Special provisions in respect of newly established undertakings in free trade zone, etc. - Section 10A - Income Tax - Ready Reckoner - Income Tax

Special provisions in respect of newly established undertakings in free trade zone, etc. - Section 10A The provisions of section 10A are not applicable now-a-days. No deduction shall be allowed for the AY 12-13 or thereafter. As per the provisions of this section, deduction of profits and gains as derived by an undertaking from the export of certain articles or things or computer software for a period of 10 consecutive AYs beginning from the AY relevant to the PY in which the undertaking begins to manufacture or produce articles or things or computer software. Notes:- Where an undertaking located in any free trade zone and subsequently located in special economic zone by reason of conversion, then the period of 10 consecutive AYs shall be reckoned from the AY relevant to the PY in which undertaking began to manufacture or produce such articles or things or computer software in such free trade zone or export processing zone For the AY beginning from 1-4-2003, the deduction shall be 90% of the profits and gains derived by an undertaking from the export of such articles or things or computer software. No deduction shall be allowed for the AY 12-13 or thereafter. For units which have begun on or after AY 2003-04: The deduction is 100% for first 5 years and 50% for next 2 years and next 3 years amount not exceeding 50% of the profits as is debited to the profit and loss account subject to creation of Special Economic Zone Reinvestment Allowance Reserve Account and fulfillment of conditions relating thereto:- the amount credited should be utilised for the purpose of acquiring new machinery or plant which is first put to use before the expiry of a period of three years next following the previous year in which the reserve was created; and until the acquisition of new machinery or plant as aforesaid, for the purposes of the business of the undertaking other than for distribution by way of dividends or profits or for remittance outside India as profits or for the creation of any asset outside India failing which the unutilized or wrongly utilized reserve would be deemed income as per the provisions of the Act and the Rules. No deduction under this section shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified u/s 139(1) This section applies to an undertaking which:- (i) not be formed by splitting up or reconstruction of unit already in existence (ii) Should not be formed by transferring machinery or plant previously used. (iii) Sale proceeds should be brought in convertible forex within 6 months from the end of P.Y. (iv) Report in Form No.56F , along with the return of income Computation of Profits Points to be noted: No deduction shall be allowed under Section 80HH or Section 80HHA or Section 80-I or Section 80-IA or Section 80-IB in relation to the profits and gains of the undertaking. No loss referred to in Section 72(1) or Section 74(1) or (3) , in so far as such loss relates to the business of the undertaking, shall be carried forward or set off where such loss relates to any of the relevant assessment years ending before the 1st day of April, 2001. In computing the depreciation allowance under Section 32 , the written down value of any asset used for the purposes of the business of the undertaking shall be computed as if the assessee had claimed and been actually allowed the deduction in respect of depreciation for each of the relevant assessment year. The provisions of this section does not apply to any undertaking, being a Unit referred to in clause (zc) of section 2 of the Special Economic Zones Act, 2005 , which has begun or begins to manufacture or produce articles or things or computer software during the previous year relevant to the assessment year commencing on or after AY 2006-07 in any Special Economic Zone. Notwithstanding anything contained in the foregoing provisions of this section, where the assessee, before the due date for furnishing the return of income u/s 139(1) , furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment years Provisions related to amalgamation and demerger: The benefit under this section is not available to the amalgamating or the demerged company for the previous year in which the amalgamation or the demerger takes place and it is available to the amalgamated or the resulting company as it would have been available to the amalgamating or the demerged company if the amalgamation or demerger had not taken place.