Scribd Logo
Upload

Welcome to Scribd!

  • Ch-3, Setting New Business (Tax Planning)

    Uploaded by

    poonammadan0001
    8 views41 pages

    Original Title

    Ch-3, Setting New Business(Tax Planning)

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    8 views41 pages

    Ch-3, Setting New Business (Tax Planning)

    Uploaded by

    poonammadan0001

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 41
    Chapter 3 Tax planning with reference tg <“- setting up of a new business areas of tax planning ML “ox planning be effective in every area of business management. Some of the im, je planning sony be-attempred are: areas @ co) (iti) (i) ocation of business. re and size of business. Form of business organization and the pattern of its ownership. Specific management decisions like make or buy, own or lease, capital structure, renew or replace, etc. (v) Employees remuneration. (vi) Mergers/Amalgamation of campanies. (vi) Double Taxation Relief. (ui) Non-residents. (i) Advance Ruling, B32 Location of business Tax planning is relevant from location point of view. There are certain locations which are given cial tax treatment. Sot r— - | Full exemption under section 10AA for initial five years, 50% for subsequent five years and further deduction of 50% for a further period of five years in the case of a newly established units in special economic zones on or after 1.4.2005. 2. Deduction under section 80-IAB in respect of profits and gains by an undertaking or an enterprise engaged in the development at Special Be Economic Zone. 3. Deduction under section 80-IB_in the case of newly set_up industrial _undertaking in industrially backward State or district. 4 Deduction under section 80-IC in case of newly set up industrial undertaking or substantial onto ofan ating UEERE SACS ®. Deduction under section 80-IE in respect of certain undertakings in North-Eastern States Nature of business —seees takings in North-Easte S. ie Anning is also relevant while deciding upon the nature of business. There are ce 1 yeich are granted special tax treatment. Some of them are a follows: 2 »‘Wly established units in special economic zones [Section 10AA]. ey ‘2 Development Account, Coffee Development Account and Rubber Developme (Section 3348) , ! etstoation fund (Section 33ABA]. Art busines eligible for deduction of Capital Expenditure [ spendin of certain preliminary expenses [Section 35D}. act iture on Prospecting for certain minerals [Section 35E]- saci Teserve created by a financial corporation under section section 354] 8 Corporate Tax Planning & Management 8. Special provision for deduction in the case of business for prospecting for mines [Sections 42 and 44BB}. 9. Special provisions for computing profits and gains of busi 44AD]. 10. Special provisions for computing profits & gains of business of plying, hiring or goods carriages [Section 44AE]. 11. Special provisions in the case of shipping business ee a? 12. Special provisions in the case of business of operation of aircraft [Section 44BBA). 13. Special provisions in the case of certain turnkey power projects [Section 44BBB], 14. Special provisions in the case of royalty income of foreign companies [Section 44D], 15. Special provisions in case of royalty income of non-residents (Section 4DA]. 16. Profits and gains of industrial undertakings or enterprises engaged in infr development, etc. [Section 80-14] 17. Profits and gains of an undertaking or an enterprise engaged in development of Economic Zone. [Section 80-IAB]. 18. Profits and gains from certain industrial undertaking [Section 80-IB]. 19. Special provisions in respect of certain States [Section 80-IC] 20. Special provisions in respect o! 21. Profits and gains from the business of coll [Section 80JJA]. 22, Employment of new workmen [Section 80JJAA]. 1I5AB, ISAC, 11SAD, 115B, 115BB, 115BA# ness on presumptive basis [Section 44B]- 1 undertaking other than infrastructure devel undertakings or enterprises in certain special ‘certain undertakings in North-Eastern States. [Section lecting and processing of bio-degradable w 23. Special tax rate under sections 115A, 115D. Tax planning and nature of business eral is to be owned by an individual, or an HUF or a firm or a company or operative society or a trust. In case of all these assesses who are carrying on business, the income* be computed as per provisions of sections 28 to 44D. These_asses i igi exemptions/deductions which are specifically allow i ‘ness cartel enPok bummer ich ASSESS 3.4 Tax planning in respect of assessees engaged in the business of export of gout merchandise Exemption available to the unit of an entrepreneur which begins to manufacture or product article or thing or provide any service in a special economic zone on or after 1-4-2005 [Se Industry in gen Se oy, 10AA]. Special provisions in respect of newly established Units in Special Economic Zones |S# IAAI 1. General: Subject to the provisions of this section, derived by an assessee being yreneur as refern 2005 fro1 Zone Act, 2005, his unit shall be allowed from the total income of 1. The deduction under this section is available qua the unit and not the assessce. 