Tuesday, 8 April 2014

TAX PLANNING THROUGH SETTING UP INDUSTRIAL UNDERTAKING IN NORTH-EASTERN REGION [SEC.10C



NTRODUCTION:
new section 10C has been introduced w.e.f. assessment year 1999-2000 with a view to industrialise the North - Eastern Region.Tax holiday for 10 years has been conferred to industrial undertakings which begins to manufacture or produce any article or thing on or after 1.4.98 in any Integrated Infrastructure Development Centre or Industrial Growth Centre of North - Eastern Region. It is expected that the tax holiday will go a long way in developing the North - Eastern States. However, the scheme is optional. The provisions of this new section are briefly summarised in this
Chapter.
CONDITIONS :
Where an industrial undertaking begins to manufacture or produce any article or thing on or after the 1st day of April 1998 in any Integrated Infrastructure Development Centre or Industrial Growth Centre of North-Eastern Region (i.e. states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura) and fulfils the under mentioned conditions, the profit of such industrial undertakings shall be exempt from tax for 10 consecutive assessment years beginning from the assessment year relevant to the previous year in which it begins to manufacture or produce article or things.
(1)
The industrial undertaking should not have been formed by the splitting up or reconstruction of a business already in existence. However, where an industrial undertaking is formed as a result of re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section, the same will qualify for the tax concession.
(2)
The industrial undertaking is not formed by the transfer to a new business of machinery or plant exceeding 20 per cent, previously used for any purpose. For this purpose, any machinery or plant which was used outside India by any person other than the assessee is not regarded as machinery or plant previously used provided no deduction on account of depreciation has been claimed in India by any person and the machinery is imported into India.
OPTION NOT TO CLAIM EXEMPTION :
The assessee may opt not to claim exemption under section 10C. For this purpose he is required to file a declaration to this effect before the due date of the filing of the return.
CERTAIN BENEFITS NOT PERMITTED, IF EXEMPTION CLAIMED UNDER SECTION 10C:
If the assessee claims exemption under section 10C he will not be entitled to claim the following deductions after the expiry of tax holiday period -
(1)unabsorbed depreciation under section 32(2) relating to tax holiday period,
(2)unabsorbed capital expenditure under section 35 relating to tax holiday period,
(3)unabsorbed capital expenditure under section 36(1)(ix) relating to the tax holiday period,
(4)unabsorbed business loss relating to tax holiday period,
(5)unabsorbed loss under the head "Capital gains" relating to tax holiday period,
(6)deduction under sections 80HH80HHA, 80-I80-IA80-IB and 80JJA.
DEPRECIATION :
Moreover in computing the depreciation allowance on any asset in the assessment years following the tax holiday period, the written down value of the assets will be computed as if the assessee had claimed and been allowed the depreciation in accordance with the provisions of the I. T. Act during each one of the relevant assessment years.
NOTIFIED CENTRES UNDER SECTION 10C :
The Central Government has notified the following as Integrated Infrastructure Development Centres and Industrial Growth Centres  for the purpose of section 10C vide Notification No. 11106 dated 13.10.1999 :
SCHEDULE - A
Sl. No.
Integrated Infrastructure Development Centre
State
1.
2.
3.
Integrated Infrastructure Development, Delgaon, Darrang  District
Integrated Infrastructure Development, Bhumuraguri, Nagaon
Integrated Infrastructure Development, Algapur in Hailakandi
Assam
Assam
Assam
SCHEDULE - B
Sl. No.Industrial Growth CentreState
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Barpeta
Goalpra
Kakopathar
Dulianjan
Sariharjan
Lilabari (N.Lakhimpur)
Malbong
Manja
Bokulia
Growth Centre, Balipara
Growth Centre, Matia
Chaygaon, Kamrup District
Mendipathar, East Garo Hill District
Growth Centre, Bodhjungnagar, West Tripura District
Assam
Assam
Assam
Assam
Assam
Assam
Assam
Assam
Assam
Assam
Assam
Assam
Meghalaya
Tripura

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