Deduction under this Section 80IE is allowed to an assessee whose gross total income includes any profits and gains derived by an undertaking in North Eastern States 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:
(i) to manufacture or produce any eligible article or thing;
(ii) to undertake substantial expansion to manufacture or produce any eligible article or thing;
(iii) to carry on any eligible business.
(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.
|1. “Substantial expansion” means increase in the investment in the plant and machinery by at least 25% of the book value of plant and machinery (before taking depreciation in any year), as on the first day of the previous year in which the substantial expansion is undertaken;
2. “North-Eastern States” means the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura.
Quantum 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.
|1. “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.
2. Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee, no deduction shall be allowed under any other section contained in Chapter VIA or in section 10A or section 10AA or section 10B or section 10BA, in relation to the profits and gains of the undertaking.
Other Conditions 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.
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)j;
(vi) Power of Central Government to notify undertakings to which section 80-IC will not apply [Section 80-IA(11)].