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Unit 7: Deductions: For Special Conditions

Explanation. The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall Notes
apply for the purposes of clause (ii) of this sub- section as they apply for the purposes of clause
(ii) of that sub-section.
Notwithstanding anything contained in any other provision of this Act, in computing the total
income of the assessee, no deduction shall be allowed under any other section contained in
Chapter VIA or in section 10A or section 10AA or section 10B or section 10BA, in relation to the

profits and gains of the undertaking.
Notwithstanding anything contained in this Act, no deduction shall be allowed to any undertaking
under this section, where the total period of deduction inclusive of the period of deduction under
this section, or under section 80-IC or under the second proviso to sub-section (4) of section 80-IB
or under section 10C, as the case may be, exceeds ten assessment years.

The provisions contained in sub-section (5) and sub- sections (7) to (12) of section 80-IA shall,
so far as may be, apply to the eligible undertaking under this section. For the purposes of this
section,—

(i) “initial assessment year” means the assessment year relevant to the previous year in
which the undertaking begins to manufacture or produce articles or things, or completes
substantial expansion;
(ii) “North-Eastern States” means the States of Arunachal Pradesh, Assam, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim and Tripura;

(iii) “substantial expansion” means increase in the investment in the plant and machinery
by at least twenty-five per cent of the book value of 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;
(iv) “eligible article or thing” means the article or thing other than the following :—

Goods falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act,
1985 (5 of 1986) which pertains to tobacco and manufactured tobacco substitutes;
Pan masala as covered under Chapter 21 of the First Schedule to the Central Excise
Tariff Act, 1985 (5 of 1986);

Plastic carry bags of less than 20 microns as specified by the Ministry of Environment
and Forests vide Notification No. S.O. 705(E), dated the 2nd September, 1999 and

S.O. 698(E), dated the 17th June, 2003; or
Goods falling under Chapter 27 of the First Schedule to the Central Excise Tariff Act,
1985 (5 of 1986), produced by petroleum oil or gas refi neries;
(v) “eligible business” means the business of hotel (not below two star category); adventure
and leisure sports including ropeways; providing medical and health services in the
nature of nursing home with a minimum capacity of 25 beds; running an old-age home,
pertaining vocational training institute for hotel management, catering and food craft,
entrepreneurship development, nursing and para-medical, civil aviation related training,
fashion designing and industrial training; running information technology related training
centre; manufacturing of information technology hardware; and bio-technology.

Self Assessment

Fill in the blanks:

18. As per section 10A (7B) of the IT Act, deduction under section 10A can be claimed by the
unit in …………………

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