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Taxation of Companies
SECTION - 80IA

Deduction in respect of profit and gain from undertaking or enterprises engaged in infrastructure development. Deduction allowed subject to following conditions:

1. It is not formed by the splitting up, or the reconstruction business already in existence. Exception: where the business of an industrial undertaking carried on in India is discontinued in any previous year by reason of extensive damage to , or destruction of , flood, typhoon, cyclone, , riot or civil disturbance, accidental fire or explosion, action by enemy etc.
2. It is not formed by the transfer to a new business of machine or plant (exceeding 20%) previously used for any purpose. Exception: only imported plant & machinery can be used.
3. Percentage of Deduction is eligible if there is only one business.
4. Audit report under form no. 10CCB
5. In case of amalgamation /Demerger.
6. Assessee have income from business of

1. Infrastructure facility : road construction, bridge, rail system, highway project, water supply project, water treatment system, sanitation or sewerage system, a port, airport, inland water ways, navigation channel in the sea etc.
2. Telecommunication services: basic or cellular, domestic satellite service, network of trunking or broad band networking.
3. Industrial park : develop, maintaining of industrial park or S.E,Z (Approved Central Govt.)
4. Generation & Distribution of Power
5. Reconstruction or revival of power generation plant

QUANTUM & PERIOD OF DEDUCTION:
1. For telecommunication services
For first 5 years 100% of profit from such business
For next 5 years 30% of profit from such business
2. For other business 100% of profit for ten consecutive assessment years out of 15
(in case of infrastructure business out of 20)

SECTION - 80IAB

Same as above but only the difference is this undertaking or enterprises engaged in development of special economic zone.
SECTION - 80IB

1. Industrial Undertaking. These are classified as under :

(A) Industrial undertaking large or small located in an industrially backward state specified in the Eighth Schedule : The assessee begins to manufactures or produce articles or things or operates cold storage plant after 31.3.193 but before 1.4.2004.
In the State of Jammu and Kashmir the assessee can commence the aforesaid work upto 31.3.2012. However, if such undertaking manufactures or produces any article or thing specified below shall not be entitled for the deduction :
(i) Cigarettes/cigars of tobacco, manufactured tobacco and substitutes;
(ii) Distilled/brewed alcoholic drinks;
(iii) Aerated branded beverages and their concentrates.

Period for which deduction is allowed and rate of deduction.
(a) (i) Five initial assessment years @ 100% of such profits
(ii) Next five assessment years :
(a) In case of companies @ 30% of such profits
(b) In case of other assessee @ 25% of such profits
(iii) Next two assessment years :
Co-operative Society @ 25% of such profits
(b) Where notified industries are located in the North-Eastern Region, the deduction shall be allowed @ 100% of such profits for ten assessment years, However, no deduction under (A) shall be allowed w.e.f. A.Y 2004-05 to any undertaking or enterprise mentioned in Sec. 80IC

(B) Industrial undertaking large or small located in an industrially backward district as notified by the Central Government : The assessee begins to manufactures or produce articles or things or operates cold storage plant after 30.9.1994 but before 1.4.2004.

Period for which deduction is allowed and rate of deduction :
(1) Backward district ‘A’ Category
(i) Five initial assessment years @ 100% of such profits
(ii) Next five assessment years :
     (a) In case of companies @ 30% of such profits
     (b) In case of other assessee @ 25% of such profits
(iii) Next tow assessment years :
      Co-operative Society @ 25% of such profits
(2) Backward district ‘B’ Category :
(i) There initial assessment years : @ 100% of such profits
(ii) Next five assessment years :
     (a) In case of companies @ 30% of such profits
     (b) In case of other assessee @ 25% of such profits
(iii) Next four assessment years
      Co-operative Society @ 25% of such profits

(C)

Small-scale industrial undertaking except discussed in (A) and (B) :
The assessee begins to manufactures or produce articles or things or operates cold storage plant after 31.3.1995 but before 1.4.2002.

Period for which deduction is allowed and rate of deduction
(a) In the case of a co – operative society – twelve assessment years @ 25% of such
(b) In the case of companies – t en assessment years @ 30% of such profits.
(c) In the case of other assessee – ten assessment years @ 25% of such profits.
It is to be noted that the deduction is to be allowed on profits from industrial undertaking etc., before setting off losses from non-industrial undertaking etc. u/s 70 u/s 71.

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