DEDUCTION IN RESPECT OF CERTAIN UNDERTAKING IN NORTH-EASTERN STATES [SEC. 80-IE]

{North Eastern States means the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura.}

Where the gross total income of an assesse includes any profits and gains derived by an undertaking, set up during the period beginning on 1 April, 2007 and ending on 31 March, 2017. (i) to manufacture or produce any eligible article or thing. Or (ii) to undertake substantial expansion to manufacture/produce any eligible article or thing. Or (iii) to carry on any eligible business in North-Eastern States, such assesse is allowed 100% deduction of such profits for 10 consecutive assessment years relevant to the previous year in which the undertaking begins to manufacture or produce eligible articles or things. Or completes their substantial expansion or starts any eligible business in North-Eastern States [Sc. 80-IE (1) (2) (7)].

Where deduction is allowed under this Section, no deduction is allowed under Sec. 10A, or Sec.10AA or Sec. 10B or Sec. 10 or under any other provision of this Act Condition to be satisfied: The aforesaid deduction is allowed of the following conditions are satisfied:

(i)                  Undertaking should be new and not formed by splitting up or reconstruction of an existing business [Sec. 80-IE r.w. Explanation 1 & 2 of Sec. 80-IA(3)]

(ii)                New plant and machinery used by the undertaking: For details, please refer to Sec. 80-IA(3)

(iii)               Accounts to be audited [Sec. 80-IA(7)] r.w. Sec. 80-IE(5).

(iv)              Return of income to be furnished: Return of income should be furnished on or before the due date, fixed for furnishing the return of income.

Computation of profits [Sec. 80-IE(5) r.w. Sec. 80-IA(5) and Sec. 80-IA(7) to (12)]: Subject to the following, the profits are computed in accordance with the provisions of the Act under the head "Profits and Gains from Business or Profession".

(i)                  Eligible business to be consider as the only source of income during the previous year

(ii)                Transfer of goods between various other businesses of the assesse to be consider at their market value

(iii)               Adjustment of more than ordinary profits arising due to transaction between assesse and closely connected person [Sec. 80-IA(10) r.w. Sec. 80-lAB(3)]

Term Explained

Eligible article or thing: It means article or thing other than the following:

(i)                  Tobacco and manufactured tobacco substitutes as covered by goods falling under Chapter 24 of the First Schedule to the Central Tariff Act, 1985; or

(ii)                Pan masala as covered under Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985; or

(iii)               Plastic carries bags of less than 20 microns as specified by the Ministry of Environment and Forests vide Notification No. S.O.705(E) dated 2 September 1999 and S.0.698(E) dated 17 June 2003; and

(iv)              Goods falling under Chapter 27 of the First Schedule to the Excise Tariff Act, 1985, produced by petroleum oil or gas refineries.

Substantial expansion:   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 1st day of the previous year in which substantial expansion was undertaken.

Eligible business:   Eligible business means the business of-

(i)                  Hotel (not below two star category);

(ii)                Adventure and leisure sports including ropeways;

(iii)               Providing medical and health services in the nature of nursing home with a minimum capacity of 25 beds;

(iv)              Running an old age home;

(v)                Operating vocational training institute for hotel management, catering and food craft, entrepreneurship, development nursing and para-medical, civil aviation related training fashion designing and industrial training;

(vi)              Running information technology related training center;

(vii)             Manufacturing of information technology hardware; and

(viii)           Bio-technology.

Venkat Prasad domain consultant in KDK Software, which is provides e-Filing Income Tax Software, Service Tax and Online TDS Software in India.