Corporate Taxation

Deductions from Gross Total Income

U/s 80-IBA and U/s 80-ID

Group-7

Submitted to:- Submitted by:-

Prof. Puja Aggarwal Gulati Himanshu Thakur
Finance, IMT Ghaziabad Indrajeet Ingale
Rahul Mittal
Sagar Kansal
Shivesh Sharma
Kabir Kumar
Shauryadeep Roy
Section – 80-IBA, Income-tax Act, 1961 – FA, 2017
(Affordable Housing Schemes / Housing for All)
Amount of Deductions U/s 80-IBA
Where the gross total income of an assessee includes any profits and gains derived from the business of
developing and building housing projects, there shall, subject to the provisions of this section, be allowed, a
deduction of an amount equal to hundred per cent (100%) of the profits and gains derived from such business.

Conditions for Section – 80IBA:

Deductions under this section is available to an assessee (maybe an Individual, HUF, Association of Person,
Body of Individual, Company, Firm or any other person), if the following conditions are satisfied: -

(A). Main Conditions: -

Particulars Metro Non-Metro

Location Chennai, Delhi, Kolkata or Mumbai Any other place
Minimum size of Plot size of land should not be less than Plot size of land should not be less than
project 1,000 sq. mtrs. 2,000 sq. mtrs.
Residential unit size Does not exceed 30 sq. mtrs. Does not exceed 60 sq. mtrs.
Utilization of Floor Not less than 90% permissible under rules Not less than 80% permissible under
area ratio made by Government or local authority. rules made by Government or local
authority.
(B). Other Conditions:-

 Plan should be approved by the Competent Authority after 1st June, 2016, but on or before 31st March,
2019.
 The Project should be completed within the period of 5-years from the date of approval by the Competent
Authority.
 If the approval related to Housing Project is obtained more than once, the date of first approval will be
considered as approval date. The Project deemed to be completed when the certificate of completion will be
obtained from the competent authority in writing.
 Shops and Commercial Area included in the housing project cannot exceed 3% of the total built-up area.
 If the Individual is allotted residential unit in the project, no other unit should be allotted to the:
 Same individual
 Spouse of the individual
 Minor children of such Individual
 Assessee should maintain their separate books of accounts in respect of housing project.
 If Project is not completed within specified years from the date of approval, profits which were allowed as
deductions shall be deemed to be profits of the year in which such limit expires.
 This section shall not apply to work-contractor (including the Central Government or the State
Section – 80-ID, Income-tax Act, 1961 – FA, 2011
(Hotels / Convention centre in specified area)
Amount of Deductions U/s 80-ID
Where the gross total income of an assessee includes any profits and gains derived from the business of Hotels
and Convention centre, there shall, subject to the provisions of this section, be allowed, a deduction of an
amount equal to hundred per cent (100%) of the profits and gains derived from such business for 5 consecutive
assessment years beginning from the initial assessment year.

Conditions for Section – 80ID:

(A). Commencement of operations criteria: -
Situation
Business of Hotel located in the specified area,
if such Hotel is constructed.
Business of building, owning and operating a
Convention centre, located in the specified area,
if such Convention centre is constructed.
Business of Hotel located in the specified
district having a World Heritage Site, if such
Hotel is constructed.
Period in which Business starts functioning
1st April, 2007 and ending on 31st July, 2010
1st April, 2007 and ending on 31st July, 2010
1st April, 2008 and ending on 31st July, 2013
Specified areas means NCT of Delhi and
other district of Faridabad, Gurgaon,
Gautam Budh Nagar and Ghaziabad.
Specified districts having World
Heritage Sites means Districts i.e. Agra,
Jalgaon, Aurangabad, Kancheepuram, Puri,
Bharatpur, Chattarpur, Thanjavur, Bellary,
South 24 Parganas, Chamoli, Raisen,
Gaya, Bhopal, Panchmahal, Kamrup,
Goalpara, Nagaon, North Goa, South Goa,
Darjeeling, Nilgiri
(A). Meaning of Section 80-ID:-
• Convention centre means a building of a prescribed area comprising of convention halls to be used for the purpose of holding
conferences and seminars, being of such size and number and having such other facilities and amenities, as may be prescribed
(Rule 18DE).
• Hotel means a hotel of 2 star, 3 star or 4 star category as classified by the Central Government.
• Initial Assessment year:
 In the case of a hotel, means the assessment year relevant to the previous year in which the business of the hotel starts
functioning
 In the case of a convention centre, means the assessment year relevant to the previous year in which the convention centre
starts operating on a commercial basis.

