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Deductions under Chapter VIA
Institute of Chartered Accountants of India – WIRC
August 27, 2011
CA Chandresh Bhimani
Agenda
• Background
• Business deduction provisions under Chapter VIA
- Section 80-IA
- Section 80-IAB
- Section 80-IB
PwC
- Section 80-IB
- Section 80-IC
- Section 80-ID
- Section 80-JJA
- Section 80-JJAA
• Draft Direct Tax Code, 2010
• Appendix – Phased Out Deductions2
Background
• Gross Total Income (GTI)
- Total income computed in accordance with the provisions of the
Act, before making any deduction under Chapter VIA
• Total income = GTI less Applicable deductions under Chapter VI-A
(Section 80A)
PwC
(Section 80A)
• Chapter VI-A Deductions
- Section 80C to Section 80U
- Business Deductions
◦ Sections 80IA, 80IAB, 80IB, 80IC, etc
4
Basic Principles
• Aggregate deduction under Chapter VI-A not to exceed:
- gross total income of the assessee
- profits and gains of the undertaking or unit or enterprise or eligible
business
• Deduction to be calculated with reference to net income as computed
PwC
• Deduction to be calculated with reference to net income as computed
in accordance with the provisions of the Act
• No deduction to be allowed under any other provisions of the Act in
respect of the profits of an undertaking/unit/enterprise/ eligible
business to the extent of claim of deduction under Chapter VI-A
• Certain deductions to be computed with reference to income included
in GTI
5
Basic Principles
• Deduction not to be allowed unless:
- Claim of deduction made in the return of income
- Return of income filed within the due date
◦ Only section 80IA, 80IAB, 80IC, 80ID, 80IE
• Transfer price of goods and services between the undertaking or unit
PwC
• Transfer price of goods and services between the undertaking or unit
or enterprise or eligible business and any other undertaking or unit
or enterprise or business of the assessee to be determined at the
market value of such goods or services as on the date of transfer
• Where deduction in respect of profits or gains allowed under Chapter
VI-A is claimed and allowed in respect of profits of any business
specified under s 35AD of the Act, no deduction will be permitted
under s 35AD of the Act in relation to such specified business for the
same or any other assessment year6
SECTION 80-IA
• Eligible activities for claiming deduction under Section 80-IA are
- Provision of infrastructure facilities
- Telecommunication services
- Development of Industrial park / special economic zone
PwC
- Power generation, transmission and distribution or substantial
renovation and modernization of existing distribution lines
- Reconstruction of a power unit
- Cross-country natural gas distribution network
8
Eligible
business
• Developing OR operating and maintaining OR developing,
operating and maintaining any “infrastructure facility”
• Infrastructure facility:
a) road including toll road, a bridge or a rail system;
b) highway project including housing or other activities
Section 80-IA – Infrastructure facility
PwC
b) highway project including housing or other activities
being an integral part of the highway project
c) a water supply project, water treatment system, irrigation
project, sanitation and sewerage system or solid waste
management system;
d) a port, airport, inland waterway, inland port or
navigational channel in the sea.
9
Other
Conditions
• Undertaking is owned by an Indian company / consortium
of such companies/ any Board / other authority established
under Central or State Act
• Entered into an agreement with Central Govt/ State Govt/
local authority etc
• Started or starts operating and maintaining Infrstructure
facility on or after 1st April, 1995
Section 80-IA – Infrastructure facility
PwC
facility on or after 1st April, 1995
Quantum • 100% deduction for 10 consecutive years in a block of 20
years except for d) wherein deduction is 100% for 10
consecutive years in a block of 15 years
10
Initial
Year
• Developing and beginning of operation of infrastructure
facility
Other
Points
• In case of transfer of an infrastructure facility by the
developer to another enterprise for operating and
maintaining the same on its behalf in accordance with the
agreement with the Central Government, State Government,
Section 80-IA – Infrastructure facility
PwC
agreement with the Central Government, State Government,
local authority or statutory body, deduction to be available to
transferee for the unexpired period
11
CBDT Circular - Widening of Road – Infrastructure facility Relaying of Road - No
Eligible
business
• Develops, develops and operates or maintains and operates
an industrial park notified during the period April 1, 1997 to
March 31, 2011
Quantum • 100% deduction for 10 consecutive years in a block of 15
years
Initial
Year
• Develops an industrial park
Section 80-IA – Industrial Park
PwC
Year
Other
Points
• Where an undertaking develops an industrial park and
transfers the operation and maintenance of this industrial
park to another undertaking, the deduction is available to
such a transferee undertaking for the balance period in the
10 consecutive years.
