Page 155 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes Questions:

1. Study and analyse the case.
2. Write down the case facts.
3. What do you infer from it?

Source: http://www.indiankanoon.org/doc/41007109/

6.4 Summary

Free Trade Zone, also called Foreign-trade Zone, formerly Free Port, an area within which

goods may be landed, handled, manufactured or reconfigured, and re-exported without
the intervention of the customs authorities.
No deduction under this section shall be allowed to an assessee who does not furnish a
return of his income on or before the due date specified under sub-section (1) of section

139.
Where any undertaking of an Indian company which is entitled to the deduction under this

section is transferred, before the expiry of the period specified in this section, to another
Indian company in a scheme of amalgamation or demerger.
Section 10AA was inserted in the Income-tax Act, 1961 by the Special Economic Zones Act,
2005 (the SEZ Act) with effect from 10-2-2006.
Where an undertaking is transferred to another company under a scheme of amalgamation
or demerger, the deduction under section 10AA shall be allowable in the hands of the
amalgamated or the resulting company.
Section 54GA has been inserted to give exemption in case of shifting of an industrial
undertaking from urban area to a special economic zone.

The Export Oriented Unit (EOU) Scheme, which had been introduced in the early 1980s
remains in the forefront of country’s export production schemes.

The main objectives of the EOU scheme is to increase exports, earn foreign exchange to the
country, transfer of latest technologies stimulate direct foreign investment and to generate
additional employment.

A 100 per cent export-oriented unit is an industrial unit offering for export its entire
production, excluding the permitted levels of domestic tariff area sales.
EOUs may be set up with a foreign equity participation of up to 100 per cent.

6.5 Keywords

Amalgamation: An amalgamation is distinct from a merger because neither of the combining
companies survives as a legal entity.
Assessment Years: An assessment year means the current year.
Convertible foreign exchange: It means foreign exchange which is for the time being treated by the
Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange
Regulation Act, 1973 (46 of 1973), and any rules made there under or any other corresponding
law for the time being in force.
Deductions: An expense subtracted from adjusted gross income when calculating taxable income,
such as for state and local taxes paid, charitable gifts, and certain types of interest payments.

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