Critical analysis of deductions under Chapter VIA CA.Farida katrak

Report
www.pwc.com/in
Critical analysis of deductions
under Chapter VIA
General provisions
• Chapter VIA deductions – Deductions from gross total income - Sections 80C to 80U.
• Gross total income to be computed before allowing deduction under Chapter VIA and
after setting off brought forward unabsorbed losses / depreciation.
•
Aggregate amount of deductions to be restricted to the amount of gross total income.
•
Where deduction is available in respect of certain incomes, such deduction is with
reference to the amount of net income.
PwC
September 2012
Slide 2
Section 80C - Deduction in respect of life insurance
premium etc.
Qualifying amount
• Rs.1,00,000 (aggregate deduction available u/s 80C, 80CCC & 80CCD)
Qualifying investments
• Life insurance premium for policy
• Deferred annuity plan
- Contract should not contain an option to receive cash payment in lieu of annuity
- Sum deducted from salary payable to Government servant for securing deferred
annuity or making provision for his wife/children [qualifying amount limited to
20% of salary]
PwC
September 2012
Slide 3
…Section 80C - Deduction in respect of life
insurance premium etc.
• Contributions by an individual made under Employees' Provident Fund
• Contribution to Public Provident Fund
• Contribution by an employee to a recognised provident fund
• Contribution by an employee to an approved superannuation fund
• Subscription to any notified security or notified deposit scheme of the Central
Government
• Subscription to NSC VIII & NSC IX
• Contribution for participation in ULIP
PwC
September 2012
Slide 4
…Section 80C - Deduction in respect of life
insurance premium etc.
• Contribution for participation in Dhanraksha 1989 Plan of LIC Mutual Fund
• Payment made to effect or keep in force a notified deferred annuity plan of –
- LIC – New Jeevan Dhara, New Jeevan Dhara I, New Jeevan Akshay, New Jeevan
Akshay I and II, Jeevan Akshay III & VI
- Any other insurer – Immediate Annuity Plan of ICICI Prudential Life Insurance
Co., Tata AIG Retire Annuity Plan
• Contribution to Equity Linked Savings Schemes
• Contribution by an individual to UTI Retirement Benefit Pension Fund
PwC
September 2012
Slide 5
…Section 80C - Deduction in respect of life
insurance premium etc.
• Subscription to Home Loan Account Scheme or National Housing Bank (Tax Saving)
Term Deposit Scheme, 2008 of National Housing Bank
• Subscription to Public Deposit Scheme of HUDCO
• Tuition fees (excluding development fees, donation or similar payment) at the time of
admission or thereafter to any university, college, school or other educational
institution in India for full time education of any two children
• Payment for the purchase or construction of a residential house property
• Subscription to equity shares or debentures forming part of any eligible issue of capital
approved by the Board in the case of a public company / public financial institution
PwC
September 2012
Slide 6
…Section 80C - Deduction in respect of life
insurance premium etc.
• Subscription to any units of mutual fund referred to in Section 10(23D) and approved
by the Board
• Bank Term Deposit Scheme, 2006 for a fixed period of not less than 5 years with a
scheduled bank
• Subscription to NABARD Rural Bonds
• Deposit under Senior Citizens Savings Scheme Rules, 2004
• Deposit as 5 year time deposit in an account under Post Office Time Deposit Rules,
1981
PwC
September 2012
Slide 7
…Section 80C - Deduction in respect of life
insurance premium etc.
Points to be noted
•
Amount may be paid or deposited any time during the previous year.
•
Deduction shall be restricted to the total income chargeable to tax during the previous
year.
•
Payment of life insurance premium which is in excess of 20 per cent (10 per cent in
case of policies issued on or after 1-4-2012) of the capital sum assured, shall not be
included in gross qualifying amount.
• Capital sum assured does not include the value of any premiums agreed to be returned
or of any benefit by way of bonus or otherwise, over and above the sum actually
assured.
PwC
September 2012
Slide 8
…Section 80C - Deduction in respect of life
insurance premium etc.
...Points to be noted
• No deduction allowed to the assessee with reference to sums paid in the previous year
and the aggregate amount of deductions allowed in preceding years shall be taxed, if –
- single premium policy terminated within two years after the date of
commencement or
- any other insurance policy terminated before premiums have been paid for two
years or
- unit-linked insurance plan (ULIP) terminated before contributions have been paid
for five years or
- house property transferred before the expiry of five years from the end of the
financial year in which possession of such property is obtained by him, or receives
back, whether by way of refund or otherwise, any sum specified in that clause.
PwC
September 2012
Slide 9
…Section 80C - Deduction in respect of life
insurance premium etc.
...Points to be noted
• Equity shares or debentures, with reference to the cost of which a deduction is allowed,
to be held for a period of three years from the date of their acquisition. If not so held,
deductions allowed in the preceding years shall be taxed in the year of sale / transfer.
• Date of acquisition of shares / debentures of public company is the date on which
name is entered in the register of members or debenture-holders.
• Any amount, including interest accrued thereon, withdrawn from (a) Senior Citizen
Saving Scheme or ( b) Post Office Time Deposit Rules, before the expiry of the period
of five years from the date of its deposit, shall be deemed to be the income of the
assessee of the previous year in which the amount is withdrawn, unless such interest
has been taxed in an earlier previous year.
PwC
September 2012
Slide 10
…Section 80C - Deduction in respect of life
insurance premium etc.
Case laws
•
CIT v/s Chelliah [1984] 147 ITR 590 (Mad)
The category of payments which are deducted from the gross total income under
Section 80C comprise items of expenditure laid out by an assessee or the wife of a
person whose income is included in his total income under Section 64.
•
ITO v/s Yogi H. Aggarwal [2005] 278 ITR 116 (Mum)
Where the deduction is after arriving at gross total income, which includes the clubbed
income, the deduction as for Section 80C, will be allowed only once on the income
after clubbing.
•
CIT v/s Abraham George [2000] 242 ITR 171 (Ker)
•
CIT v/s Ram Mohan Rawat [2002] 255 ITR 555 (Raj)
•
CIT v/s Ramesh Chandra Khandelwal [2005] 273 ITR 363 (All)
The sums paid or deposited need not be out of income chargeable to tax of the
previous year.