2, Meaning of Entrepreneur: repreneur’ means a 4 ‘ person who has beei approval by the Development Commission under section 15(9). {Section 5 Economic Zone Act, 2005) _ : ion 2(/) Tax planning with reference to setting up of a new business 3 per gible for deduction: Deducti i 9 who are eligible for eduction under this sect 2. Assesses’ wes being entrepreneurs viz., individuals, fin ton {5 a¥8iLabe to ay 10 detive gre SF things of {sential conditions Co claim dedetion: The deduction shall apply to av woo fats the following conditions: ing Which (i) Ithas begun or begins to manufacture or produce articles or thi ona Before 14-202 iany Special Economic Zone. eo AM 4.2006, (i) It-should_not_be formed by the splitting up or reconstruction of a business alread existence., However, if the unit is formed as a result of the-re establishment, reconstruction or revival by the assessee of the business _ is referred to and satisfying the conditions in section 33B, («EC should also not be formed by the transfer of machinery or plant, previously usd for any Purpose, to a new business) However, the following are the two exceptions to this condition (1) QMachinery or plant which was used outside India by an ther than the assessee shall not be regarded as machinery or plant previously used for any purpose) if the folfowing conditions are fulfilled: (a) The machinery or plant should not be previously used in India, | (4) The machinery or plant should be imported into India from a foreign country. ()_ 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 to any person previously. ) eduction under section 10AA will, be available if the total value of the second hand ™achinery or plant transferred to the new undertaking does not exceed 20 per cent of the total Value of the machinery or plant used in the industrial uni ; () Gy assesse should farish in the preseribed form [Form No. 36], alongwith the rtm 9 icome, the repoft of a chartered accountant certifying that the en. been correctly claimed in accordance with the provisions of this sector jon 80-1A(10) The provisions of section 80-IA(8) (relating to inter-unit transfer) and section 3 ly in relation to (relating to showing excess profit from such unit) shall, so far as may be, apply of the undertaking the undertaking referred to in this section as they apply for the purposes of the Wt, 7 i ith any ot referred to in section 80-1A. Similarly, outing the close comes em Bat the business of the eligible assessees so arranged that it produce: b ordinary profits, the Assessing Officer shall have a right to ; f fhe reasonable profits which could be derived. In he ee Que business and there 1s a Wanster To or from the undet ee Corporate Tax Planning & Management ae . % c 84 Corporate Tax Planning & Management hap, Restriction of excessive profits [Section 80-1A(10)}; ‘ ic JAB shall not Power of Central Government to notify undertakings to which section HO-TAT) shal 01 apy, [Section 80-1A(11)]; 6 Deduction in case of amalgamation/demerger [Section 3.6 Special provision in respect of eligible business of eligible start up IAC} “i the gros (1) 100% deduction of profit from eligible business [Section Se (I: pai irom alight income of an assessee, being an eligible start-up, includes any profits ani Hie CT iy business, there shall, in accordance with and subject to the provisions of this nen a the profi lie computing the total income of the assessee, a deduction of an amount equal to fo ang gains derived from such business for 3 consecutive assessment years: tn (2) Deduction to be allowed for any three consecutive assessment years out i ive year [Section 80-IAC(2)|: The deduction specified in section 80-IAC(1) may, at the option of asset be claimed by him for any 3 consecutive assessment years out of 7 years (5 years upto A.Y. 2017-18) beginning from the year in which the eligible start-up is incorporated : (3) Conditions to be satisfied to claim exemption under section 80-IAC(1) [Section 6 IACQ)}: This section applies to a start-up which fulfils the following conditions, namely: (i) itis not formed by splitting up, or the reconstruction, of a business already in existence: Provided that this condition shall not apply in respect of a start-up which is formed as a resuk of the re-establishment, reconstruction or revival by the assessee of the business of any such y y undertaking as referred to in section 33B, in the circumstances and within the period specifies in that section; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Explanation 1—For the purposes of clause (ii) above, any machinery or plant which was used] outside India by any person other than the assessee shall not be regarded as machinery or plast Pere for any purpose, ifall the following conditions are fulfilled, namely: | (a) such machinery or plant wa ime previ i cea oe Pi Was not, at any time previous to the date of the installation by the (5) such machinery or plant is imported i 80-1A(12)]. [Newly inserted section my » India; any person for any period prior to the date of the installa oe tion of the machinery or plant by art-up, an i Previously used for any purpose is transferred 10 anon tone OF Plant or any part there! i 0 to a ‘new. busines machinery or plant or part so transferred does not Pyypsiness and the total value of the i t t exceed 20% of Z eae lof tt leedie aerated exceed 20% of the total value of the machine specified therein shall be deemed to have 10 been complied giao 8 he cm ith, (4) Further conditions applicable for an assessee elaig ojo tea assessee claimi a ee {Section 80-4AC(A: The provisions contained in section 80-1A(S) aut gen anger seston 40-14 apply to the eligible business under this section. These provisions a 2). 