(B). Computation of Profits criteria:-

For the purposes of computing deduction under this section, Profits and Gains of an eligible business shall be computed on
standalone basis. In other words, it should be assumed that eligible business was the only source of income of the assessee
during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including
the assessment year for which the determination is to be made.

(C). Transaction between closely connected assessee criteria:-

Where it appears to the assessing officer that, owing to the close connection between the assessee carrying on the eligible
business and any other person, that the business transacted between them produces more than the ordinary profits to such
eligible business, the Assessing Officer shall, in computing the profits and gains of such eligible business for the purposes of
the deduction under this section, take the amount of profits as may be reasonably deemed to have been derived there from.
(D). Dual benefit not allowed criteria:-
Where any amount of profits and gains is claimed and allowed under this section, deduction to the extent of such profits
and gains shall not be allowed under any other provisions of Chapter-VIA under the heading ‘C-Deductions in respect of
certain incomes’. Deduction under this section shall not exceed the profits and gains of eligible business. No deduction
shall be allowed under any other section contained in Chapter VIA or section 10AA, in relation to the profits and gains of
the undertaking.

(E). Dual benefit to member AOP /BOI not allowed criteria:-

Where, benefit of this deduction is given to an association of persons or a body of individuals, no deduction under this
section shall again be allowed to member of the association of persons or body of individuals in relation to the share of
such member.

(F). Powers of Central Government criteria:-

Central Government may, after making inquiry, direct, by notification in the Official Gazette that the exemption conferred
by this section shall not apply to any class of industrial undertaking or enterprise with effect from such date as it may
specify in the notification.
(G). Compulsory filing Return of Income criteria:-
No deduction shall be allowed to assessee under this section unless he furnishes a return of his income for such assessment year
on or before the due date specified under section 139(1). In addition, the claim of this deduction shall be compulsorily made in
the return of income.

(H). Audit of Accounts criteria:-

The deduction shall not be admissible unless the accounts of the undertaking audited by an accountant for the previous year for
which the deduction is claimed. Report of such audit is to be furnished in the Form no. 10CCBBA duly signed and verified by
such accountant. This report shall be accompanied by the Profit and Loss Account and Balance Sheet of the undertaking or
enterprise as if the undertaking or the enterprise were a distinct entity.

(I). New Business undertaking criteria:-

Eligible undertaking shall not be formed by splitting up, or the reconstruction, of a business already in existence. However, this
condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or
revival by the assessee of the business of any such undertaking as is referred to in section 33B.

(J). New Plant and Machinery criteria:-

Eligible undertaking shall not be formed by the inward transfer to a new business of machinery or plant previously used for any
purpose. This condition shall be deemed to be compiled with if value of used machinery or plant or any part thereof transferred
to a new business does not exceed 20% of the total value of the machinery or plant used in the business.
(K). Inter-unit transaction at market value criteria:-
Where any goods or services are transacted (purchase or sale) by eligible business or any other business carried on by the
assessee shall be at market value. However where the consideration for such transfer as recorded in the accounts of the
eligible business does not correspond to the market value as on the date of the transfer, then, for the purposes of the deduction
under this section, the profits and gains of such eligible business shall be computed as if the transfer had been made at the
market value of such goods or services.
Where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner
hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such
reasonable basis as he may deem fit.
Explanation: Market value at which goods and services would ordinarily fetch in the open market.

(L). Any plant and machinery used outside India by any person other than the assessee shall not be regarded plant and
machinery previously used for any person, if the following conditions are fulfilled:
 Such plant or machinery was not, at any time previous to the date of the installation by the assessee, used in India;
 Such plant or machinery is imported into India from any country outside Indi; and
 No deduction on account of depreciation in respect of such plant and machinery 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 plant or machinery by the assessee.
Thank you