PwC
September 2012
Slide 11
Section 80CCC – Contribution to certain pension
funds of LIC or any other insurer
Qualifying amount
•
Rs.1,00,000 (aggregate deduction available u/s 80C, 80CCC & 80CCD)
Qualifying investments
• Payment made to effect or to keep in force a contract for any annuity plan of LIC or
any other insurer for receiving pension from the fund
Points to be noted
• Amount received on full / partial surrender of annuity plan or pension received from
the plan, deemed to be the income of the assessee / nominee of the year in which
amount is withdrawn or pension is received
• Where deduction is claimed under this section, deduction in relation to same amount
cannot be claimed under section 80C
PwC
September 2012
Slide 12
Section 80CCD – Deduction re. contribution to
pension scheme of Central Government
Eligible assessee
1.
Individual employed by the Central Government or any other employer
2.
Any other assessee being an individual
Conditions
• In case (1) above, the Central Government or any other employer makes any
contribution to employee’s account.
• In case (2) above, the assessee has, in the previous year paid or deposited any amount
in his account under a notified pension scheme.
PwC
September 2012
Slide 13
…Section 80CCD – Deduction re. contribution to
pension scheme of Central Government
Amount of deduction
• The whole of the amount so paid or deposited as does not exceed –
- in the case of an employee, 10% of his salary in the previous year
- in any other case, 10% of gross total income
• Section 80CCE provides that the aggregate amount of deductions under section 80C,
section 80CCC and section 80CCD shall not, in any case, exceed Rs. 1,00,000.
•
PwC
With effect from the assessment year 2012-13, contribution made by the Central
Government or any other employer to a pension scheme shall not be included in the
limit of deduction of Rs.1,00,000 provided under section 80CCE.
September 2012
Slide 14
…Section 80CCD – Deduction re. contribution to
pension scheme of Central Government
Points to be noted
• Amount received on closure / opting out of the pension scheme or pension received
from the annuity plan purchased or taken on such closure or opting out, is taxable in
the year of receipt in the hands of the assessee / nominee.
• If amount received is used for purchasing an annuity plan in the same previous year,
the assessee shall be deemed not to have received any amount in the previous year.
• Where deduction has been allowed u/s 80CCD, no deduction with reference to such
amount shall be allowed u/s 80C.
PwC
September 2012
Slide 15
Section 80CCF – Deduction re. subscription to
long term infrastructure bonds
• Applicable for AY 2011-12 and AY 2012-13
• Individuals and HUF entitled to deduction u/s 80CCF
• Deduction available for subscription to notified long term infrastructure bonds issued
by –
- IFCI
- LIC
- IDFC
- NBFC classified as an infrastructure finance company by RBI
- India Infrastructure Finance Co. Ltd.
• Eligible amount Rs.20,000
PwC
September 2012
Slide 16
Section 80CCG – Deduction re. of investment made
under an equity savings scheme
Eligible assessee
• Resident individual
Conditions
• Applicable w.e.f. 1-4-2013
• Gross total income does not exceed Rs.10,00,000
• Assessee is a new retail investor as specified in the notified scheme
• Acquisition of listed equity shares as per notified scheme
• Lock in period of 3 years
• Any other condition as may be prescribed
Amount of deduction
• 50% of the amount invested subject to a maximum of Rs.25,000.
PwC
September 2012
Slide 17
…Section 80CCG – Deduction re. of investment
made under an equity savings scheme
Points to be noted
• One time deduction – no deduction under this section for any subsequent assessment
year.
• If assessee fails to comply with any specified condition in any previous year, deduction
originally allowed, shall be deemed to be the income of such year.
PwC
September 2012
Slide 18
Section 80D – Deduction in respect of health
insurance premium
Eligible assessee
• Individuals
• HUF
Conditions
• Medical insurance premia paid to GIC or any other insurer approved by Insurance
Regulatory and Development Authority
Amount of deduction
• In case of individuals, premia paid –
- for self, spouse and dependent children : Rs. 15,000 (Rs.20,000 if person insured is
a senior citizen)
- for parents of the assessee : additional Rs.15,000 (Rs.20,000 if person insured is a
senior citizen)
• In case of HUF, premia paid upto Rs.15,000 (Rs.20,000 if person insured is a senior
citizen to insure any member of the family
PwC
September 2012
Slide 19
…Section 80D – Deduction in respect of health
insurance premium
Points to be noted
• Premium to be paid by any mode other than cash
•
With effect from 1-4-2013 –
- deduction is available in respect of any payment made by an assessee on account of
preventive health check-up of self, spouse, dependent children or parent during the
previous year up to a limit of Rs.5,000 within the existing limits prescribed above;
- the age for defining a senior citizen is reduced from sixty five years to sixty;
- cash may be paid on account of preventive health checkup.
PwC
September 2012
Slide 20
Section 80DD – Deduction re. maintenance / medical
treatment of a dependant who is a person with disability
Eligible assessee
• Individual
• HUF
Conditions
• Expenditure incurred for the medical treatment (including nursing), training and
rehabilitation of a dependant (spouse, children, parents, brothers and sisters) being a
person with disability.
•
Any amount paid or deposited under an approved scheme framed by LIC or any other
insurer or the Administrator or the specified company for the maintenance of a
dependent, being a person with disability.
•
The approved schemes provide for payment of annuity or lump sum amount for the
benefit of a disabled dependent, on the death of the individual or member of HUF in
whose name subscription to the scheme has been made.
•
The subscriber is required to nominate the disabled dependent or any other person or
a trust to receive the payment on his behalf for the benefit of the disabled dependent.
PwC
September 2012
Slide 21
…Section 80DD – Deduction re. maintenance / medical
treatment of a dependant who is a person with disability
Amount of deduction
• Rs.50,000
• Rs.1,00,000 in case of severe disability
Points to be noted
• Medical certificate in the prescribed form (Rule 11A) to be furnished along with the
Return of Income.
•
PwC
Amount received by the individual / member of HUF, in case disabled dependent
predeceases such individual / member of HUF, is taxable in the year of receipt.