12
Eligible
business
• Undertaking engaged in
a) Generation or generation and distribution of power if
generation of power commenced during April 1, 1993 to
March 31, 2012
b) Transmission or distribution by laying a network of new
transmission or distribution lines during April 1, 1999 to
March 31, 2012
Section 80-IA – Power Generation
PwC
March 31, 2012
c) Substantial renovation and modernisation of existing
network of transmission or distribution lines during April
1, 2004 to March 31, 2012
Quantum • 100% deduction for 10 consecutive years in a block of 15
years
13
Initial
Year
• Begins to generates power or starts transmission or
distribution of power or undertakes substantial renovation
and modernisation of the existing transmission or
distribution lines
Other
Points
• Deduction to an undertaking referred to in (b) shall be
allowed only in relation to the profits derived from laying
such a network of new lines for transmission or distribution
Section 80-IA – Power Generation
PwC
such a network of new lines for transmission or distribution
• For undertaking referred to in (c), substantial renovation
and modernisation means an increase in the plant and
machinery in the network of transmission or distribution
lines by at least 50% of the book value of such plant and
machinery as on 01.04.2004
14
Eligible
business
Reconstruction or revival of a power generating plant by an
Indian company if:
• Such Indian company is formed before November 30,2005
with majority equity held by public sector companies and
such Indian company is notified before December 31, 2005
by the Central Government
• Generation or transmission or distribution of power before
Section 80-IA –Power Generation Plant Revival
PwC
• Generation or transmission or distribution of power before
March 31, 2011
Quantum • 100% deduction for 10 consecutive years in a block of 15
years
Initial
Year
• Develops an industrial park
Other
Points
• Begins to generate power or start transmission or
distribution of power
15
Issue – Work Contract
• Whether deduction available to sub-contractor
- Amendment to Explanation to section 80IA (w.r.e.f AY 2000-01)
◦ Deduction not available to works contracts awarded by any person and
executed by the undertaking
◦ M/s. B. T. Patil & Sons Belgaum, Construction Private Limited & Ors v.
PwC
ACIT (35 SOT 171)
› Deduction not available to sub-contractor
- Writ petition challenging constitutional validity of amendment made by
Finance Act 2009, admitted by Bombay High Court / Gujarat High Court
- JV Partner executing infrastructure development work eligible for section
80IA deduction, even if contract awarded to JV
◦ Transatory (India) Ltd [ ITA No. 540 /V/2009] – AY 2006-07
16
Recent Judicial precedents
• Rajkumar Exports Pvt. Ltd. v. ACIT [2009] 317 ITR 229
― amount disallowed are eligible for deduction under section 80IA
• CIT v. Chetak Enterprises (P.) Ltd. 176 Taxman 217 (Raj)
― Deduction u/s 80-IA will be allowed to the private limited company were contract was awarded to the erstwhile partnership firm by the Government
Associated Capsules Pvt. Ltd Vs Dy.CIT 2011-TIOL-28-HC-MUM-
PwC
• Associated Capsules Pvt. Ltd Vs Dy.CIT 2011-TIOL-28-HC-MUM-IT
― Deduction under section 80IA and 80HHC can be claimed simultaneously provided it should not exceeds profit of the undertaking
• CIT Vs M/s Dharampal Premchand Ltd 2010-TIOL-654-HC-DEL-IT
― No penalty is imposable if disallowance of deductions under Sections 80IA and 80IB is made
17
Issue: Treatment of Interest
Nature Deduction u/s?
