5 annual installments off 2,00,000 each payable in the beginning of each year.
2. Hire charges f 1,50,000 p.a. for 8 years payable in the beginning of each year.
3. Residual value f 50,000 after 8 years.
4. Rate of deprecation 15%.
5. Cost of capital 10%.
6. Rate of tax 30%
7. Present value@ 10%:
1 2 3 4 5 6 7 8
0.909 0.826 0.751 0.683 0.621 0.564 0.5130 0.467
8. Loss on sale of machine set-off against short-term capital gains.
Solution
(A) Asset purchased by installments
Date of Payment • Installment Discounted
(Amount) value@l0%
f
f
I Down payment 2,00,000 2,00,000
II installment 2,00,000 1,81,800
III installment 2,00,000 1,65,200
IV installment 1,50,200
2,00,000
V installment
2,00,000
136,600
ifssoo
Cash Outflow
Cash inflow at the end of 8th year f 50,000 on account of sale of machine, Discoun
value f 23,350.
Note : Tax savings on account of depreciation :
Year 7hx savings on
. Amountof
Depreciation depreciation
I year 45,000
II year 1,50,000
.1,27,500 38,250
III year 32,514
1,08,380
IVyear 27,636
92,120
 a

" · ~ ~ . , . . . . · ~ ( " ~ ..._. ,,,.,.._,. ""t' --..ii'-...·

. ·A"_·,-~'":~ •• , l ., • •• SPECIALTAXPftOVISIONS~ng;:; 4fu4§YG}l lftf?•D:Yf 'NiW'f ,..-2~

. 1 , rt:1 ktt e :H: 7 c }

Vyear 78,300 23,490 14,587

VI year 66,555 19,967 11,261
VJl year 56,572 • 16,972 8,707
vtll year 48,086 14,426 6,737
pital loss on sale of machine 7,27,513 1,57,085
rt-teflll ca == f 10,00,000-(7,27,513 + 50,000) = f 2 22 48 t ff . STCG
5110 22487@30%=?66746 • ' ' 7 se-o agamst •
dont', 2 ' '
TBJss"e al e oftaX savings= f 31,170 f f
rresent Ca;h Outflow • 8,33,800
. (i) Cash inflow on sale of machine 23,350
£tSS • (ii) Tax savings on account of depreciation 1,57,085
(iii) Tax savings on account of STCL 31,170 2,11,605
Net Cash Outflow 6,22,195
set taken on Hire
(B) As
Present
of
l)ate Hire Discounted Value of
payment Value Tax savings
f f f
I year 1,50,000 1,50,000 45,000
Il year 1,50,000 1,36,350 40,905
ID year 1,50,000 1,23,900 37,170
Nyear 1,50,000 1,12,650, . 33,795
Vyear 1,50,000 1,02,450 30,735
VI year 1,50,000 93,150 27,945
VII year 1,50,000 84,600 25,380
VIII year 1,50,000 76,950 23,085
12,00,000 8,80,050 2,64,015
f
Present value of Cash Outflow on account of Hire 8,80,050
Less : Present value of tax savings on account of Hire 2,64,015
Net Cash Outflow 6,16,035
Conclusion : Net Cash outflow in case of Hire 6,16,035
Net Cash outflow in case of
Ii • purchase by installments 6,22,195
ence, asset should be taken on Hire.

OIJJec'™ QUESTIONS
1. Tax.edr'Y/'e _Quest/on ·
(A) T e uction available to certain industries for the initial few years is called .................... .
(C) ins
Holiday (B) Tax •
1n,._ !Ans. 1. (A).] (D) Advance
...,"1Answ •
Deaer1t' '{Pe Qu!3stlons • •
~ t e he conditions for claiming exemption from tax u/s lOAA of the Income Tax Act .
3
.: ~rite ::~I>ecial tax provisions? Discuss the tax incentives for exporters.
Diaeua8 th note on : Infrastructure. .
of the e provisions of deduction in respect of profits and gains from housing projects u/s 80IBA
Income Tax Act. •