September 2012
Slide 22
Section 80DDB – Deduction in respect of medical
treatment etc.
Eligible assessee
• Individual
• HUF
Conditions
• The assessee has actually paid any amount for the medical treatment of specified
diseases and ailments (Rule 11DD).
• Payment in the case of individual, for self or dependent (spouse, children, parents,
brothers and sisters).
• Payment in the case of HUF, for any member of the HUF.
PwC
September 2012
Slide 23
…Section 80DDB – Deduction in respect of medical
treatment etc.
Amount of deduction
• Amount actually paid upto a maximum of Rs.40,000
• Amount actually paid upto a maximum of Rs.60,000 in case of senior citizen
• Amount actually paid means the amount paid as reduced by insurance claim received /
amount reimbursed by employer.
Points to be noted
• Medical certificate in the prescribed form (Rule 11DD) to be furnished along with the
Return of Income.
• With effect from 1-4-2013 the age for defining a senior citizen is reduced from sixty
five years to sixty.
PwC
September 2012
Slide 24
Section 80E – Deduction in respect of loan taken
for higher education
Eligible assessee
• Individual
Conditions
• Deduction available for payment of interest on loan, out of income chargeable to tax.
• Loan taken from any financial institution including a bank or any other approved
charitable institution.
• Loan taken for pursuing higher education for self or relative (spouse, children or
student for whom the individual is the legal guardian.
Amount of deduction
• 100% of the interest paid
PwC
September 2012
Slide 25
...Section 80E – Deduction in respect of loan taken
for higher education
Points to be noted
•
Amount paid for repayment of loan does not qualify for deduction.
•
Deduction available until the interest on loan is paid in full, subject to a maximum of
8 years.
PwC
September 2012
Slide 26
Section 80G - Donations
Eligible assessee
• Any assessee
Conditions
• Donations to specified funds, charitable institutions etc.
Amount of deduction
• Donations made to National Defence Fund and other specified Funds e.g. Prime
Minister’s National Relief Fund, Prime Minister’s Armenia Earthquake Relief Fund,
National Sports Fund, National Cultural Fund etc.
- 100% of qualifying donations
• In any other case
- 50% of qualifying donations
PwC
September 2012
Slide 27
...Section 80G - Donations
• Qualifying amount of following aggregate donations should not exceed 10% of the
gross total income as reduced by deductions permissible under other provisions of
Chapter VIA
- By a company to the Indian Olympic Association or to any other notified
association / institution established in India for development of infrastructure for
sports and games in India or sponsorship of sports and games in India
- To a Government or to any such local authority, institution or association as may be
approved by the Central Government for the purpose of promoting family planning
- To approved charitable institutions / funds established in India fulfilling prescribed
conditions
-
PwC
To a corporation established by the Central government / State government for
promoting the interests of the members of a minority community
September 2012
Slide 28
...Section 80G - Donations
Points to be noted
• Only donations in form of money and not in kind will qualify for deduction.
• W.e.f. 1-4-2013, deduction in respect of donations in cash will be allowed only upto
Rs.10,000.
• Where deduction allowed u/s 80G for any assessment year, deduction in relation to
such sum shall not be allowed under any other provision of the Act for the same or any
other assessment year.
• Any approval u/s 80G(5)(vi) on or after 1-10-2009 would be a one-time approval
which would be valid till it is withdrawn.
• Wholly / substantially whole religious purpose is not a charitable purpose.
PwC
September 2012
Slide 29
...Section 80G - Donations
Case laws
• CIT v/s General Textiles [1978] 111 ITR 727 (Cal)
Where deduction allowed u/s 80G to a firm, such relief cannot again be allowed to its
partners.
•
Upper Ganges Sugar Mills Ltd. v/s CIT [1997] 227 ITR 578 (SC)
Even if one of the objects of the institution or fund is wholly or substantially of a
religious character, institution or fund would fall outside scope of Section 80G.
• Reliance Motor Co. Pvt. Ltd. v/s CIT [1995] 213 ITR 733 (Mad)
It is not the actual use of funds by the trust but the likelihood of its being used for the
benefit of any particular religious community or caste and the capacity of the trust to
do so, which is important.
PwC
September 2012
Slide 30
...Section 80G - Donations
…Case laws
•
Sri Karpagambal Mills Ltd. v/s CIT [1999] 238 ITR 842 (Mad)
For the purpose of Section 80G(4), first the limit of 10% of gross total income should
be applied and then 50% of that amount should be allowed as deduction u/s 80G.
•
Golecha Properties (P) Ltd. v/s CIT [1988] 171 ITR 47 (Raj)
Proof of donation essential.
•
Parivar Seva Sanstha v/s DIT (Exemptions) [2002] 255 ITR 132 (Del)
Pendency of demand cannot be a ground for refusal of recognition u/s 80G.
•
Orpat Charitable Trust v/s CIT [2002] 173 ITR 534 (Guj)
Contravention of Sec. 11(5) will have a bearing at the time of assessment and cannot be
a ground for refusal of recognition u/s 80G(5).
PwC
September 2012
Slide 31
Section 80GG – Deduction in respect of rents paid
Eligible assessee
• Any assessee
Conditions
• Rent paid is in excess of 10% of total income before allowing any deduction under this
section.
• Rent paid is in respect of accommodation occupied for the purposes of own residence.
•
Declaration to be filed in Form 10BA.
•
No other residential accommodation is owned by the assessee or by his spouse or
minor child or by HUF of which he is a member.
PwC
September 2012
Slide 32
…Section 80GG – Deduction in respect of rents paid
...Conditions
• Deduction will not be denied if –
- some other residential accommodation is owned at places other than the place
where the assessee ordinarily performs his duties of employment or carries on
business or profession and
- the assessee does not claim concession in respect of self-occupied house property in
respect of such accomodation.
Amount of deduction
• The least of the following 3 limits –
- excess of rent paid over 10% of total income before allowing deduction under this
section
- 25% of total income
- Rs.2,000 per month
PwC
September 2012
Slide 33
…Section 80GG – Deduction in respect of rents paid
Point to be noted
• An employee who is entitled to house rent allowance from his employer, is eligible for
exemption u/s 10(13A) and not for deduction u/s 80GG.