Caselaw
Interest received from trade debtors
Yes – 80IA Advance Detergents Ltd. [2010] 228 CTR 356 (DEL)
Interest earned on FDRs No – 80IA, 80HH, 80I
Paras Oil Extraction Ltd.[1998] 230 ITR 266 (MP), Navbharat Explosives Co. (P.)Ltd. [2010] Tax LR 497
PwC
Ltd. [2010] Tax LR 497 (Chhattisgrah), Advance Detergents Ltd. [2010] 228 CTR 356 (DEL)
Interest received on letters of credit, bank guarantee money, deposits made under Sales Tax Rules, Kisan VikasPatras, Income-tax refund, Inter-corporate deposits
No – 80I Shri Ram Honda Power Equip [2007] 289 ITR 475 (DEL), Jay Bharat Maruti Ltd. [2010] 322 ITR 599 (DEL)
18
SECTION 80-IAB
• Deductions in respect of profits and gains from an undertaking or
enterprise engaged in development of SEZ
• Such SEZ should be notified on or after April 1, 2005
• Deduction is available of 100 percent of profits for ten consecutive
AYs
PwC
AYs
20
Issue - Characterisation of Developer’s income
• For tax purposes, income from lease of a real estate asset could be characterised as :
- Income from Business (“Business Profits”); or
- Income from House Property (“House Property”)
• Characterization of income to depend on nature of income
- Whether pure lease transaction or sophisticated business activity
PwC
- Whether pure lease transaction or sophisticated business activity
Composite letting – Business Income
• CIT v. National Storage Pvt Ltd (56 ITR 596)
• Manohar Singh v. CIT (58 ITR 592) (Punjab HC)
• Associated Building Co Ltd (137 ITR 339) (Bom HC)
Pure letting – House Property Income
• Shambhu Investment Pvt Ltd v. CIT (263 ITR 143) (SC)
• Karnani Properties Ltd. v. CIT (82 ITR 547) (SC)
21
Issue - Characterisation of Developer’s income
• For tax purposes, income from lease of a real estate asset could be characterised as :
- Income from Business (“Business Profits”); or
- Income from House Property (“House Property”)
PwC
Composite letting – Business Income
• CIT v. National Storage Pvt Ltd (56 ITR 596)
• Manohar Singh v. CIT (58 ITR 592) (Punjab HC)
• Associated Building Co Ltd (137 ITR 339) (Bom HC)
Pure letting – House Property Income
• Shambhu Investment Pvt Ltd v. CIT (263 ITR 143) (SC)
• Karnani Properties Ltd. v. CIT (82 ITR 547) (SC)
22
Issue - Characterisation of Developer’s income
• What if rent and service income recovered seperately from the lessee?
Sarabhai Pvt Ltd (263 ITR 197) (Guj HC)Where the rental and the service arrangement are separable, (i.e. the one is not so integral to the other such that it cannot be separated) having regard to the overall purpose of the agreement, then the rental income should be characterized as
PwC
agreement, then the rental income should be characterized as HP income and the service income should be regarded as Business Income
Sultan Bros P Ltd. v. CIT (51 ITR 353) (SC)… …has held that where the two arrangements are per se inseparable (i.e. letting of one without other is not possible); then despite the fact that the income streams have been bifurcated in the agreement, the same would be characterized on an aggregate basis
23
Issue - Characterisation of Developer’s income
• Long-term lease : Land and building
- Only land
• Lumpsum consideration received for the long term lease
• Advance rent? Or Salami payment ?
Conditions for qualification as salami payment
PwC
Supporting judgements:• Visweshwar Singh (7 ITR 538)(Patna HC)• Maharaja Chintamani Saran Nath Sah Deo (82 ITR 464) (SC)• Rao Thakur (46 ITR 901) (All HC)
Conditions for qualification as salami payment• Transfer of substantial rights in the property• Consideration should represent the fair value of the property• Element of permanency
24
Issue - Characterisation of Developer’s income
• Deduction under section 80IAB available if developer’s income classified as house property income?
- Section 80IAB does not indicate head of income
- Deduction should be available
PwC
• Lease of land to co-developer for carrying on developing activity-deduction available?
- Section 80IAB mentions business of developing a SEZ
- What constitutes “development of SEZ” not clear
- Strict interpretation-deduction not available
25
Issue - Characterisation of Developer’s income
• Developer develops land in part and leases the same to co-developer for balance development and operating and maintenance
• Developer receives lease rentals from co-developer
• Co-developer receives lease rentals from units
• Whether Developer eligible for 80IAB deduction for part development of
PwC
• Whether Developer eligible for 80IAB deduction for part development of land?
• Will Co-Developer be entitled to claim 80IAB deduction?