12) shall. 0 late to the following’ (i) Computation of profits of eligi ines: i (ii) Audit of accounts [Section anes Beer 0140) (ii) Inter-unit transfer of goods [Section 80-1A(8)} (iv) Restriction on double deduction [Section 80-1A(9)} (0) Restriction on excessive profits [Section 80-1A(10)] ub-section, the conditio# a ra planning with reference f0 setting up of a new business 3 | power sect of Central Government 0 notity undertakings to which Section 80, we SOUACDE For the purposes of this section, business” means a business carried out by an eli ia “wiaible MMjevelopment or improvement of products or proces inaovapodel with a high potential of employment generation vy startup” means a company oF a limited liability pee which fulfils the following conditions, namely:— 4.2016 but before 14.2019 i incorporated on or after 1.4 19 (extended it (2) 1 43021 by the Finance Act, 2018); Ui before tumover of its business does not exc 6) the total F its business d eed (07 levant tothe assessment year for which deduction un (0) it holds a certificate of eligible business from Cenifcation as notified in the Official Gazette by the ai) “limited liability partnership” means a partnershi | "Limited Liability Partnership Act, 2008 Deduction not to be allowed in cases where return is not filed Jsection 80AC]: No deduction shall be allowed to the assessee und irtum of his income of the relevant assessment year on or before tl 1391). 37Tax planning in respect of certain undertakings in North Eastern States [Section 80] Deduction under this section is allowed to an assessee whose gross total income ineludes any fis and gains derived by an undertaking which fulfils the following conditions: : (1) Tehas during the period beginning on 1.4.2007 and ending before 1.4.2017 begun or begins in any of the North-Eastern States: (to manufacture or produce any eligible article or thing; Sees (4) ‘0 undertake substantial expansion to manufacture or produce any eligible thing; (ii) to carry on any eligible business. Rene ; in existence: 2) Itis not formed by splitting up, or the reconstruction, of a pee eet However, this condition shall not apply in respect of an undertaking wi pies of) result of the re-establishment, reconstruction or revival by the ee and within the Pe such undertaking as referred to in section 33B, in the circumstanc Specified in the said section. ii orp Itis not formed by the transfer to a new business of machinery any purpose, = However, plant and machinery, already used for any purpo: \d machinery industrial undertaking, provided value of such plant an ial undertaking industrié the total value of Ne 85 1B wil not Apply gible start UP en, SCS OF Services of g 8 OF a sc OF Wealth creation, tt ° Partnership engaged ineligible «i 25 crore in the Previous. \der section B80-IAC(I) is. claimed the Inter-Ministerial Board of Central Government, P referred to in section 2(1}(n) of the within the specified time limit ler this section unless he furnishes a the due date specified under section previously used for 8 to the new canbe tafe bo { 86 Corporate Tax Planning & Management Chap, ; “any petson for any period prior to the date of the installation of the machinery or plant by the assessee, 2. "Eligible article or thing" means the article or thing other than the followings (a) goods falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1oxs which pertains to tobacco and manufactured tobacco substitutes; (b) pan masala as covered under Chapter 21 of the First Schedule to the Central Excise Tait Act, 1985; , : | (c) plastic carry bags of less than 20 microns as specified by the Ministry of Environment ang) 1999 and So; Forests vide Notification Number SO 705(E), dated the 2nd September, 698(E), dated the 17th June, 2003; and F 2 (d)_ goods falling under Chapter 27 of the First Schedule to the Central Excise Tariff Act, 1985, | produced by petroleum oil or gas refineries. 4 3. "Eligible business" means the business of, — (a) hotel (not below two star category’ (b) adventure and leisure sports including ropeways; (c) providing medical and health services in the nature of nursing home with a minimum, capacity of twenty-five beds; (d) running an old-age home; (©) operating 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; (g) manufacturing of information technology hardware; and (h)_ bio-technology. 