PwC
September 2012
Slide 34
Section 80GGA – Deduction re. donations for
scientific research or rural development
Eligible assessee
• All assessees not having any income chargeable under the head “Profits and gains of
business or profession”.
Conditions
• Donations to a research association, University, college or other institution for
scientific, social or statistical research or rural development programme or for carrying
out an eligible project or scheme or National Urban Poverty Eradication Fund
Amount of deduction
• 100% of the amount paid
PwC
September 2012
Slide 35
...Section 80GGA – Deduction re. donations for
scientific research or rural development
Points to be noted
• Where deduction allowed u/s 80GGA for any assessment year, deduction in relation to
such sum shall not be allowed under any other provision of the Act for the same or any
other assessment year.
•
PwC
W.e.f. 1-4-2013, deduction in respect of cash donations u/s 80GGA will be allowed
only upto Rs.10,000.
September 2012
Slide 36
Section 80GGB – Deduction re. contributions
given by companies to political parties
Eligible assessee
• Indian Company
Conditions
• Contribution to –
- Political party
- Electoral trust
Amount of deduction
• 100% of amount donated
Points to be noted
• Donations to political parties governed by Section 293A of Companies Act
PwC
September 2012
Slide 37
Section 80GGC – Deduction re. contributions
given by any person to political parties
Eligible assessee
• All assesses, other than local authority and artificial juridical person wholly or partly
funded by Government
Conditions
• Contribution to –
- Political party
- Electoral trust
Amount of deduction
• 100% of amount donated
PwC
September 2012
Slide 38
Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
Nature of business
activity
No. of
consecutive
assessment
years for which
deduction is
available
An enterprise developing On or after 1- 10 out of 15 / 20
or operating and
4-1995
initial assessment
maintaining or
years
developing, operating and
[Initial assessment
maintaining
year means the A.Y.
infrastructure facility
relevant to previous
year in which the
Conditions specified in
undertaking
Sec. 80IA (4)(i)(a) & (b)
commences the
activity]
PwC
Period of
commencem
ent of
operations
Rate of deduction
from profits and
gains
100% of profits and
gains derived from
such business for 10
consecutive
assessment years
September 2012
Slide 39
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
Nature of
business activity
Period of
commencement
of operations
An undertaking
1-4-1995 to
providing basic or
31-3-2005
cellular
telecommunication
services, including
radio paging,
domestic satellite
service, network of
trunking, broadband
network and
internet services
PwC
No. of
consecutive
assessment years
for which
deduction is
available
10 out of 15 initial
assessment years
Rate of deduction
from profits and
gains
100% of profits and
gains derived from
such business for
first 5 consecutive
assessment years
and
30% for subsequent
5 consecutive
assessment years
September 2012
Slide 40
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
Nature of
business activity
Period of
commencement
of operations
An undertaking
which develops,
develops and
operates, or
maintains and
operates a notified
industrial park or
special economic
zone in accordance
with notified scheme
Industrial park
1-4-1997 to 31-32011
SEZ – 1-4-1997 to
31-3-2006
PwC
No. of
consecutive
assessment years
for which
deduction is
available
10 out of 15 initial
assessment years
Rate of deduction
from profits and
gains
100% of profits and
gains derived from
such business for 10
consecutive
assessment years
September 2012
Slide 41
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
Nature of
business activity
Period of
commencement
of operations
An undertaking set
up for generation or
generation and
distribution of
power
An undertaking
which starts
transmission or
distribution by
laying network of
new transmission
and distribution
lines
1-4-1993 to 31-32013
No. of
consecutive
assessment years
for which
deduction is
available
10 out of 15 initial
assessment years
1-4-1999 to 31-32013
10 out of 15 initial
assessment years
PwC
Rate of deduction
from profits and
gains
100% of profits and
gains derived from
such business for 10
consecutive
assessment years
100% of profits and
gains derived from
such business for 10
consecutive
assessment years
September 2012
Slide 42
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
Nature of
business activity
Period of
commencement
of operations
An undertaking
1-4-2004 to 31-3which undertakes
2013
substantial
renovation and
modernization of the
existing network of
transmission and
distribution lines
PwC
No. of
consecutive
assessment years
for which
deduction is
available
10 out of 15 initial
assessment years
Rate of deduction
from profits and
gains
100% of profits and
gains derived from
such business for 10
consecutive
assessment years
September 2012
Slide 43
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
Nature of
business activity
An undertaking
owned by an Indian
company formed
before 30-11-2005
and notified before
31-12-2005 and set
up for
reconstruction or
revival of a power
generating plant
PwC
Period of
commencement
of operations
No. of
consecutive
assessment years
for which
deduction is
available
generate or transmit 10 out of 15 initial
or distribute power assessment years
before 31-3-2011
Rate of deduction
from profits and
gains
100% of profits and
gains derived from
such business for 10
consecutive
assessment years
September 2012
Slide 44
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
Points to be noted
• The eligible undertaking must fulfil the following conditions –
- not formed by splitting up or reconstruction of a business already in existence
- not formed by transfer to a new business of machinery or plant previously used for
any purpose. Exemption from this provision if value of old plant and machinery
transferred to new business does not exceed 20% of the total value of plant and
machinery used in the business.
• For determining the quantum of deduction, profits and gains of business is to be
computed as if such business were the only source of income.
• Audit report to be furnished in Form 10CCB alongwith the Return of Income.
PwC
September 2012
Slide 45
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
… Points to be noted
• If deduction allowed u/s 80IA, no other deduction under Chapter VIA with reference
to the same profits and gains will be allowed.
• Section 80IA not applicable in relation to a works contract awarded by any person
(including the Central or State Government) and executed by the undertaking or
enterprise.
• Transfer of goods or services from / to an eligible business to / from any other
business carried on by the assessee, shall be at market value of such goods / services.
PwC
September 2012
Slide 46
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
… Points to be noted
• AO has the power to recompute the profits attributable to an eligible undertaking.
Domestic transfer pricing regulations to be applied. Emanates from the decision in the
case of CIT v/s Glaxo Smithkline Asia (P) Ltd. [2010] 195 Taxman 35 (SC)
• Depreciation compulsory for computation of relief
• Deduction u/s 80IA shall be granted only if the Return of income is filed within the
prescribed time. [Section 80AC]
• For failure to claim deduction u/s 80IA in the Return of Income, deduction will not be
allowed.