Deduction should be available
26
SECTION 80-IB
• Deduction in respect of profits and gains from certain industrial
undertakings other than infrastructure development undertakings
• Eligible activities for claiming deduction under Section 80IB are
- Business of an industrial undertaking (Refer Annexure for details)
- Operation of ship
PwC
- Hotels
- Industrial research
- Production of mineral oil
- Developing and building housing projects
- Business of processing, preservation and packaging of fruits or
vegetables or integrated handling, storage and transportation of
food grains units
28
SECTION 80-IB
- Multiplex theaters
- Convention centre
- Operating and maintaining a hospital in rural area
- Hospital located in certain areas
PwC 29
Eligibility • Undertaking developing and building housing projects
approved before March 31, 2008 by local auhority
•Housing project –
• Min land area – one acre
• Max built up area for each unit- 1000 sq ft for Delhi/
Section 80-IB – Housing Projects
PwC
Mumbai (1500 sq ft for others)
•Commercial built up area < 3% of the aggregate built up
area or 5,000 sq ft, whichever is higher (from AY 2005-
06)
• One unit to an individual
• Deduction not available for execution of housing projects on
works contract basis
Quantum • 100% deduction for profits derived from such project
30
Issue – Cap on Commercial Space – Retrospective ?
CIT V.M/.s Brahma Associates ( 333 ITR 289) (Bom) (AY 2003-04)
• Assessee undertook a construction project which consisted of 15 residential buildings and 2 commercial buildings
• Local authority had approved the project as “residential plus commercial”. Project commenced on 14 August 2000 and was completed on 3 October 2005
PwC
completed on 3 October 2005
• Claimed deduction under section 80IB (10) on the profits derived from the sale of the residential units in the project
• AO rejected the claim on the ground that the project was approved by the local authority as “residential plus commercial‟ and hence was not a project of residential units only
• CIT(Appeals) dismissed the appeal filed by the taxpayer
• On further appeal, the matter was referred to a Special Bench of the Tribunal which ruled partly in favour of the taxpayer
31
Issue before the High Court
• Whether deduction under section 80IB(10) as applicable prior to 1 April 2005 allowable to a housing project approved by a local authority with commercial user to the extent permitted under the rules framed by the local authority?
• Whether the limit on commercial use of built-up area as prescribed by clause (d) of section 80-IB(10) is prospective and hence applicable from assessment year 2005-06 onwards?
PwC
Conclusion
• a project with residential and commercial user to the extent permitted under Development Control Rules would be a “housing project” eligible for deduction under section 80-IB(10) of the Act upto assessment year 2004-05
• With effect from the assessment year 2005-06, the deduction under section 80-IB(10) of the Act would be available subject to the fulfilment of commercial user criteria set out in clause (d) to section 80-IB(10)
32
August 2011
Housing projects – Other Issues
• Whether assessee must be the owner of the land on which the housing project is constructed
• Special Bench in Radhe Developers & Ors. v. ITO & Ors. (2008) 23 SOT 420 (Ahd)
• Whether sub developer entitled to claim deduction ?
PwC
• Whether sub developer entitled to claim deduction ?
• Works contract not eligible - amendment in section 80IB (10)
33
August 2011
Eligible
business
a) Commercial production of mineral oil by an undertaking
located in any part of other than the North-Eastern
Region
b) Refining of mineral oil
c) Commercial production of natural gas in blocks licensed
under the VIII Round of bidding for award of exploration
contracts.
Section 80-IB – Mineral Oil
PwC
contracts.
d) Under the New Exploration or Licensing Policy (NELP) or
blocks licensed under the IV Round of bidding for awards
of exploration contracts for Coal Bed Methane blocks
Quantum • 100% deduction for 7 consecutive years beginning with the
initial year
Initial
Year
• The year in which the undertaking commences the
commercial production or refining of mineral oil
34
Other
Points
• the commercial production of mineral oil should have
begun or begins on or after 01.04.1997
• In the case of (a), deduction shall not be available to blocks
licensed under a contract awarded after the 31st day of
March 2011,under NELP announced by the Resolution No.
