Page 163 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes 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)].
2. Where housing or other activities are an integral part of a highway project and the profi ts
and gains have been calculated in accordance with the section, the profits shall not be liable

to tax if the following conditions have been fulfi lled:
(a) the profit has been transferred to a special reserve account;

(b) the same is actually utilised for the highway project excluding housing and other
activities before the expiry of 3 years following the year of transfer to the reserve
account; and
(c) the amount remaining unutilised shall be chargeable to tax as income of the year in
which the transfer to the reserve account took place [Sub-section (6)].
3. The deduction shall be allowed to the industrial undertaking only if the accounts of the
industrial undertaking for the relevant previous year have been audited by a Chartered
Accountant and the assessee furnishes the audit report in the prescribed form, duly signed

and verified by such accountant along with his return of income [Sub-section (7)].
4. Where any goods or services held for the purposes of the eligible business are transferred
to any other business carried on by the assessee, or vice versa, and if the consideration for
such transfer does not correspond with the market value of the goods or services then the

profits and gains of the eligible business shall be computed as if the transfer was made

at market value. However, if, in the opinion of the Assessing Officer, such computation

presents exceptional difficulties, the Assessing Officer may compute the profits on such

reasonable basis as he may deem fit [Sub-section (8)].

Notes For the purpose of section 80-IA(8), the market value, in relation to any goods or
services transferred between the eligible business and any other business carried on by the
assessee, shall mean:
1. The price that such goods or services would ordinarily fetch in the open market; or
2. The arm’s length price as defined under section 92F, where the transfer of such

goods or services is a specified domestic transaction referred to in section 92BA.

5. The deductions claimed and allowed under this section shall not exceed the profi ts and
gains of the eligible business. Further, where deduction is claimed and allowed under this

section for any assessment year no deduction in respect of such profits will be allowed
under any other section under this chapter [Sub-section (9)].

6. The Assessing Officer is empowered to make an adjustment while computing the profi t
and gains of the eligible business on the basis of the reasonable profit that can be derived

from the transaction, in case the transaction between the assessee carrying on the eligible
business under section 80-IA and any other person is so arranged that the transaction
produces excessive profits to the eligible business [Sub-section (10)].

!
Caution It has now been provided that if the aforesaid arrangement between the assessee

carrying on the eligible business and any other person is a specified domestic transaction
referred to in section 92BA, then, the amount of profit of such transaction shall be

determined having regard to arm’s length price as defined under section 92F and not as

per the reasonable profit from such transaction.

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