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Deduction in respect of certain undertaking in North-Eastern States [Section 80-IE].

  1. It has during the period beginning on 1.4.2007 and ending before 1.4.2017 begun or begins in any of the North-Eastern States:

  2. It is not formed by splitting up, or the reconstruction, of a business already in existence:

  3. It is not formed by the transfer to a new business of machinery or plant previously used for any purpose.

  4. Deduction under this section is not available in respect of manufacture or production of tobacco, pan masala, plastic carry bags or less than 20 microns or goods produced by petroleum oil and gas refineries.

  5. Deduction should be claimed in the Return of Income.

  6. Quantum and Period of Deduction under Section 80-IE :

  7. Other Condition of Section 80-IA also applicable [Section 80-IE(6)]:

Deduction under this section is allowed to an assessee whose gross total income includes any profits and gains derived by an undertaking which fulfils the following conditions:

(1) It has during the period beginning on 1.4.2007 and ending before 1.4.2017 begun or begins in any of the North-Eastern States:

  1. to manufacture or produce any eligible article or thing;

  2. to undertake substantial expansion to manufacture or produce any eligible article or thing;

  3. to carry on any eligible business.

Deductions under Section 80-IE

(2) It is not formed by splitting up, or the reconstruction, of a business already in existence:

However, this condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as referred to in section 33B, in the circumstances and within the period specified in the said section.

(3) It is not formed by the transfer to a new business of machinery or plant previously used for any purpose.

However, plant and machinery, already used for any purpose, can be transferred to the new industrial undertaking, provided value of such plant and machinery does not exceed 20% of the total value of plant and machinery of the new industrial undertaking.

(4) Deduction under this section is not available in respect of manufacture or production of tobacco, pan masala, plastic carry bags or less than 20 microns or goods produced by petroleum oil and gas refineries.

Eligible services for this purpose are hotel (3 star or above), nursing home (25 beds or more), old age homes, vocational training institutes (such as hotel management, catering, entrepreneurship development, nursing and paramedical, civil aviation related training, fashion designing and industrial training), IT related training centres, IT hardware units and bio-technology.

(5) Deduction should be claimed in the Return of Income.

Return of income should be submitted on or before the due date of submission of return of income. Books of account should be audited and audit report should be submitted electronically.

(6) Quantum and Period of Deduction under Section 80-IE :

100% of the profits and gains derived from such business for 10 consecutive assessment years commencing with the initial assessment year.

Initial Assessment Year:

"Initial assessment year" means the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things, or completes substantial expansion.

(7) Other Condition of Section 80-IA also applicable [Section 80-IE(6)]:

The provisions contained in sub-section (5) and sub-sections (7) to (12) of section 80-IA shall, so far as may be, apply to the eligible undertaking under this section.

  1. Audit of accounts [Section 80-IA(7)]:

  2. The deduction under section 80-IA from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by a chartered accountant and the assessee furnishes, alongwith his return of income, the report of such audit in Form No. 10CCB duly signed and verified by such accountant.

  3. Inter-unit transfer of goods or services [Section 80-IA(8)]:

  4. Where any goods or services held for the purposes of the 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 consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods or services as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date:

    However, where in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit. "Market value" in relation to any goods or service, means the price that such goods or service, would ordinarily fetch on sale in the open market.

  5. Double deduction not allowed [Section 80-IA(9)]:

  6. Where any amount of profits and gains of an undertaking or of an enterprise in the case of an assessee is claimed and allowed under this section for any assessment year, deduction to the extent of such profits and gains shall not be allowed under the heading "deductions in respect of certain incomes", and shall in no case exceed the profits and gains of such eligible business of undertaking or enterprise, as the case may be.

  7. Restriction of excessive profits [Section 80-IA(10)]:

  8. Where it appears to the Assessing Officer that, owing to the (i) close connection between the assessee carrying on the eligible business to which this section applies and any other person, or (ii) for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in such eligible business, the Assessing Officer shall, in computing the profits and gains of such eligible business for the purposes of the deduction under this section, take the amount of profits as maybe reasonably deemed to have been derived therefrom.

  9. Power of Central Government to declare that the section shall not apply [Section 80-IA(11)]:

  10. The Central Govt. may, after making such inquiry as it may think fit, direct, by notification in the Official Gazette, that the exemption conferred by this section not apply to any class of industrial undertaking or enterprise with effect from such date as it may specify in the notification.

Deductions to be made in Computing Total Income [Sections 80A to 80U (Chapter VIA)]

Related Topics...Deductions from Gross Total Income

  1. DEDUCTIONS UNDER 'CHAPTER VI-A' IN RESPECT OF "PAYMENT & INVESTMENT" ARE ALLOWED FROM SECTION 80C TO 80GGC

    Section 80C Section 80CCC Section 80CCD
    Section 80CCG Section 80D Section 80DD
    Section 80DDB Section 80E Section 80EE
    Section 80G Section 80GG Section 80GGA
  2. DEDUCTIONS UNDER 'CHAPTER VI-A' IN RESPECT OF "INCOMES" ARE ALLOWED FROM SECTION 80-IA TO 80U

    Section 80-IA Section 80-IAB Section 80-IAC
    Section 80-IB Section 80-IBA Section 80-IC
    Section 80-ID Section 80-IE Section 80-JJA
    Section 80-JJAA Section 80-LA Section 80-P
    Section 80-PA Section 80-QQB Section 80-RRB
    Section 80-TTA Section 80-TTB Section 80-U
 

 

 
 
 
 
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