O-19018/22/95 – ONG.DO.VL,dated 10th February, 1999
or in pursuance of any law for the time being in force or by
Section 80-IB – Mineral Oil
PwC
or in pursuance of any law for the time being in force or by
the Central or a State Government in any other manner;
• In the case of (b), the refining of mineral oil should be
commenced by the undertaking not later than 01.04.2012;
• In the case of (c), the commercial production of natural gas
should be commenced on or after 01.04.2009
35
Eligible
business
a) Processing preservation and packaging of fruits or
vegetables
b) Processing, preserving and packaging of meat and meat
products or poultry, marine or dairy products
c) The integrated business of handling, storage and
transportation of food grains
Quantum • 100% deduction for 5 years beginning with the initial year
Section 80-IB –Food Processing
PwC
Quantum • 100% deduction for 5 years beginning with the initial year
• 25% (or 30% where the assessee is a company) for next 5
years
• Total period is 10 consecutive years
Initial
Year
• The year in which the undertaking begins such business
36
Other
Points
• Undertaking begins to operate such business on or after
April 1, 2001
• Deduction in case of (b) would be eligible to the undertaking
commencing its operations on or after April 1, 2009
•
Section 80-IB –Food Processing
PwC 37
Eligible
business
• Operating and maintaining a hospital located anywhere in
rural areas, other than the excluded area
Quantum • 100% deduction for 5 consecutive years beginning with the
initial year
Initial
Year
• The year in which the hospital starts functioning
Section 80-IB –Hospitals
PwC
Year
Other
Points
• The hospital is constructed and has started or starts
functioning at any time during the period beginning on the
01.04.2008 and ending on the 31.03.2013
• The hospital has at least 100 beds for patients
• The construction of the hospital is in accordance with the
regulations or bye-laws of the local authority
• “Excluded area” shall mean specified areas in specified cities
38
Eligible
business
• Engaged in the business of hotel located in the specified
district having a World Heritage Site
Quantum • 100% deduction for 5 years beginning with the initial year
Initial
Year
• Hotel is constructed and has started or starts functioning at
any time during the period beginning on the April 1, 2008
and ending on the March 31, 2013
Section 80-ID –Heritage Hotels
PwC
and ending on the March 31, 2013
39
Issue - Operating & Management Arrangement
Constructs and
starts functioning
O & M
arrangement
A Ltd. (owning co.)
Management
fees
PwC
Hotel
B Ltd. (operating co.)
Operating revenueO & M
arrangement
fees
A Ltd. appoints B Ltd for operating and managing the hotel
40
Issue - Operating & Management Arrangement
• Income-tax implications in the hands of A Ltd.
- Eligible for 80ID deduction
◦ engaged in business of hotel
- O & M fees paid to B Ltd. is an allowable deduction - subject to tax
withholding u/s. 194J / 195
PwC
withholding u/s. 194J / 195
• Income-tax implications in the hands of B Ltd.
- O & M fees – Business or Other Sources
- Eligible for 80ID deduction ?
A Ltd. and B Ltd. can claim 80ID deduction on same undertaking ?
41
Section 80ID (contd.)
Issues
• Engaged in “business of hotel” – meaning
- Construction and operation by same entity?
- Deduction to hotel operating entities?
◦ Radhe Developers & Ors. 113 TTJ 300 (Ahd)
Slide 42
◦ Radhe Developers & Ors. 113 TTJ 300 (Ahd)
◦ Shakti Corpn [2009] 32 SOT 438 (Ahd)
• Deduction available on “business income” – meaning?
• Amalgamation and demerger – deduction available ?