4. "Substantial expansion" means increase in the investment in the plant and machinery by at least 25% of the book value of plant and machinery (before taking depreciation in any year), as oa the first day of the previous year in which the substantial expansion is undertaken; 5. “North-Eastern States" means the States of Arunachal Pradesh, Assam, Maniput, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, ‘ ‘casa Quantum of deduction 100% of the profits and gains derived from such business for 10 commeneing with the initial assessment year. I. “Initial assessment year" means the assessment undertaking begins to manufacture or produce articles or thi aan ings, or completes substant 2. Notwithstanding anything contained in any other provision of this income of the assessee, no deduction shal be allowed under any Chapter VIA section 10AA, in relation to the profi sina of ty consecutive assessment yeas Act, in computing the Other condition of section 80-IA also applicable |Section 80-1E(6)}: Th ie sub-section (5) and sub-sections (7) to (12) of section 80-IA shall. so fa me eligible undertaking under this section. So far as may be, apply to “ ‘These provisions relate to the following:— uy (i) Computation of profits of eligible business [Section 80-1A(5)]; (ii) Audit of accounts [Section 80-1A(7)]; (iii) Inter-unit transfer of goods [Section 80-LA(8)]; (iv). Restriction on double deduction [Section 80-1A(9)]; ning with reference to setting up of a new p Section 80-IA(10)]; one’ Coat Government to notify undertakings to which Section 80.1¢ r ero ic 3, {sei amalgamated company in ase of amalgamation [Section 80-1A(12) (0 oa owed for unexpired period of 10 years in certain cme, (Sect cfm anything contained in this Act, no deduction shall be alloney 10 any outELSH xa where the total period of deduction inclusive of the peg) Of deduction raking | th oie seation 80-IC or under the second proviso to section 80-1B(4) or unde ode this ce rip business 3 pestrictio 87 ) w! stots may be, exceeds ten assessment years, ns case ma) . a planning for hospitals cderaking operating and maintaining a hospital are eligible forthe following ke ion in respect of expenditure on building and operating, anywhere with at least 100 beds for patients [Section 35AD] in India, & new Nanre ond amount of deduction: 100% deduction shall be allowed an account ofan ental nature incurred wholly and exclusively forthe purpose of the above spenfat ens eon ty such assessce during the previous year in which such expenditure inineured hy Pe Any expenditure of capital nature shall not include any expenditure incurred on the acquisition of] sy lind or goodwill oF financial instruments. (Clause (f) of section 3SAD(8)] Any expenditure of capital nature shall also not include any expenditure in respect of which | the payment or aggregate of payments made to a person in a day, otherwise than by an | _sccouat payee cheque drawn on a bank or an account payee bank draft or use of electronic _ searing system through a bank account, exceeds 10,000. Expenditure incurred prior to commencement of operation to be allowed in the year of emmencement of operation: The expenditure incurred, wholly and exclusively, for the purposes of ') specified business, shall also be allowed as deduction during the previous year in which he imences operations of his specified business, if— (a) thee penditure is incurred prior to the commencement of its operations; and (*) the amount is capitalized in the books of account of the assessee on the date of commencement of its operations, | Any expenditure of capital nature shall not include any expenditure incurred on the i {acquisition of any land or goodwill or financial instruments. Ete 89 Tay Planning for Telecommunication Industry = : 1D but a special jy oun the business income of this assessee is computed as per section 28 aM Sant allowed to the telecommunication industry under section - Ronen in addition, this assessee is allowed deduction under section aeasrices [Section ang of expenditure for obtaining licence to operate telecommunica operate any right 10 clas © any capital expenditure is incurred by the assessee om aca business 1 oP “eleconnttication services either before the commencement for which pay’ ; I ious year and for W tui) Cation service or thereafter any time during any previous y ce fact = é ropriate “he tt” Made to obtain a license, a deduction equal tothe appre For gitute shall be allowed for each of the relevant previous ¥ a1 a the purpose of above: relevant previous year means— nt pre Jeo '9) Ifthe fee is paid for acquiring any right 10 0 eT commence sm ES, St ness commences = With the previous year in which such bust * Corporate Tax Planning & Management Chap, (5) If the fee is paid for acquiring such rights after the commencement of such business the Auton stall be allowed forthe previous years Desig Wi The previo yas ich ie ee Re Sea ae a i He ei and the subsequent previous year or years during which the licence, for which fee is paig shall be inforce. (4) “appropriate fraction" means the fraction the numerator of which is one and the denominaty of which is the total number of the relevant previous year. aaa |. Where a deduction for any previous year has been claimed and allowed under this section, no) depreciation shall be allowed under section 32(1) forthe same or any subsequent year. i 2. "Payment has actually been made” means the