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Unit 6: Deductions: For Special Conditions

(ii) No deduction on account of depreciation was allowed to any person prior to Notes
the date of installation by the assessee.
Further, where the total value of any plant or machinery previously used and now
transferred to the new business does not exceed 20% of the total value of the machinery or
plant used in the new business, such plant or machinery will be considered as new for this
purpose.
(5) Undertakings owned by an Indian company and set up for reconstruction or revival of a
power generating plant: Clause (v) provides that the benefit under this section is available
to an undertaking owned by an Indian company and set up for reconstruction or revival of
a power generating plant.
Such Indian company should be formed before 30.11.2005 with majority equity
participation by public sector companies for the purposes of enforcing the security interest
of the lenders to the company owning the power generating plant.
Such Indian company should have been notified before 31.12.2005 by the Central
Government for the purposes of this clause. Such undertaking should begin to generate or
transmit or distribute power before 31.3.2011.

Rate of Deduction

1. The amount of deduction available will be 100% of the profits and gains derived from such
business for ten consecutive assessment years commencing at any time during the periods
specified in point 3 mentioned below.
2. However, in case of telecom undertakings covered under (2) above, the deduction will be
100% for the first 5 assessment years and thereafter 30% for the further 5 assessment years.

Period of Tax Holiday or Concession

1. The assessee has the option to claim deduction for any 10 consecutive assessment years out
of 15 years beginning from the year in which the undertaking or the enterprise develops
or begins to operate the eligible business.
2. The assessee may also claim deduction for 10 out of 15 years beginning from the year in
which an undertaking undertakes substantial renovation and modernization of the existing
transmission or distribution lines.
3. In case of an infrastructure facility being a public facility like:

(i) a road, including a toll road, bridge or rail system; or
(ii) a highway project including housing or other activities which are an integral part of
the highway project; or a water supply project, water treatment system, irrigation
project, sanitation and sewerage system or solid waste management system, the
assessee can claim deduction for any 10 consecutive assessment years out of 20 years
beginning from the year of operation.

Other Provisions

1. For the purpose of computing deduction under this section, the profits and gains of the
eligible business shall be computed as if such eligible business were the only source of
income of the assessee during the relevant previous years (Sub-section (5)).

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