PwC
September 2012
Slide 47
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
Case laws
•
Bajaj Tempo Ltd. v/s CIT [1992] 62 Taxman 480 (SC)
Provision in the taxing statute granting incentives for promoting growth and
development should be construed liberally.
•
Deduction u/s 80IA is available qua undertaking and not qua assessee
- Madras Machine Tools Manufacturers Ltd. v/s CIT 98 ITR 119 (Mad)
- CIT v/s Premier Cotton Mills Ltd. 240 ITR 434 (Mad)
- CIT v/s Chanda Diesels 216 ITR 639 (Bom)
PwC
September 2012
Slide 48
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
…Case laws
•
Textile Machinery Corpn. Ltd. v/s CIT [1977] 107 ITR 195 (SC)
Guidelines to determine whether an undertaking has not been formed by splitting up
or reconstruction of a business already in existence –
- Separate and distinct identity of the industrial unit set up
- Investment of substantial fresh capital
- Employment of additional employees
- Manufacture or production of articles in the said undertaking
•
Rangamma Steels & Malleables v Asst. CIT (2010) 43 DTR 137 (Chennai)
(Trib)
Co-generation plant (windmill) installed in different years has to be considered as a
separate undertaking and the profit/loss cannot be clubbed in order to compute the
deduction under s. 80-IA.
PwC
September 2012
Slide 49
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
…Case laws
•
Jt CIT v/s Associated Capsules P. Ltd. 304 ITR 85 Mum
Assessee established new plant and machinery at same premises, producing same
product as existing business. AO held new units to be part of existing business. It was
held that certain post-manufacturing activities centrally carried out or drawing certain
facilities from a common source was not relevant . New units have separate & distinct
identity of their own & profits and gains derived from them. Assessee treated each
unit as separate and independent in its accounts. Assessee entitled to deduction.
•
Tata Communication Internet Services Ltd. v. ITO ITA No. 4214/Del/2010
Bar provided in section 80-IA(3) is to be considered only for first year of claim of
deduction u/s 80-IA
PwC
September 2012
Slide 50
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
…Case laws
•
CIT v/s Nestor Pharmaceuticals Ltd. [2010] 322 ITR 631 (Del)
Trial production does not amount to manufacture of products. Assessee entitled to
deduction u/s 80IA / 80IB only when commercial production commences.
•
Liberty India v/s CIT [2009] 317 ITR 218 (SC)
Duty drawback / DEPB benefits are not eligible for deduction u/s 80IB. Incentives are
not profits “derived from” the eligible business. Incentives flow from schemes framed
by the Central Government. Decision follows the SC decision in CIT v/s Sterling
Foods [1999] 237 ITR 539 (SC)
•
Midas Polymer Compounds P. Ltd. 2011-TIOL-92-HC-Ker-LB
Delayed payment charges qualify for deduction u/s 80IA, since offered for tax as
business income.
PwC
September 2012
Slide 51
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
…Case laws
•
CIT v/s Sportking India Ltd. [2009] 183 Taxman 312 (Del)
Amount received from insurance company to be taken into account in computing
profits and gains of an industrial undertaking entitled to deduction u/s 80IA.
•
Treatment of losses of eligible undertaking
- Mohan Breweries 116 ITD 241 (Che) and Mewar Oil & General Mills 271
ITR 311 (Raj)
The first year of claim will be the “initial year”. If losses of the eligible undertaking
already set off against other income in earlier years, such losses to be ignored.
- ACIT v/s Goldmine Shares & Finance P. Ltd. 302 ITR 208 Ahmed. ITAT
– SB
Did not follow Mewar Oil.
- Velayudhaswamy Spinning Mills 38 DTR 57 (Che) & Rangamma Steels &
Malleables 132 TTJ 365 (Ch)
The assessee had the option to select the “initial year” (not defined in s. 80-IA) and
that losses/depreciation prior thereto were not hit by s. 80-IA (5).
PwC
September 2012
Slide 52
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
…Case laws
• Ferani Hotels Pvt Ltd TS-112-ITAT-2012(Mum)
Profits of notified industrial park offered to tax on year to year basis following
‘percentage completion method’ of accounting, eligible for Sec 80-IA deduction;
benefit of CBDT instruction allowing Sec 80IB benefit on year-to-year basis in similar
situation equally applicable to Sec 80IA deduction
•
Natco Pharma Ltd TS-122-ITAT-2012(COCH)
Excess deduction u/s 80IC denied applying provisions of 80IA(8); Reasonable profit
to be determined applying profitability of comparable companies.
• Parmeshwar Cold Storage (P) Ltd. v/s ACIT [2011] 8 ITR (Trib) 172 (Ahm)
Whether relief is barred on a revised Return? Even if no relief claimed in the original
Return, claim made in the revised Return, is permissible, if original and revised
Returns filed in time.
PwC
September 2012
Slide 53
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
…Case laws
•
Videsh Sanchar Nigam Ltd. v/s CIT [2008] 299 ITR (AT) 234 (Mum)(SB)
Earth station not functionally an independent unit. More in the nature of upgrading
of assessee’s services through value addition, taking advantage of improved
technology. Deduction u/s 80IA denied.
•
Tamilnadu Petro Products Ltd. v/s ACIT [2011] 338 ITR 643 (Mad)
Merely because power generation is used for captive consumption, it does not lose the
right to relief u/s 80IA.
•
CIT v/s Hind Lamps Ltd. [1991] 190 ITR 553 (All)
•
CIT v/s Abhirami Cotton Mills (P) Ltd. [1996] 220 ITR 84 (AP)
•
CIT v/s Mazagaon Dock Ltd. [1991] 191 ITR 460 (Mum)
Separate accounts need not be kept.
PwC
September 2012
Slide 54
…Section 80IA – Deduction re. profits and gains
from industrial undertakings etc.