actual payment of expenditure irrespective of the Previous year in which the liability for the expenditure was incurred according to the method of accounting regularly employed by the assessee. sq Mlustration 6.18: R. Ltd. obtained a licence to operate telecommunication services fron Department of Telecommunication on 1.7.2019 for a period of I years ie. till 30.6.2030 for a sum of 213,20,000. Calculate the amount of deduction available to the company under section 3S ABB for th various previous years assuming:— (a) The payment of the entire licence fee is made on the date of acquisition of the licence; (6) 24,00,000 was paid on the date of acquisition, %2,60,000 was paid on 15.10.2019 and balance %6,60,000 will be paid in two equal instalments of 23,30,000 each during previous year 2020- 21 and 2021-22. Solution (a) Since the entire licence fee has been paid during the previous year 2019-20, the deduction under section 35ABB shall be allowed for 12 relevant previous year in equal amount of %1,10,000 each year starting from previous year 2019-20 to Previous year 2030-31. Actual fee paid during the year ie 1320000 = 21,10,000 each year 12 Unexpired period of licence (6) Amount to be allowed as deduction in previous "6601 year 2019-20 senpo0 = 55,000 Amount to be allowed as deduction in previous year 2020-21 55,000 (1/12th the amount paid in 201 9-20) 30,000 (3,30,000/11 i.e. amount paid in 2020-21! unexpired period of licence) Total 285,000 Amount to be allowed as deduction (1/12th of the amount paid in 2019-20 in previous year 2021-22 285,000 ad WIth of the amount paid in 2020 21) +33,000 — (3,30,000/10) ie. Amount in 20. Unexpired period of licence eae eee ape ‘ax planning with reference fo setting up of a new business a8 1,18,000 89 ars 2022-23 10203031 118,000 cach yar for 9 previo (12th of amount (V/11th of amount (0th of amount cence i for 11 years but deduction wi __Although the licence is acquired year luction will be all Norse lence is acquted on 17.2019 and it will remains in force tl on Stine jon will be allowed w.e.f. previous year 2019-20 to previous year 2030.31 rh |. Hence, the espe deduction isnot allowed on pro rata basis (i. 9 month for proving ll 1 evs hs fr previous year 2030-31) it willbe allowed in equal installments fore on 20aM 3 ih which licence was allowed to be used levant preview, 624a Sale of licence (@) Where the entire licence is transferred: ( W.the sale proceeds and the deductions already allowed, ae less than the Tcence is Wansteeed. (Section 3SABBO soe Year which (ii) Ifthe sale proceeds and the deductions already allowed exceed the cost of acquisition of allowed in the past, whichever i II be taxable as business income of the yea ip which the licence is transferred. [Section 35ABB(3)] (6) Where a part of the licence is transferred: (i) Where a part of the licence is the written down value of the.total licence, the balance amount not yet written off shall be allowed as deduction in the balance number of equal instalments. (Section 35ABB(5)} (ii) If part of the licence is transferred for a sum exceeding the written down value of the iene, sale proceeds mins the wun doe salute alec hal be profit from such sale, rofit, an amount equal to the amount already writen off inthe earlier years shall be deemed to be the busi [Section SSABBG)) It may be mentioned that the licence constitutes a capital asset and as such there will be capital Sain/loss on sale of entire/part of the licence i oe for computing Tong-term capital gain indexation of cost shall be allowed if suc after 36 months, . pany, |. In case of amalgamation and demerger, the amalgamated company Oe eh ‘vas 008 4s the case may be, shall be allowed to write off the balance amount o ‘same manner as WS writen off by the amalgamating company or demerged company i0 ME Tbe, (Secton allowed to the amalgamating company or demerged company as 3SABB(6) & (7)] Where a deduction for any previous year under section ‘spect of any expenditure referred to in that sub-section | account of depreciation under section 32(1) for the sams Vious year. [Section 35ABB(8)] Tax Planning - imi iction of z ning For claiming ed ion of een ie, Paid in 2019.20) Paid in 2029.2)) previous ¥6 } | Paid in 2021.29 and allowed it oe be allowed of ir or any UTS 35ABB(1) is eli ‘on, no deduction previous yu assess tig ther, for claiming deduction under section 80-1A. the lo —SMtuunder that section. sgh Chap, T i nt : Corporate Tax Planning & Manageme’ ‘ : s of providing infrastructural facilities 3.10 Tax planning for assesses engaged in the ema infrastructural facilities are eligible Assessees who are engaged in the business of provi deduction under section 80-IA. i a cture facility |: Essential conditions for enterprises carrying on the business of infrastru ity [Sect 80-1A(4)(ii)] (The enterprise should carry on the business of — (a) developing, (b) operating and maintaining, or (c). developing, operating and maintaining, any infrastructure facility. (ii) the enterprise is owned by an authority or a Board or a Corp Central or State Act. (iii) the enterprise has entered into an agreement with Central/State Government or a loci authority