- rigors of section 80IA(12A) not present
SECTION 80-IE
• Deduction in respect of certain undertakings in North-Eastern
States
• The deduction is available if the assessee begins manufacture or
production of eligible goods or undertakes substantial expansion or
begins to provide the eligible services during April 1, 2007 to March
31, 2017
PwC
31, 2017
• These activities should be undertaken in North-Eastern states
44
SECTION 80-IE
• Eligible business includes
- Hotels
- Adventure and leisure sports
- Nursing home
- Old age homes
PwC
- Old age homes
- Vocational training institutes
- IT related training institutes
- It hardware units and bio-technology
• Substantial expansion means increase in investment in the plant and
machinery by at least 25 percent of the book value of plant and
machinery (before depreciation), as on the first day of the year in
which expansion takes place
45
Eligible
business
• Business of collecting and processing or treating of bio-
degradable waste:
• for generating power; or
• for producing bio-fertilizers, bio-pesticides or other
biological agents; or
SECTION 80-JJA - Collecting and Processing of Bio-degradable Waste
PwC
biological agents; or
• for producing bio-gas; or
• making pellets or briquettes for fuel or organic manure
Quantum • 100% deduction for 5 years beginning with the initial year
Initial
Year
• Year of commencement of business
47
Eligible
business
• Employment by any industrial undertaking engaged in the
manufacture or production of articles or thing, of new
regular workmen
• A “regular workman” does not include:
• a casual workman; or
• a workman employed through contract labour; or
SECTION 80-JJAA - Employment of New Workmen
PwC
• a workman employed through contract labour; or
• any other workman employed for a period of less than 300
days during the financial year
Quantum • 30% of additional wages paid to the new regular workmen
employed by the assessee in the financial year for the period
of three years, starting from the initial year
Initial
Year
• Year in which the employment is provided to new regular
workmen
48
COMMON CONDITIONS FOR SECTIONS 80-IA, 80-IAB, 80-IB, 80-IC and 80-IE
• Audit report should be furnished in prescribed form
• Return of income should be filed within prescribed time and
deduction must be claimed
• Double deduction is not permissible ie if deduction is allowed
PwC
• Double deduction is not permissible ie if deduction is allowed
under one of the above sections, deduction will not be available
under any other section
• The profits and gains from the eligible business to be calculated as if
such business were the only source of income of the assessee
50
COMMON CONDITIONS FOR SECTIONS 80-IA, 80-IAB, 80-IB, 80-IC and 80-IE
• The AO has power to recompute profits if
- The taxpayer carries on two or more businesses out of which
atleast one is qualified for deductions in the above-mentioned
sections
- Some goods are transferred from the business eligible for
PwC
- Some goods are transferred from the business eligible for
deduction to the other business
- Some goods are transferred from the business eligible for
deduction to the other business
• If the undertaking entitled for deduction is
amalgamated/demerged, then the amalgamated/resulting
company can avail the benefit for the unexpired period of the tax
holiday
51
DRAFT DIRECT TAX CODE, 2010 (DTC)
• Sections 80-IA, 80-IAB, 80-IB, 80-IC,80-ID, 80-IE, 80-JJA or 80-
JJA grandfathered subject to following conditions:
- Assessee eligible to claim such deduction for AY 2012-13
- Eligible profits computed as per DTC with specified exclusions
PwC
- Deduction not allowed for period otherwise not allowable under
the Act
- Capital expenditure not to be allowed as deduction while
computing GTI
- Other conditions prescribed in relevant sections continue to be
satisfied
53
Thank You
This publication has been prepared for general guidance on matters of interest only, and does
not constitute professional advice. You should not act upon the information contained in this
publication without obtaining specific professional advice. No representation or warranty
(express or implied) is given as to the accuracy or completeness of the information contained
in this publication, and, to the extent permitted by law, [insert legal name of the PwC firm], its
members, employees and agents do not accept or assume any liability, responsibility or duty of
care for any consequences of you or anyone else acting, or refraining to act, in reliance on the
information contained in this publication or for any decision based on it.
© 2011 PricewaterhouseCoopers Private Ltd. All rights reserved. “PwC”, a registered
trademark, refers to PricewaterhouseCoopers Private Limited (a limited company in India) or,
as the context requires, other member firms of PwC International Limited, each of which is a
separate and independent legal entity.
Section 80-IA – Past Deductions
S.
No.Eligible business
Sunset date
(the last date
up to which
the
deduction is
allowed)
Period of
deduction
Deduction
available (if
set-up in the
year of sunset
date) until
financial year
1 An undertaking which starts March 31, 2005 100% deduction 2013-14 to 2018-
PwC
providing
telecommunication services,
whether basic or cellular,
including radio paging,
domestic satellite service,
network of trunking,
broadband network and
internet services during the
period 01.04.1995 to
31.03.2005
for the first five
years and 30%
for the next five
years
Total 10
consecutive
years in a
block of 15
years
19 depending
upon the initial
year opted
56
Section 80-IA – Past Deductions
S.
No.Eligible business
Sunset date
(the last date
up to which
the deduction
is allowed)
Period
of
deducti
on
Deduction
available (if
set-up in the
year of sunset
date) until
financial year
2 An undertaking which develops,
develops and operates or maintains and
operates an SEZ, notified by the Central
March 31, 2005 100%
deduction
for the 10
2013-14 to 2018-
19 depending
upon the initial
PwC
operates an SEZ, notified by the Central
Government in accordance with the
scheme framed and notified by that
Government during the period
01.04.1997 to 31.03.2005.
