Page 151 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes (iii) However, where an undertaking develops an industrial park on or after 1.4.1999 or
a special economic zone on or after 1.4.2001 and transfers the operation and
maintenance to another undertaking (transferee undertaking), the deduction to the
transferee undertaking shall be available for the remaining period in the ten
consecutive assessment years, in such a manner as would have been available to the
transferor undertaking, as if the operation and maintenance were not so transferred
to the transferee undertaking.
(4) Power undertakings: Any undertaking which
(i) Is set up in any part of India for the generation or generation and distribution of
power. However, such undertaking must begin to generate power at any time during
the period between 1.4.1993 and 31.3.2013.
(ii) Starts transmission or distribution by laying a network of new transmission or
distribution lines at any time during the period from 1.4.1999 and 31.3.2013. However,
the deduction shall be allowed only in respect of profits derived from the laying of
such network of new lines for transmission or distribution.

(iii) Undertakes substantial renovation and modernisation of the existing network of
transmission or distribution lines at any time during the period beginning on 1.4.2004
and ending on 31.3.2013.
Substantial renovation and modernisation means an increase in the plant and
machinery in the network of transmission or distribution lines by at least fifty per
cent of the book value of such plant and machinery as on 1st April, 2004.
Telecom and Power undertakings should fulfil the following conditions:
a. It is not formed by splitting up or reconstruction of a business already in existence.
However, this condition shall not apply in the case of an undertaking which is
formed as a result of reconstruction, re-establishment or revival of the business of
any undertaking which has been discontinued in any previous year due to extensive
damage or destruction of any building, machinery, plant or furniture owned by the
assessee and used for the purposes of such business. Further, the reason for damage
or destruction is due to any natural calamity or other unforeseen circumstances such
as the following:
(i) flood, typhoon, hurricane, cyclone, earthquake or other natural calamity, or
(ii) riot or civil disturbance, or
(iii) accidental fire or explosion, or
(iv) enemy action or action taken in combat, and such business is re-established or
revived within 3 years from the end of such previous year.
b. The undertaking should not be formed by the transfer of machinery or plant
previously used for any purpose.
However, these conditions do not apply in case of transfer, either in whole or in
part, of machinery or plant previously used by a State Electricity Board. This is
irrespective of whether or not such transfer is in pursuance of the splitting up or
reconstruction of such State Electricity Board or reorganisation of the State Electricity
Board under Part XIII of the Electricity Act, 2003.
Also, this condition shall not apply to second-hand machinery or plant imported by
the assessee if the following conditions are fulfilled:
(i) Such machinery or plant was not used in India prior to the date of installation
by the assessee.

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