or any other statutory body for (i) developing, (ii) operating and maintaining or (i) S developing, operating and maintaining, a new infrastructural facility. (iv) the enterprise has started or starts operating and maintaining the infrastructural facilities on after 1.4.1995. Provisions of section 80-1A shall not apply to any enterprise which starts the development « operation and maintenance of the infrastructure facility on or after 1.4.2017 as such enterprise shall eligible for 100% deduction of capital expenditure under section 35AD. [Second proviso to section 8 1A(4) inserted by the Finance Act, 2016] Meaning of infrastructural facility For the purposes of this clause, "infrastructure facility" means: (a) aroad including toll road, a bridge or a rail system; (6) widening of an existing road by constructing lanes as a part of a highway project; (©) a highway project including housin, : a hie ig or other activities being an integral part of the highws (@) a water supply project, water treatm system or solid waste management sy (e) a port, aii i ium of such companies or by a Indian company or a consortium o} 1 y oration or any other body established or constituted under any ent system, irrij stem; igation project, sanitation and sewer Quantum of deduction Assessee "Period of Daducuon riod of Deduction = sbefimgit Perio tie it % % (commencing from chighieior initial assessmey ance eae “ssment year) : a assess deduction Enterprises engaged in developing, maintaining “ and operating any infrastructural facility come eee ‘ment years _—, Period of deduction |Section 80-14(2) assessment years out of 20 years beginnin; develops and begins to operate any infrast 100 ow fen cons 1 the ent will be available fc for any t Which the undertaking o 1: The deduction '8 With the year in ructure facility, ing with reference to setting up of a new business Tax planning, ‘ i a Il be availabj \d waterways or inland port, it wil ailable for 19 for gor a0 inlanad of 20 years given above, Consecutive sone car ouvof 1S YR UM ctivities which are an integral part of the ee of housing OF OF ‘ding anything discussed above, where housing or other na? Project profs 1aco): Notwithstan’ we ect and the profits of which are computed ou tivities are of the highway Pt 36 Such basis ang it has been be liable to tax where the pat |, such profit shall not be liat ere the pr 0 2 est the same is actually utilised for the highway project excluding houses are aa fore the expiry of three years following the year in which such ing ther activities e account; and the amount remaining unutilised shal Il be chargeaby seed 1 eich such transfer to reserve account took place. Beable to tax as of the y' : ssee engaged in infrastructural facilities should ei : Ta Pa of such companies and it should satisfy all the conditions nt, man » of qa to be eligible for claiming deduction under this section, iasrss ve veaning for Tea, Coffee and Rubber Industry ee cotguting the business iacoms' of tsa ‘ndutiy, coffee’ toa suction is available under section 3AB. Further, ftom Tea Board, et. shall also be exempt. ) Tea Development Account, Coffee Development Account and Rubber Development Account ion 33AB and Rule SAC] Deduction under section 33 is available to an assessee who satisfies the following conditions: Essential conditions (i) the assessee is engaged in the business of in India; (ithe assessee has, within 6 months from the end of the previous year or before the due date of furnishing the return of income whichever is earlier; (2) deposited with National Bank for Agriculture and Rural Development (NABARD) any amount(s) in a special account maintained by the assessee with that bank in accordance with and for the purpose specified in a scheme approved in this behalf by the Tea Board or the Coffee Board or the Rubber Board; or deposited any amount in the Deposit Account opened by the assessee in ee , and for the purpose specified in a scheme framed by the Tea Board or the Coffee or the Rubber Board with the previous approval of the Central Government; a the assessee must get its accounts audited by an Accountant as defined ‘ bake aa as below section 288(2) and furnish the report of such audit in Form No. ace eae ‘tum of income. In a case where the assessee is required by or under oo ibe accounts of {counts audited, it shall be sufficient compliance if such assessee gets the ac red under such business audited under such law and furnishes the report of the audit as req other law and a further report in the Form No. 3AC. Quantum of deduction: Quantum of deduction shall be— ( . A the amount(s) deposited in the schemes referred to above: oF ) 40% of the Profession, aot MhEVErT is Legs under this ie. Section ae f ion under of emg are to be computed before making a0) eT in ng adjustment for brought forward losses un accounts are Maina Togs «.