Deduction in respect of certain undertakings or enterprises in certain special category states under section 80 IC of income tax act.
Assessee eligible for deduction: - every assessee is eligible for this deduction irrespective of its residential status or corporate status. Deduction is operative from the assessment year 2004-05 and onwards.
Conditions to be satisfied: - the following conditions to be satisfied for the deductions under section 80 IC of income tax act.
Return of income to be furnished: - under section 80 AC of income tax act, the assessee should furnish return of income within the time limit specified under section 139(1) of income tax act.
Accounts of the enterprises or undertaking to be audited: - under section 80IA (7) of income tax act, the accounts of the assessee should be audited by a chartered accountant from the relevant year for which deduction is claimed. The report of such report should be furnished along with the return of income in the prescribed form duly signed and verified by chartered accountant.
Undertaking should be new and not formed by splitting up or reconstruction of an existing business: - under section 80IC (4) of income tax act, the object of these incentives is to promote new investment and not just relocation of existing ones. Therefore, it has been provided that the eligible undertaking should be new and not formed by splitting up and reconstruction of an existing business.
Exception in case of re-establishment, reconstruction of revival of an undertaking: - however this condition does not apply where the undertaking is discontinued due to extensive damage or destruction of its building, machinery or plant and furniture or account of natural disasters, civil disturbance, accidental fire or explosion, enemy action etc. and such undertaking is re-established within 3 years from the end of such previous year.
New plant and machinery used by the undertaking: - under section 80 IC (4) of income tax act, use of old plant and machinery is prohibited except under the following cases.
- For import and use of second hand plant or machinery in India is deemed to be a new plant and machinery. Second hand plant or machinery imported and put to use for the first time in India is not to be regarded as machinery or plant previously used provided the following conditions are satisfied.
(1) It was used outside India by a person other than the assessee.
( (2) Such plant and machinery is used in India for the first time.
(3) No depreciation in respect of such plant and machinery has been allowed or is allowable under the act for a period prior to its installation by the assessee.
- Transfer of old plant or machinery not exceeding 20% of the total value of plant or machinery of the new undertaking :- where the value of plant or machinery previously used by the assessee is transferred to the new undertaking, such value should not exceed 20% of the total value of plant or machinery used in the new undertaking.
Production schedule, nature of product and location: - the enterprise or undertaking must manufacture or produce the specified articles or things within the stated time period in special category states. An existing enterprise or undertaking manufacturing or producing eligible articles or things will be covered, provided it’s substantially expands its business.