…Case laws
•
CIT v/s Gopal Plastics Pvt Ltd. [1995] 215 ITR 136 (Mad)
If second hand machinery even to the extent of less than 20% is used for forming a
new unit, such unit may still be treated as not an independent one eligible under
Section 80IB, if the other facts and circumstances (e.g. reconstruction or splitting up)
warrant such an inference.
PwC
September 2012
Slide 55
Section 80IAB – Deduction re. profits and gains of an
undertaking engaged in development of Special
Economic Zone
Nature of
business activity
No. of
consecutive
assessment years
for which
deduction is
admissible
Developer whose
On or after 1-4-2005 10 consecutive
gross total income
assessments years
includes profits and
(as reduced by the
gains derived by an
number of years in
enterprise from any
which deduction
business of
allowed u/s 80IA)
developing a Special
out of 15 years
Economic Zone
beginning from the
(SEZ), which is
year in which SEZ
notified on or after
has been notified.
1-4-2005 under the
SEZ Act 2005.
PwC
Period of
commencement
of operation
Rate of deduction
from profits and
gains
100% of profits and
gains from specified
business activity
September 2012
Slide 56
…Section 80IAB – Deduction re. profits and gains of an
undertaking engaged in development of Special
Economic Zone
Points to be noted
• Same as for Section 80IA
• Where developer who develops SEZ on or after 1-4-2005, transfers operation and
maintenance of such SEZ to another developer, deductionu/s 80IAB allowable to
transferee developer for balance period out of 10 years.
PwC
September 2012
Slide 57
Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
No.
1
PwC
Nature of business
activity
Period of
No. of
commenceme consecutive
nt of operation assessment
years for
which
deduction is
admissible
Small scale industrial
1-4-1995 to 31- 12 for co-op.
undertaking manufacturing 3-2002
society
or producing articles or
10 for others
things or operating cold
storage plant (other than 2
to 5 below)
Rate of
deduction
from profits
and gains
25% (30% in
case of a
company)
September 2012
Slide 58
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
No.
Nature of business
activity
2
Industrial undertaking in
an industrially backward
State specified in the
Eighth Schedule,
manufacturing or
producing articles or
things or operating cold
storage plant
PwC
Period of
No. of
commenceme consecutive
nt of operation assessment
years for
which
deduction is
admissible
1-4-1993 to
12 for co-op.
31-3-2004
society
10 for others
Rate of
deduction
from profits
and gains
100% for 5
initial
assessment
years
25% (30% in
case of a
company) for
the remaining
assessment
years
September 2012
Slide 59
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
No.
Nature of business
activity
3
Industrial undertaking
referred to in(2) above if
located in a notified North
Eastern Region
PwC
Period of
No. of
commenceme consecutive
nt of operation assessment
years for
which
deduction is
admissible
1-4-1993 to 31- 10 in all cases
3-2004
Rate of
deduction
from profits
and gains
100%
September 2012
Slide 60
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
No.
Nature of business
activity
4
Industrial undertaking
manufacturing or
producing articles or
things or operating cold
storage plant located in
notified industrially
backward district of
category “A”
PwC
Period of
No. of
commencemen consecutive
t of operation
assessment
years for
which
deduction is
admissible
1-10-1994 to 31-3- 12 for co-op.
2004
society
10 for others
Rate of
deduction
from profits
and gains
100% for 5
initial
assessment
years
25% (30% in
case of a
company) for
the remaining
assessment
years
September 2012
Slide 61
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
No.
Nature of business
activity
5
Industrial undertaking
manufacturing or
producing articles or
things or operating cold
storage plant located in
notified industrially
backward district of
category “B”
PwC
Period of
No. of
commenceme consecutive
nt of operation assessment
years for
which
deduction is
admissible
1-10-1994 to 31- 12 for co-op.
3-2004
society
8 for others
Rate of
deduction
from profits
and gains
100% for 5
initial
assessment
years
25% (30% in
case of a
company) for
the remaining
assessment
years
September 2012
Slide 62
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
No.
Nature of business
activity
6
An industrial undertaking
deriving profit from the
business of setting up and
operating a cold chain
facility for agricultural
produce
PwC
Period of
No. of
commencemen consecutive
t of operation
assessment
years for
which
deduction is
admissible
1-4-1999 to 31- 12 for co-op.
3-2004
society
10 for others
Rate of
deduction
from profits
and gains
100% for 5
initial
assessment
years
25% (30% in
case of a
company) for
the remaining
assessment
years
September 2012
Slide 63
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
Nature of business
No. activity
Rate of
deduction
from profits
and gains
7
100%
PwC
Period of
No. of
commenceme consecutive
nt of operation assessment
years for
which
deduction is
admissible
An undertaking which has
On or after 1-47 in all cases
begun or begins commercial 1997
production of mineral oil
located in any part of India
Not applicable to blocks
licensed under contract
awarded after 31-3-2011
under the New Exploration
licensing policy (NELP)
September 2012
Slide 64
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
Nature of business
No. activity
Period of
commencemen
t of operation
8
An undertaking which
begins refining of mineral
oil
1-10-1998 to
31-3-2012
9
An undertaking which begins On or after
commercial production of
1-4-2009
natural gas in blocks
Licensed under NELP VIII –
all blocks licensed under a
single contract shall be treated
as a single contract
Licensed under the IV Round
of bidding for award of
exploration contracts for Coal
Bed Methane blocks
PwC
No. of
consecutive
assessment
years for
which
deduction is
admissible
7 in all cases
Rate of
deduction
from profits
and gains
7 in all cases
100%
100%
September 2012
Slide 65
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
Nature of business
No. activity
10
An undertaking
developing and building
housing projects approved
before 31-3-2008 by a
local authority subject to
certain conditions
11
Company regd. for carrying
on business of scientific
research and development,
approved by prescribed
authority after 31-3-2000
but before 1-4-2007 and
fulfils prescribed conditions
PwC
Period of
commencement
of operation
No. of
consecutive
assessment
years for
which
deduction is
admissible
Within 5 years from the end of the
financial year in
which the housing
project is approved
by the local
authority
Rate of
deduction
from profits
and gains
-
100%
10
100% of the
profits derived
from such
housing
project
September 2012
Slide 66
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
Nature of business
No. activity
12
PwC
An undertaking deriving
profits from the business of
processing, preservation and
packing of –
fruits, vegetables, foodgrains
meat and meat products,
poultry or marine or dairy
products
Period of
commencem
ent of
operation
On or after
1-4-2001
On or after
1-4-2009
No. of
Rate of
consecutiv deduction from
e
profits and gains
assessmen
t years for
which
deduction
is
admissible
100% for 5 initial
10 in all
assessment years
cases
25% (30% in case
10 in all
of a company) for
cases
the remaining
assessment years
September 2012
Slide 67
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
No.
