Section 80-1A(4A)--Whether applicable to the B.O.L.T. Scheme of Indian Railways for development of Railway system--Clarifications regarding - Income Tax - 733/1996

Section 80-1A(4A)--Whether applicable to the B.O.L.T. Scheme of Indian Railways for development of Railway system--Clarifications regarding Circular No. 733 Dated 3/1/1996 All Chief Commissioners/Director-General of Income-tax. The Finance Act, 1995, has introduced sub-section (4A) in section 80-IA of the Income-tax Act, 1961, providing for a five year tax holiday and a deduction of 30 per cent. in the subsequent five years within a period of twelve assessment years beginning with the assessment year in which an enterprise (which may be owned by a company or a consortium of companies) begins operating and maintaining an infrastructure facility on build-operate-transfer (B-O-T) or on build-own-operate-transfer (B-O-O-T) basis subject to certain conditions specified in that sub-section. One of the conditions to be fulfilled by the enterprise is that it should develop, maintain and operate a new infrastructure facility which shall be transferred to the Central Government, etc., within the period stipulated in the agreement. The definition of infrastructure as per sub-section (12) of section 80-IA includes a rail system also. 2. The Indian Railways have formulated a Build-Own-Lease-Transfer (B-O-L-T) scheme, whereunder a private enterprise will provide the necessary and crucial components of a railway system, own them for a stipulated period but will not maintain or operate the same. Instead, the enterprise will lease the asset (only necessary and crucial components of a railway system) back to the Indian Railways for maintenance and operation and shall ultimately transfer it to the Indian Railways. 3. This is to clarify that, the said (B-O-L-T) scheme of the Indian Railways shall be eligible for the benefit of section 80-IA of the Income-tax Act, 1961, since it is not legally possible for any enterprise other than the Indian Railways to maintain and operate a railway system. However, this concession shall be applicable only to an infrastructure facility meant for development of a rail system and not to any other infrastructure facility including rolling stocks. 4. The contents of this circular may be brought to the notice of all the officers working in your region. (Sd.) Dr. Dheeraj Bhatnagar, Under Secretary to the Government of India.