Page 131 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes in a case referred to in clause (a), in the year in which the amount was so utilised; or
in a case referred to in clause (b), in the year immediately following the period of three
years specified in sub-clause (i) of clause (a) of sub-section (2), and shall be charged to tax
accordingly:
Provided that where in computing the total income of the Unit for any assessment year, its
profits and gains had not been included by application of the provisions of sub-section (7B) of
section 10A, the undertaking, being the Unit shall be entitled to deduction referred to in this sub-
section only for the unexpired period of ten consecutive assessment years and thereafter it shall
be eligible for deduction from income as provided in clause (ii) of sub-section (1).
Explanation: For the removal of doubts, it is hereby declared that an undertaking, being the Unit,
which had already availed, before the commencement of the Special Economic Zones Act, 2005,
the deductions referred to in section 10A for ten consecutive assessment years, such Unit shall
not be eligible for deduction from income under this section:
Provided further that where a Unit initially located in any free trade zone or export processing
zone is subsequently located in a Special Economic Zone by reason of conversion of such free
trade zone or export processing zone into a Special Economic Zone, the period of ten consecutive
assessment years referred to above shall be reckoned from the assessment year relevant to the
previous year in which the Unit began to manufacture, or produce or process such articles or
things or services in such free trade zone or export processing zone :
Provided also that where a Unit initially located in any free trade zone or export processing
zone is subsequently located in a Special Economic Zone by reason of conversion of such free
trade zone or export processing zone into a Special Economic Zone and has completed the
period of ten consecutive assessment years referred to above, it shall not be eligible for deduction
from income as provided in clause (ii) of sub-section (1) with effect from the 1st day of April,
2006.

This sub-section applies to any undertaking, being the Unit, which fulfils all the following
conditions, namely:
(i) it has begun or begins to manufacture or produce articles or things or provide services
during the previous year relevant to the assessment year commencing on or after the 1st
day of April, 2006 in any Special Economic Zone;

(ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of any undertaking, being the Unit,
which is formed as a result of the re-establishment, reconstruction or revival by the
assessee of the business of any such undertaking as is referred to in section 33B, in the
circumstances and within the period specified in that section;

(iii) it is not formed by the transfer to a new business, of machinery or plant previously used
for any purpose.
Explanation: The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall apply
for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of
that sub-section.

Where any undertaking being the Unit which is entitled to the deduction under this section is
transferred, before the expiry of the period specified in this section, to another undertaking,
being the Unit in a scheme of amalgamation or demerger,
(a) no deduction shall be admissible under this section to the amalgamating or the demerged
Unit, being the company for the previous year in which the amalgamation or the demerger
takes place; and

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