Nature of business
activity
Period of
commencem
ent of
operation
13
The business of building,
owning and operating a
multiplex theatre and is not
located within the
municipal jurisdiction of
Kolkatta, Chennai, or
Mumbai, subject to
specified conditions
The business of building,
owning and operating a
convention centre subject
to specified conditions
Constructed
during 1-42002 to 31-32005
14
PwC
Constructed
during 1-42002 to 31-32005
No. of
consecutive
assessment
years for which
deduction is
admissible
5 in all cases
Rate of
deduction
from profits
and gains
5 in all cases
50%
50%
September 2012
Slide 68
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
No.
Nature of business
activity
15
An undertaking deriving
profits from the business
of operating and
maintaining a hospital in
rural area subject to
specified conditions
PwC
Period of
No. of
commencemen consecutive
t of operation
assessment
years for
which
deduction is
admissible
Constructed
5 in all cases
during 1-10-2004
to 31-3-2008.
Hospital deemed
to have been
constructed on
the date on which
completion
certificate issued
by concerned
local authority
Rate of
deduction
from profits
and gains
100%
September 2012
Slide 69
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
S.
No.
Nature of business
activity
Period of
No. of
commenceme consecutive
nt of operation assessment
years for
which
deduction is
admissible
Rate of
deduction
from profits
and gains
16
An undertaking deriving
profits from the business of
operating and maintaining a
hospital located anywhere in
India other than excluded
area subject to specified
conditions
Constructed and
5 in all cases
has started or
starts functioning
during 1-4-2008
to 31-3-2013
Hospital deemed
to have been
constructed on the
date on which
completion
certificate issued
by concerned local
authority
100%
PwC
September 2012
Slide 70
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
Points to be noted
•
Same as for Section 80IA
•
The term “manufacture” has now been defined u/s 2(29BA)
Case laws
• M/s Essem Capital Markets Ltd Vs ITO [2011-TIOL-196-ITAT-MUM]
- Whether while claiming deduction u/s 80IB, it is necessary that the
commencement certificate should be in the name of the assessee
- Whether where the development agreement is not registered but the same is not
doubted by the AO as non-genuine, deduction cannot be disallowed u/s 80IB
- Whether where the assessee has not commenced the development on the project
before 1/10/1998 but received the commencement certificate before the said date,
deduction cannot be disallowed
Assessee's appeal allowed
PwC
September 2012
Slide 71
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
…Case laws
• Tarnetar Corporation [ TS-229-ITAT-2011(Ahd) ]
Builder eligible for deduction u/s 80-IB for ‘housing project’ even though land was
owned by co-operative society.
• CIT v/s Metalman Auto P Ltd. [2011] 336 ITR 434 (P&H)
An assessee who has its own manufacturing unit but also does job work for others, the
assessee is entitled to deduction in respect of all its manufacturing profits including
the income from job work u/s 80IB.
PwC
September 2012
Slide 72
…Section 80IB – Deduction in respect of profits and
gains from certain industrial undertakings other than
infrastructure development undertakings
…Case laws
• Enem Nostrum Remedies P. Ltd. v/s ACIT [2009] 314 ITR (AT) 47 (Mum)
The conditions u/s 80IB(2) to be a new industrial undertaking, would have no
application for scientific research u/s 80IB(8A).
•
CIT v/s Sadhu Forging Ltd. [2011] 336 ITR 444 (Del)
Sale of scrap generated during the course of manufacturing activity – entitled to
deduction u/s 80IB
PwC
September 2012
Slide 73
Section 80IC – Deduction in respect of certain
undertakings in certain special category States
Nature of
business activity
Profits and gains
derived by an undertaking or an
enterprise in
special category
States (Himachal
Pradesh,
Uttaranchal,
Manipur, Meghalaya,
Mizoram, Nagaland
and Tripura) (subject
to certain limits, time
limits and
conditions)
PwC
Period of
commencement
of operation
Sikkim
23-12-2002 to
1-4-2007
Himachal Pradesh
7-1-2003 to 1-42012
North Eastern States
24-12-1997 to
1-4-2007
No. of
consecutive
assessment years
for which
deduction is
admissible
10 initial assessment
years
Rate of deduction
from profits and
gains
Sikkim and North
Eastern States
100% for 10 years
Himachal Pradesh /
Uttaranchal Pradesh
100% for 5 initial
assessment years
25% (30% in case of
a company) for the
remaining
assessment years
September 2012
Slide 74
…Section 80IC – Deduction in respect of certain
undertakings in certain special category States
Conditions
• The undertaking / enterprise has begun or begins to manufacture or produce any
article or thing, not being any article or thing specified in the Thirteenth Schedule, or
which undertakes substantial expansion during the specified period.
• The undertaking / enterprise has begun or begins to manufacture or produce any
article or thing specified in the Fourteenth Schedule or which undertakes substantial
expansion during the specified period.
Points to be noted
• Same as for Section 80IA
• If deduction claimed u/s 80IC, no deduction will be allowed under any other section
under Chapter VIA or under Sections 10A or 10B.
PwC
September 2012
Slide 75
Section 80ID – Deduction in respect of profits and
gains from business of hotels and convention centres in
specified areas
Nature of business activity
Period of
commence
ment of
operation
Hotels / convention centres
located in National Capital
Territory of Delhi, , Gurgaon,
Gautam Budh Nagar and
Ghaziabad
1-4-2007 to
31-7-2010
No. of
consecutive
assessment
years for which
deduction is
admissible
5 consecutive
initial assessment
years
Rate of
deduction
from profits
and gains
100%
Points to be noted
• Same as for Section 80IA.
