Page 167 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes
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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.
The deduction under this section should not exceed the profits of such eligible business of

the undertaking or the enterprise. Further, where any amount of profits of an undertaking or
enterprise is allowed as deduction under this section, no deduction under any other provision
of Chapter VI-A is allowable in respect of such profits. The Central Government may notify that

the benefit conferred by this section shall not apply to any class of industrial undertaking or

enterprise with effect from any specifi ed date.
Where any undertaking of an Indian company which is entitled to the deduction under this
section is transferred before the expiry of the period of deduction to another Indian company in
a scheme of amalgamation or demerger, no deduction shall be admissible to the amalgamating
or demerged company for the previous year in which the amalgamation or demerger takes
place and the amalgamated or the resulting company shall be entitled to the deduction as if the
amalgamation or demerger had not taken place.

Self Assessment

Fill in the blanks:

6. Sub-section (1) of Section 80-IAB provides for a deduction of 100% of profits and gains
derived by an undertaking or an enterprise from any business of developing a SEZ for
……………… consecutive assessment years.
7. Developer means a …………….. which has been granted a letter of approval by the Central
Government under section 3(10) of the SEZ Act, 2005.

8. Co-developer means a person who, or a State Government which has been granted a letter
of approval by the Central Government under ……………… of the SEZ Act, 2005.
9. The deduction under section 80-IAB shall be allowed only if the accounts are audited by a
Chartered Accountant and the audit report is furnished along with the …………………….
10. The deduction under section 80-IAB should not exceed the …………… of such eligible
business of the undertaking or the enterprise.

7.3 Special Provisions in Respect of Certain Undertakings in Special
Category States

Special provisions in respect of certain undertakings or enterprises in certain special category
States (Section 80-IC) will be discussed in this section. Section 80-IC allows tax holiday to the new
undertakings or existing undertakings on their substantial expansion in the States of Himachal
Pradesh, Uttaranchal, Sikkim and North-Eastern States.
For this purpose, substantial expansion means increase in the investment in plant and machinery
by at least 50% of the book value of the plant and machinery (before taking depreciation in any
year), as on the first day of the previous year in which the substantial expansion is undertaken.

The tax holiday in the States of Himachal Pradesh and Uttaranchal will be 100% for the fi rst fi ve

assessment years and 25% (30% in the case of a company) for the next five assessment years.
However, tax holiday in the States of Sikkim and North-Eastern States will be 100% for ten
assessment years commencing from the initial assessment year.

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