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Unit 7: Deductions: For Special Conditions

Also, this condition shall not apply to second-hand machinery or plant imported by the assessee Notes
if the following conditions are fulfi lled:
(i) Such machinery or plant was not used in India prior to the date of installation by the
assessee.

(ii) No deduction on account of depreciation was allowed to any person prior to 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.
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.
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 modernisation 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.

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