*9 Compute profits from such business: If separate in India, it sall Pe ** of growing and manufacturing tea or coffee or rubber lustry and rubber industry in case of such assessee atiy income of growing and manufacturing tea or coffee or rubber (6) f business its and gains 0! Profits of such business computed under the head profi 92 business beg Corporate Tax Planning & Management Cha, : a : i accout not mai will be calculated aon deduction Under this section, In case separate accounts are Not mainizing Profits of the business ‘Total tumover of business of growing and manufacturing tea/coffeerubber Total turnover of assesse's business : ase of a firm, AOP or BOI, no deduction will be allowed in the compulation 0 5 Re Of any partner or member of the AOP or BOI. 2 Tha deduction hasbeen allowed under ction 33AB, no deduction shall be allowed in ‘ f Such amount in any other previous year, (B) Income of Subsidy from Tea Board [Section 10(30) A In the case of an assessee who carries on the business of growing and manufacturing tea in I the amount of any subsidy received from or through the Tea Board under any such scheme fq Feplantation or replacement of tea bushes or for rejuvenation or consolidation of areas use f Cultivation of tea as the Central Government may, by notification in the Official Gazette specify, shi be exempt. Ine For claiming such exemption the assessee has to furnish along with his return of income for te assessment year concemed or within such extended time as the Assessing Officer may allow, certificate from the Tea Board as to the amount of such subsidy paid to the assessee during i previous year. ‘The Central Government has since notified the following schemes for this clause: (i _Replantation Subsidy Scheme of the Tea Board, as effective from the 1-10-1968. (ii Amended Replantation Subsidy of the Tea Board, as effective from the 12-3-1970, (ii) Amended Replantation Subsidy Scheme of the Tea Bo; [Notification No. SO 3616, dated 27-9-1976) Income of subsidy from Rubber Board or Coffee Board or Spices Board or any other Notified Board [Section 10(31)] In the case of an assessee who carri ard, as effective from the 1-1-1972 ‘ies on the business of iodity in India, as the C behalf, the amount of any subsidy 1 received from or through scheme for replantation or replacement of rubber plants, coffee ithe growing of such other commodit ‘of rubber, coffee, cardamom or such exempt. growing and manufacturing rubbe entral Government may notify in ths the concerned Board under any sith b Plants, cardamom plants or plants {¥ 'y or for rejuvenation or consolidation of areas used for cultivatid® } other commodity as the Central Government may notify shall ® undertaking Tax Planning. The assessee for claiming deduction under sectio it money with NABARD/Tea Development Account within six monthe faa the ees a one year’ or before furnishing return of Income, whichever is earlier, The money lying in the a should not be used to acquire an asset which is not eligible under the scheme. Further, the mom withdrawn from the scheme in any previous year must be utilised within the some ye year the purpose mentioned in the scheme, otherwise, the amount not utilised by 31st March of the rele previous year shall be treated as the income of that previous year. The asset Purchased, out of funds of the scheme, should not be transferred before the expiry of B years trac the end of ® previous year in which it was acquired except what is allowed under the law, otherwise such pat he cost ofthe asset, as js relatable to the deduction allowed, shall be treated as income ofthe po eae in which the asset is sold or otherwise transferred. Further, such assessee should take the benefit of subsidy from the Tea Board as per the provisi® ‘urther, Peartion 10030). Tax planning with reference t0 setting up of g new business ing for business of computer software Fenny ed in the business of developing com, sei MAA if is located in a Special Econorie sie The easeanse who is engaged in th the undertaking either in a So im full exemption of Income for a 8 PULET Sof Ware w re will Zone [already discusseq © EXport of C, ™MPuter vare Techn, ical 7 Tiod Of 10 years. usiness of Beneration op apution of Power i j ea to claims depreciation on basis of straight ti por ce Gf a as8Essee Wi i engaged in: in (a) generation, or b) generation and distribution of power, oc in respect of depreciation of as F KO ine method e cost thereof to the assessee. However, i different assessment years shall not excee See Appendix he aggrega ae tional depreciation 22reg: Preciation alloy athe actual cost of the said acces t Besides the normal depreciation, mission of distribution of power, who an additional depreci tion to claim depreciation on: ation of assets [Proviso 2 to Rule eciation on actual cost (eT Asse 0 th block of assets, However, lertaking which began to ger erate power prior to 1.4.1997, the option fore the due-date of Tilin; assessment year 1998-9 e return of income under section 13%(1) for the (i) ioease "case Tthe_undertaking’ begins to generate power after 31. opti res mantsed before the due date of Tumishing he mec income under section 139(1) for assessment y ‘Sment year relevant to the Previous i ich it Begins to. wee yessment years. Such option, once yor ning for assessee fnsaged in prospecting for of extraction op nt * §3IT ei oairal gases or both in India eu! Tax planning with reference to set duction f 4 to an assessee who sat ction