•
PwC
If deduction claimed u/s 80ID, no deduction will be allowed under any other section
under Chapter VIA or under Sections 10A or 10B.
September 2012
Slide 76
Section 80IE – Deduction in respect of certain
undertakings in North Eastern States
Nature of business
activity
Period of
No. of
commenceme consecutive
nt of operation assessment
years for which
deduction is
admissible
Undertaking
1-4-2007 to 31-3- 10 consecutive
manufactures or produces 2017
initial assessment
/ undertakes substantial
years
expansion to manufacture
or produce any eligible
article or thing
Undertaking carries on
any eligible business
Rate of deduction
from profits and
gains
100%
Points to be noted
• Same as for Section 80IA.
• If deduction claimed u/s 80ID, no deduction will be allowed under any other section
under Chapter VIA or under Sections 10A, 10AA, 10B or 10BA.
PwC
September 2012
Slide 77
Section 80JJA – Deduction in respect of profits and
gains from business of collecting and processing biodegradable waste
• Entire income
• from business of collecting and processing or treating of bio-degradable waste for
generating power, or producing bio-fertilizers, biopesticides or other biological agents
or for producing bio-gas, making pellets or briquettes for fuel or organic manure
• for 5 consecutive assessment years
PwC
September 2012
Slide 78
Section 80JJAA – Deduction in respect of employment
of new workmen
• Assessee is an Indian Company whose gross total income includes profits and gains
derived from any industrial undertaking engaged in the manufacture or production of
article or thing
• Deduction -
- equivalent to 30% of additional wages paid to new, regular workmen employed in
the previous year
- for 3 assessment years including the assessment year relevant to the previous year
in which such employment is provided
- subject to certain conditions
•
Panacea Biotec Ltd. v/s ACIT [2009] 314 ITR (AT) 82 (Del)
Percentage of increase in the number of regular workmen to be worked out with
reference to the number of employees as on the last day of the preceding year.
PwC
September 2012
Slide 79
Section 80LA – Deduction re. certain incomes of
Offshore Banking Units and International Financial
Services Centre
• Certain incomes of Scheduled banks / banks incorporated outside India having
Offshore Banking Units in a Special Economic Zone / Units of International Financial
Services Centre (subject to certain conditions and limits)
PwC
September 2012
Slide 80
Section 80P – Deduction in respect of income of cooperative societies
• Co-operative societies engaged in certain businesses and primary co-operative
societies engaged in supplying milk, oilseeds, fruits or vegetables – the whole of the
amount of profits and gains of such business
• Other co-operative societies –
- consumers’ co-operative societies : profits and gains upto Rs.1,00,000
- other co-operative societies : profits and gains upto Rs.50,000
• 100% of following incomes –
- Interest or dividends derived from investment with any other co-operative society –
100% of such income
- income from letting of godowns or warehouses
PwC
September 2012
Slide 81
…Section 80P – Deduction in respect of income of
co-operative societies
Case laws
• Maratha Mandir Co-op. Bank Ltd Vs. CIT TS-380-HC-2011(BOM)
Co-operative bank eligible for deduction u/s 80P on interest on advance rent
•
CIT v/s Kumbakonam Mutual Benefit Fund Ltd. [1964] 53 ITR 241 (SC)
It may not be possible to say that all co-operative societies are mutual associations, so
as to be totally exempt. By-laws of the co-operative societies would require to be
drafted in a manner, that not only the activities are confined to the members, but the
benefit of the surplus is available solely to the participants and not mere investors.
• CIT v/s South Arcot District Co-op. Marketing Society Ltd. [1989] 176 ITR
117 (SC)
The word “letting” in Section 80P(2)(e) is wide enough to include user by persons
other than members of the concerned co-operative society.
PwC
September 2012
Slide 82
…Section 80P – Deduction in respect of income of
co-operative societies
…Case laws
•
CIT v/s Karnataka State Co-operative Apex Bank [2001] 251 ITR 194
(SC)(LB)
Interest on investment out of statutory reserve fund, eligible for deduction u/s 80P.
• Mehsana District Central Co-operative Bank Ltd. v/s ITO [2001] 251 ITR
522 (SC)
Interest on Government securities invested out of reserve fund of a Co-operative
society, entitled to deduction u/s 80P.
•
Surat District Co-op. Bank Ltd. v/s ITO [2003] 262 ITR (AT) 1 (Ahm)
Interest on fixed deposits with other banks, locker rent are eligible for deduction u/s
80P.
PwC
September 2012
Slide 83
Section 80QQB – Deduction re. royalty income etc. of
authors of certain books other than text books
• Resident individual author
• Royalty income of author of certain specified category of books (upto Rs.3,00,000)
subject to certain conditions
Section 80RRB – Deduction in respect of royalty on patents
• Resident individuals
• Royalty on patents registered on or after 1-4-2003 (upto Rs.3,00,000) subject to
certain conditions
PwC
September 2012
Slide 84
Section 80TTA – Deduction in respect of interest on
deposits in savings account
• Inserted w.e.f. 1-4-2013
• Individual or HUF
• Interest on deposits (not being time deposits) in a savings account with
- banking company
- co-operative society engaged in banking business
- Post Office
• Rs.10,000
Point to be noted
• Where income derived from any deposit in a savings account by a firm, AOP or BOI,
no deduction available in computing total income of any partner of firm or member of
AOP or BOI.
PwC
September 2012
Slide 85
Section 80U – Deduction in the case of a person with
disability
• Resident individual
• Certified by the medical authority at any time during the previous year to be a person
with disability
• Certificate issued by the medical authority in the prescribed form to be furnished
alongwith the Return of Income
• Deduction of Rs.50,000 / Rs.1,00,000 in case of severe disability
PwC
September 2012
Slide 86
…Section 80U – Deduction in the case of a person
with disability
Case law
•
CIT v/s Narendra R. Oza [2002] 257 ITR 466 (Guj)
It is not a condition precedent for allowing deduction u/s 80U that the assessee
should be unemployed or should not be earning anything. Merely because the
assessee is earning income from some business, deduction u/s 80U cannot be
disallowed for, had he not suffered from a permanent physical disability, he could
have earned more.
PwC
September 2012
Slide 87

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