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Unit 7: Deductions: For Special Conditions

section 10AA(1). In case of such units, there cannot be question of unexpired period because they Notes
began only after 1st April 2005.

Section 80-IAB applies to any industrial undertaking which fulﬁls all the following conditions,
namely:
1. It is not formed by splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of an industrial undertaking which
is formed as a result of the re-establishment, reconstruction or revival by the assessee
of the business of any such industrial undertaking as is referred to in section 33B, in the

circumstances and within the period speciﬁed in that section.
2. It is not formed by the transfer to a new business of machinery or plant previously used for
any purpose.
3. It manufactures or produces any article or thing, not being any article or thing speciﬁ ed in
the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in
any part of India:
Provided that the condition in this clause shall, in relation to a small scale industrial
undertaking or an industrial undertaking referred to in sub-section (4) shall apply as if the

words “not being any article or thing speciﬁed in the list in the Eleventh Schedule” had
been omitted.
Explanation 1.—For the purposes of clause (ii), any machinery or plant which was used
outside India by any person other than the assessee shall not be regarded as machinery or
plant previously used for any purpose, if the following conditions are fulﬁ lled, namely:—
(a) Such machinery or plant was not, at any time previous to the date of the installation
by the assessee, used in India;

(b) Such machinery or plant is imported into India from any country outside India; and
(c) No deduction on account of depreciation in respect of such machinery or plant
has been allowed or is allowable under the provisions of this Act in computing the
total income of any person for any period prior to the date of the installation of the
machinery or plant by the assessee.
Explanation 2.—Where in the case of an industrial undertaking, any machinery or plant or
any part thereof previously used for any purpose is transferred to a new business and the
total value of the machinery or plant or part so transferred does not exceed twenty per cent
of the total value of the machinery or plant used in the business, then, for the purposes of

clause (ii) of this sub-section, the condition speciﬁed therein shall be deemed to have been
complied with.
4. In a case where the industrial undertaking manufactures or produces articles or things, the
undertaking employs ten or more workers in a manufacturing process carried on with the
aid of power, or employs twenty or more workers in a manufacturing process carried on
without the aid of power.

Section 80-IC applies to any industrial undertaking which fulﬁls all the following conditions,
namely:
This section applies to any undertaking or enterprise:
(a) Which has begun or begins to manufacture or produce any article or thing, not being any
article or thing speciﬁed in the Thirteenth Schedule, or which manufactures or produces

any article or thing, not being any article or thing speciﬁed in the Thirteenth Schedule and

undertakes substantial expansion during the period beginning:

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