Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

[Section 80-1B]- Deduction in respect of Profits and Gains from Certain Industrial Undertakings

The deduction under this section is available to an assessee whose Gross Total Income includes any profits and gains derived from the business of:

(1)          commercial production and refining of mineral oil;

(2)          processing, preservation and packaging of fruits or vegetables, meat and meat products or poultry or marine or dairy products;

(3)          integrated business of handling, storage and transportation of food grains;

(4)          operating and maintaining a hospital located anywhere in India other than the excluded area.

[Section 80-1B]- Deduction in respect of Profits and Gains from Certain Industrial Undertakings
[Section 80-1B]- Deduction in respect of Profits and Gains from Certain Industrial Undertakings

(A) [Section 80-IB(9)]- Industrial Undertaking Producing or Refining Mineral Oil in the North Eastern Region or in any part of India

Deduction under this section is allowed if an undertaking fulfils any of the following conditions:

(i)           It is located in the North Eastern Region and has begun or begins commercial production of mineral oil before 1.4.1997 or on or after 1.4.1997 but not later than 31.3.2017.

(ii)           It has begun or begins commercial production on or after 1.4.1997 but not later than 31.3.2017 where it is located in any other part of India.

See also  [Section 80-IA]- Deduction in respect of Profits and Gains from Undertakings engaged in Infrastructure Development

(iii)          It is engaged in the business of refining of mineral oil on or after 1.10.1998 but not later than
31.3.2012.

(iv)          It is engaged in commercial production of natural gas in licensed blocks and begins commercial production of natural gas on or after 1.4.2009.

Quantum of Deduction U/s 80-IB(9):

Deduction shall be available @ 100% of eligible profits for 7 assessment years commencing from the ‘initial assessment year’.

Note :

Initial assessment year:

It means the assessment year relevant to the previous year in which the undertaking commences the commercial production or refining of mineral oil.

(B) [Section 80-IB(11A)]- Undertaking engaged in the business of processing, preservation and packaging of fruits or vegetables or meat and meat products or poultry or marine or dairy products or integrated business of handling. storage and transportation of food grains

Essential condition: It must begin or operate the business of processing, preservation and packaging of fruits or vegetables or integrated business of handling, storage and transportation of food grains on or after 1.4.2001.

The business of processing preservation and packaging of meat and meat products or poultry or marine or dairy products should commence on or after 31.3.2009.

Quantum of Deduction U/s 80-IB(11A)

Assessee Period of Deduction
(commencing from initial
assessment ear)
% of profit
eligible for
deduction
(a) Owned by a company First 5 years 100%
Next 5 years 30%
(b) Owned by any other assessee First 5 years 100%
Next 5 years 25%
Note :

Initial assessment year:

It means the assessment year relevant to the previous year in which the undertaking commences the commercial production or refining of mineral oil.

(C) [Section 80-IB(11C)]- Undertaking operating and maintaining a hospital located anywhere in India other than excluded area

Essential conditions: The deduction is allowed if the following conditions are satisfied:

(1)          the hospital is constructed and has started or starts functioning at any time during the period beginning on 1.4.2008 and ending on 31.3.2013;

(2)          the hospital has at least 100 beds for patients:

(3)          the construction of the hospital is in accordance with the regulations or bye-laws of the local authority; and

(4)          the assessee furnishes along with the return of income, a report of audit in such form and containing such particulars, as may be prescribed, and duly signed and verified by an accountant.

Quantum and Period of Deduction U/s 80-IB]:

100% of the profits and gains of such business for a period of 5 consecutive assessment years, beginning with the initial assessment year.

[section 80-IB(13)]- Conditions applicable for all assessees claiming Deduction under Section 80-IB:

The provisions contained in section 80-IA(5) and 80-IA(7) to (12) shall, so far as may be, apply to the eligible business under this section. These provisions relate to the following:—

(i)            Computation of profits of eligible business [Section 80-IA(5)]

(ii)           Audit of accounts [Section 80-IA(7)]

(iii)          Inter-unit transfer of goods [Section 80-IA(8)]

(Iv)         Restriction on double deduction [Section 80-IA(9)]

(v)           Restriction on excessive profits [Section 80-IA( 10)]

(vi)          Power of Central Government to notify undertakings to which section 80-IB will not apply [Section 80-IA(11)]

(vii)        Deduction not to be allowed in cases where return is not filed within the time limit specified under section 139(1) [Section 80AC].

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