under section 33ABA is allowed to SE Who satisfies the following Condition, oe ntial conditions: sis ai caades bg he assessec is carrying on business consisting o 1, The Prospecting for or extract {petroleum or natural gas or both in India anes o ‘traction of Prod : ti in relation to which the Centray Govemman tered into an agreement with such assessee for such business : has er ic The assessee has before the end of the previous ee 2 India any amount(s) in a g cial accouy bank, in accordance with and for the ae Spear » this behalf by the Ministry of Petroleum and Natural Gas of he Government of India: or (6) deposited any amount in the Site Restoration Account Opene secordance with, and for the pun HOS specified in a scheme framed by th is known as Deposit Scheme, ‘d by the Ssessee in 1 aforesaid 7 a i 3 2 é 33ABA on em with Cent sas, The relevant pre, wt Planni M Sie veg 0 0 : —— Where the income is dist mibuted to any other person by a money market mutual fund or liquid fund. 1 Wher the income is distributed by a fund other than a Y ral find or liquid fund and suct Money market, income is distributed to (@) Individual or HUF SC+H&EC 30% +SC-+ HeEC 25% (0) Any person other than individual or HUF j/Mere the income is distributed by ane Person (inserted by the *SC+H&EC ‘quity oriented fu, Finance Act, 201 Provided that where any 30% + SC + HeEC ind to any 10% +S¢ 4 H&EC & Wef, 1-4-2018 income is distribu T an infrastructure debt fund 310 & non-resident (not beng gee tibuted by m PeVaddfional inc a \utual fund shall be liable 80 ng contained apply in Tespect of any income trator of the s, 8, to the unit holders; (second proviso) 2019 [Wet 1.9.2019) Means a Mutual Fund specifi ied under section 10(23D)— ‘ational Financial Services Centre; e units are held by non-residents, GE San Money market mu tual fund anation (4) to Chapter pha fund’ means a m Diet mona aa ee : Sccutities and Board utual Funds) ae O_O Corporate Tax Planning & Management pega oe ae As per clause (a) of the Explanation to section 112A Quity oriented fund” means a fund set up under 4 sl under section 10(23D) and, (in a case where the fund invests in the units oF another Fecognised stock exchange, (A) a minimum of 9%, of the total procee such other fund; and £ 99%, of its total proceeds in the (B) such other fund also invests « minimum of meopnised stock exchanges arid equity shares of domestic companies listed on a re on f such fund is invested ii) in any other case, a minimum of 65%, of the total proceeds ot mock axchinage: in the equity shares of domestic compa inies listed on @ recog! | ect of the fund, as Provided that the percentage of equity shareholding oF unit held in resp ate ft the case may be, shall be computed with reference (0 the annual Averages of the opening and closing figures. Income Distribution Tax to be grossed up (Section 115RCA)I in accordance with For the purposes of determining the tax on distributed income payable a a ey aks abe section 115R. any amount by way of income referred 1o in section 115-R, as reduces oy referred to in section 115-R(2A) [referred to as net distributed income], shal ; amount as would, after reduction of the tax on such increased amount at the rate specified in section 115-R, be equal to the net distributed income. The effective rate of additional tax, shall be as under: 1. (a) Where the income is distributed to any person being an 33.33% + 12% SC + 4% individual or a HUF by a money market mutual fund or a H&EC = 38.82% liquid fund (b) Where the income is distributed to any other person by a 42.857% + 12% SC + 4% heme of a mutual fund specifiy + fund which is traded on y | of such fund is invested in the units of | money market mutual fund or liquid fund. H&EC = 49.92% (c) Income distributed to any person by an equity oriented 1.111% + 12% SC + 4% fund H&EC = 12.942% 2. Where the income is distributed by a fund other than a money market mutual fund or a liquid fund and such income is distributed to— (a) Individual or HUF 33.33% + 12% SC +4% H&EC = 38.82% 42.857% + 12% SC + 4% H&EC = 49.92% 5.26% + 12% SC +4% H&EC = 6.127% (4) Any person other than individual or HUF (c)_if recipient is non-resident/foreign company (under infrastructure debt fund) 3.22 Special provisions for computing profits and gains of busin it goods carriages [Section 4AE] ss of plying, ring or lash Notwithstanding anything to the contrary contained in sections 28 section 44AE also provides for a system for estimating the income of an i business of plying, hiring or leasing of goods carriages. The broad features of the sehome 4 (a) the scheme is applicable to an assessee who owns not more than 10 goods carriag time during the previous year and who is engaged in the business of plying, of such goods carriages; 0 43C the scheme un riages at all hiring or leasité ith reference to setting up of a new business inning wi Tax plat : carriage (other than heavy goods vehicle and gains of each goods equal to 87,500 for every month or see shall be arviage is owned by the assessee in the Previous y Sng whch te Bo vy goods vehicle (more than l2MT dunt ol Br0Ss Vehicle weight), the In the

    You might also like