Page 169 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes Section 80-IE provides for an incentive to an undertaking which has during the period
between 1st April, 2007 and 1st April, 2017, begun or begins, in any of the North-Eastern
States (i.e., the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram,
Nagaland, Sikkim and Tripura) - to manufacture or produce any eligible article or thing;
to undertake substantial expansion to manufacture or produce any eligible article or
thing; and to carry on any eligible business.

Eligible article or thing means the article or thing other than the goods falling under
Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985 which pertains to
tobacco and manufactured tobacco substitutes; pan masala as covered under Chapter 21 of
the First Schedule to the Central Excise Tariff Act, 1985; plastic carry bags of less than
20 microns; and goods falling under Chapter 27 of the First Schedule to the Central Excise
Tariff Act, 1985 produced by petroleum oil or gas refineries.
Where the gross total income of an assessee includes any profits and gains derived by such
an undertaking, a deduction of 100% of the profits and gains derived from such business
for 10 consecutive assessment years commencing with the initial assessment year shall be
allowed in computing the total income of the assessee. 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.

6.7 Keywords

Arm’s Length Price: The price at which two unrelated and non-desperate parties would agree to
a transaction.

Assessing Officer: He or she is an officer of the Income tax department who has been given
jurisdiction over a particular geographical territory or class of persons.
Co-developer: It implies a person who, or a State Government which has been granted a letter of
approval by the Central Government under section 3(12) of the SEZ Act, 2005.
Deduction: Any item or expenditure subtracted from gross income to reduce the amount of
income subject to tax.
Developer: It is a person who, or a State Government which has been granted a letter of approval
by the Central Government under section 3(10) of the SEZ Act, 2005.
Domestic Satellite: It is a satellite owned and operated by an Indian company for providing
telecommunication services.

Market Value: It is the price at which an asset would trade in a competitive auction setting.
SEZs: These are free trade zones, having completely different set of administrative and taxation
laws outside the purview of customs authorities.

Substantial Expansion: It means increase in the investment in the plant and machinery by at
least 25% of the book value of plant and machinery as on the first day of the previous year in
which the substantial expansion is undertaken.

Telecom Undertakings: Any undertaking providing telecommunication services, whether basic
or cellular, including radio paging, domestic satellite service or network of trunking (NOT),
broadband network and internet services on or after 1 April, 1995 but on or before 31 March,
2005.

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