In a case where an undertaking develops
an SEZ and transfers the operation and
maintenance of such SEZ to another
undertaking (the transferee undertaking),
the deduction is available to the transferee
undertaking for the remaining period in
the 10 consecutive years.
for the 10
consecutive
years in a
block of 15
years
upon the initial
year opted
57
Section 80-IA – Past Deductions : Conditions
S.
No.Conditions Remarks
1. The undertaking is owned by a company registered
in or by a consortium of such companies or by an
authority or a board or a corporation or any other
body established or constituted under any Central or
State Act
2. The undertaking has entered into an agreement with
the Central Government or a State Government or a
PwC
the Central Government or a State Government or a
local authority or any other statutory body for (i)
developing; or (ii) operating and maintaining; or
(iii) developing, operating and maintaining a new
infrastructure facility
3. The undertaking has started or starts operating and
maintaining the infrastructure facility on or after
01.04.1995
58
Section 80-IA – Past Deductions : Conditions
S.
No.Conditions Remarks
4. In the case of a highway project, where housing or
other activities are an integral part of the highway
project, the deduction will be made available only
where the profits from housing or other activities
are transferred to a special reserve and the reserve is
actually utilised for the highway project excluding
housing and other activities before the expiry of
The amount remaining unutilised would
be charged to tax as income of the year in
which the transfer to reserve account took
place
PwC
housing and other activities before the expiry of
three years following the year in which the amount
was transferred to the reserve.
59
Section 80-IB – Past Deductions
S. No.
Eligible business
Sunset date(the last date up to which the deduction is allowed)
Period of deduction
Deduction available (if set-up
in the year of sunset date) tillfinancial year
1 A small-scale industrial undertaking which begins to manufacture or produce articles or things or operate a cold storage plant
March 31, 2002 10 years (12years in case of aco-operativesociety)
2010/11 (2012/13 in case of co-operative society)
PwC
[s 80-IB(3)(ii)]2 An industrial undertaking in
a industrially backward state which begins to manufacture or produce articles or things or operate a cold storage plant [s 80-IB(4)]
March 31, 2004 10 years (12years in case of aco-operativesociety)
2012/13 (2014/15 in case of co-operative society)
60
Section 80-IB – Past Deductions
S. No.
Eligible business
Sunset date(the last date up to which the deduction is allowed)
Period of deduction
Deduction available (if set-up
in the year of sunset date) tillfinancial year
3 An Industrial undertaking in an industrially backward district which begins to manufacture or produce articles or things or operate
March 31, 2004 8–10 years (12 years in case of a co-operative society) depending on
2010-11/2012/13 (2014/15 in case of a co-operative society) depending on the category of district.
PwC
a cold storage plant [s 80-IB(5)]
the category of district.
4 Company carrying on Scientific Research & Development [s 80-IB(8A)]
March 31, 2007 10 years 2015/16
5 Undertaking developing and building Housing Projects [s 80-IB(10)]
Project approved before March 31, 2008
Deduction allowed up to 5 years for projects approved after 01.04.2005.
2011/12
61
Section 80-IB – Past Deductions
S. No.
Eligible business
Sunset date(the last date up to which the deduction is allowed)
Period of deduction
Deduction available (if set-up
in the year of sunset date) tillfinancial year
6 Cold chain facility for agricultural produce [s 80-IB(11)]
March 31, 2004 10 years (12 years in the case of a co-operative society)
2012/13 (2014/15 in the case of a co-operative society)
7 Undertaking engaged in the March 31, 2008 5 years 2011/12
PwC
business of operating and maintaining a hospital in a rural area
62
Section 80-ID – Past Deductions
S.
No.Eligible business Quantum of
deductionInitial year Remarks
1. Engaged in the business
of hotels located in
specified areas
100% deduction
for 5 years
beginning with
the initial year
Year in which
the business of
the hotel starts
functioning
Hotel is constructed and
starts functioning during
the period 01.04.2007 to
31.07.2010
2. Engaged in the business
of building, owning and
operating a convention
100% deduction
for 5 years
beginning with
Year in which
the convention
centre starts
Convention Centre is
constructed during the
period 01.04.2007 to
PwC
operating a convention
centre located in a specified area
beginning with
the initial year
centre starts
operating on a commercial
basis
period 01.04.2007 to
31.07.2010
63